Act against harsh US banking rules
AMERICANS in France are being asked to take urgent action in a bid to change harsh banking rules which an expats’ body says are “wrecking people’s lives”.
AARO (Association of Americans Resident Overseas) says intrusive rules in America’s ‘FATCA’ law place such heavy reporting obligations on French banks with American customers, and such heavy threats of penalties for any mistakes, that Americans have had accounts closed or have been turned down for new ones – especially for the best long-term savings plans.
Americans are also being pressured by French spouses to be removed from couples’ joint bank accounts, AARO says.
The rules are linked to the fact that America requires annual worldwide income tax declarations from all its citizens, wherever they live.
Congress will shortly be considering tax reforms and AARO says it is now vital that as many people as possible contact their senators and congresspeople in a bid to get the rules changed.
AARO president Lucy Laederich said: “Apart from the fact that Congress is looking at tax itself this year, we were in Washington last week and learned that the Treasury Department can make some changes to FATCA on its own – but this needs congressional support. So the more people that write, the more chance we have.
“In 1975 when overseas Americans got the vote, it was because Congress was deluged by letters. There are 7.6 million of us and if Congress could get half a million that would make a big impact on them.”
The association has provided a sample letter and information on how to adapt it and send it to politicians who represent you in the USA: see Model letter.
Ms Laederich added: “A lot of people are very upset about FATCA. Banks are saying “we can’t afford this. We don’t want to put the software and human resources in place”. What’s more, if the bank makes any mistake or fails to declare an account, the IRS [American tax authorities] can accuse them of withholding information and the penalty is huge. This is what banks are afraid of.
“All banks have investments in the USA and they could be punished with 30% being withheld from any dividends and interest from stocks, bonds etc in the United States. The IRS hasn’t done it yet, but the law gives them the right.”
Ms Laederich said apart from AARO, she also represents the Federation of American Women’