Ranting and Raving Mad - Second Class Citizenship

I am not a tax professional. I am an active member of AARO. As an active member, I was privileged to participate in Overseas Americans Week in February 2013.
If what I write below is erroneous, please send me a comment so I can correct it.

Let us start with FATCA and take a cool-headed look at how FATCA affects us US citizens (and non-citizen US taxpayers).

Depending on Intergovernmental agreements (IGAs), or their absence, foreign financial institutions must declare, to their government or directly to the IRS, the existence of your accounts and the amount in them. For bank accounts, they will not have to report holdings under $50000 and for other investment accounts, amounts under $250000. We, however, may be required to report these accounts, even if the banks do not. That depends on the total amount in our accounts and our filing status.

Single or married filing separately. If the total amount in all the accounts outside the US is not greater than $200000, then we do not have to file form 8938. If the total amount in all the accounts outside the US is greater than $10000, we must file form TD F 90-22.1 (the FBAR form).

Married filing a joint return. The threshold for form 8938 is $400000. For the FBAR,  it's still $10000.

So much for the filing requirements, which are simplified, here. If there is an exceptional short-term deposit which carries the total amount in the accounts above the threshold, there are other dispositions, and these are covered every year in the AARO tax seminars.

Many Americans abroad do not have to file form 8938. They do not have such savings abroad. That does not mean that FATCA has not affected them. It has made opening or maintaining accounts in the countries in which we reside difficult, if not impossible, because banks are reluctant to hold these accounts that will create such expensive reporting requirements, and in some countries, these requirements are contrary to local law on privacy. There has been a modification to the FATCA rules that requires banks to not discriminate against US persons, but it is not clear how that rule will be enforced. If you live abroad, either full time or part time, and you need a local account, FATCA has affected you.

Many Americans who live abroad do not have significant savings abroad because they have maintained an investment account in the United States. Now, US brokerages are closing or restricting accounts held by US citizens with foreign addresses. There's no law telling them to do this; it's their new policy. Policies from one brokerage to another are not consistent. The closures or restrictions seem to depend on the country of residence. There's no clear explanation, but it looks like it may be linked to which countries have entered an IGA with the US about FATCA. If any of us were thinking that we were lucky not to have to deal with the FATCA business because our money was still in the States, we are now stuck.

I'm going to skip the long diatribe about how the FBAR and FATCA filings affect us finding jobs, creating companies and partnerships, taking on responsibilities with associations -- anything to do with our having a signature on a bank account. Short story -- negative effect.

What are we to do? Where are we supposed to be investing our savings? How?

There is a second issue. Some Americans who live abroad do not have bank accounts in the US. Either they have never lived in the US, or they left and closed their accounts when they realized they would be residing abroad indefinitely. Since the passage of the Patriot Act, banks have refused to open accounts to US citizens who do not have a local address. This is not part of the law, but it is the policy based on the “know your customer” requirement. It is discriminatory. The workaround solution is to claim residence at parent's, sibling's, or friend's homes. In fact, the bank clerk might suggest this solution. In effect, they will know you to be a liar and that is okay. I have never done this. To claim one address to a bank and then another, foreign address, to the IRS, seemed hypocritical.

I have lived in France for over 40 years, having married a Frenchman while still a student. The money in the States has its origins in the States, from my very modest saving account and  mostly thanks to the success of my parents. It is not money that was earned in France and stashed in the US. Likewise, the savings my  husband and I have here in France originate here, our savings. I closed the checking account as I no longer used it; that was a mistake because when after my mother died, it would have been easier if I had a checking account, but I couldn't open one. (Well, the clerk did suggest I use a bogus address and I balked since the reason I could not use my French address was the "know your customer" rule!) The investment account is my sole account in the US.

Is it the intent of US financial institutions that we remove our funds and import them to our country of residence? I could do that. And I suppose, that over time, that is what will happen. Can you imagine what life would be like for US citizens who move from country to country (for work)? If they have not maintained an address in the States, they no longer have a home base.

My own dilemma is Fidelity Investments phone call this week warning me that I would be receiving a letter with the details of the new restrictions on my account: I can sell, but will not be able to buy securities. I will not be able to deposit new funds to the account. My investment account, in effect, over time, becomes a cash account in which I will only be able to withdraw funds, to my understanding. My children, who have accounts at Fidelity, are in the same predicament. The restrictions are linked to our living in France. What has France done, or not done, to warrant US financial institutions treating US citizens like this?

Please, do not imagine that money is my sole connection to the US. No, it is not. I still have family and I still feel American. I am proud to be an American. I am sick of America making me feel unwanted. I have been a member of AAWE and AARO, organizations that fought for our rights to transmit our citizenship to our children and grand-children and to vote, fought for more reasoned thought into how we are taxed by the US. I am sick to find myself telling my children it might not be such a good idea to burden their children with US citizenship.

Can financial institutions in the US have such discriminatory policies? Is it legal? There is no law, it seems, that imposes these policies; it's the instituion's new policy; like it or leave. But leave for where, since all the institutions are doing this? And at what cost. If I had to sell all my mutual funds and stocks in a single stroke, I'd have excessive capital gains taxes.

As I noted at the beginning, I am mad. My discourse is not as well-organized as I'd like it to be. I have already written to my Representative, Chaka Fattah, to my Senators, Bob Casey and Pat Toomey, to Representative Carolyn Maloney, who is the chair of the Americans Abroad Caucus and the House Committee on Financial Services and who is also the sponsor of HR597 To establish a commission to study how Federal laws and policies affect United States citizens living in foreign countries. 

You can support HR597. You can write to your Congress people: If you, yourself, live outside the US, this letter. And if you are in the US and have family or friends who live abroad, use this letter.

And to give your opinion on tax reform -- in favor of RBT (Residence Based Taxation) for we who live overseas, consideration of accounts in one's country of residence as local, not foreign accounts, elimination of FATCA requirements that are strangling financial services.... Or maybe you disagree. 

Wow, another month has gone by

It's been a busy month. Not that I can remember much of any importance. I just finished our French taxes. So all that has been taken care of: US and FR. AARO had its annual general meeting at the ambassador's residence, with the US ambassador, Charles Rivkin, as our speaker. And he was a fine speaker. Paul and I have babysat a few times. Sacha's sitter has been on sick leave, so we got to fill in. Now, Paul and I both have sore throats and bad colds, probably caught from Sacha. That family has gone off to visit more family in England and Norway and everyone should be all better by next week, when they get back. I've taken Sacha to the lap-sit story hours at the library -- he likes it.
And that is it.

Word for Word in Paris

The San Francisco company, Word for Word, has been coming to Paris for the past 18 of its 20 years in existence. They are an eagerly awaited annual event. This year's performance was "You Know When the Men are Gone", two of the collection of short stories. This review in the Huffington Post is more eloquent than I can be.
And that's all that is interesting. I've dealt with the family's US taxes, for the time being, at least. The sun came out and I went to the baseball game yesterday, but didn't stay long. I preferred to continue walking. We watch Sacha grow and will celebrate his birthday, soon. I've just finished reading Jodi Picoult's The Storyteller and am currently reading Tom Wolfe's Back to Blood. Now, off to an appointment. My checklist is done for the day!

Cranky Resident/Cranky Traveler

We're currently accepting submissions for France Revisited's upcoming "Cranky Resident/Cranky Traveler" issue in which all is not beautiful and tasteful and macaroon-perfect in the City of Light (or elsewhere in France). If you'd like to submit, send a 200-300-word description of your idea or a full text (500-800 words) to francerevisited@aol.com by Sunday April 7. We aren't interested in accounts of a single bad experience or a specific business you don't care for but in short essays that show what's wrong with the state of architecture or fashion or service or food or whatever you're feeling cranky about. Please share this with fellow cranks who might be interested in submitting. No payment but much glory and a large audience for your crankiness.

My friend Gary Lee Kraut, of France Revisited, put this request up yesterday.It just so happens that I went to visit Montmartre with assorted family on Saturday, so it's all fresh in my mind. This one experience, though, seems to be a fair example of most of my visits up there with friends who want to see the church, the view, and the artists and pretty much like vieits elsewhere.

First of all, when it's cold and gray, Montmartre is a bit colder and grayer. When it's cold and gray in December, you just grin and bear it and say to yourself that it's winter, so stop complaining, but when it's the very end of March, you bear it without the grin. It actually snowed for a while when we were having lunch. However, you can't dictate the weather when you schedule a trip. It's always either too cold or too hot or raining....

When you get out of the metro at Abbesses and you see that the wagons all empty out at Abbesses, you figure you were not alone on this pilgrimage. So, you start the museum shuffle down the street and you can't cross the street because of the pedestrian traffic coming at you, not because of the cars. There was a long, but quick-moving line for the funicular and the children loved it. At the top, there was a bit of a jam trying to get out and to the steps where we had a view of the white fog over Paris. We couldn't see any major monuments, and it was hard to stay out of the way of people taking pictures of loved ones on the steps. The human statues are always amusing; I don't think anyone was leaving them any money, though. There was a harpist entertaining and then, further up, a violinist played classic French hits. We got into line for the Basilica visit; only one gate was open for both ingoing and outgoing traffic, which caused another traffic jam. All this time, we had to keep counting one another: 6 adults and two small children, who kept switching the adult they were holding hands with. The Basilica is cold and dark -- 19th century Roman architecture, none of the light, airy Gothic. There are so many people you shuffle along, down the left side and back up the right without much time to notice anything of particular interest or beauty, leaving me with the impression there isn't any. There are very clear signs asking tourists to respect the place (no photos) and the people who might be praying (silence), but it's clear that most tourists ignore the signs, even when a staff person put his hand in front of someone's camera to stop him from taking a picture, it only worked until the staffer went on with his work. 
From the Basilica to the Place des Tertres, we needed to stop to eat. The first place had an electrical outage, but the second place could accommodate the eight of us. About five minutes later, that would not have been possible as they filled up to the point of having a waiting line! In fact, I think it's the first time, I've found seating so early in the search. We were very lucky and promptly served. That's when it started snowing. After this satisfying stop, we shuffled off through the pedestrian traffic to the Place des Tertres to admire the artists at work -- and they do draw good portraits and caricatures. We were impressed, but not to the point of sitting for a portrait; it was too cold. We ducked into a gallery to get warm and figure out the rest of the day. Emma and I took the kids home with us and the others went on to the Flea Market at St. Ouen, another place I will not go to in winter, even if it's officially spring.
To be fair, the travellers in our group were perfectly happy. We can't choose the weather when we schedule our trips and you just have to plug along. The children were well-behaved; no one got lost. It's the shuffle. It's the same shuffle in museums, at Mont St. Michel, at Notre Dame. To be fair, again, it's the same shuffle in Rome, in Florence, in New Hope, the Great Wall of China or any other popular place. As I get older, I can't stand to shuffle; my back can't take it!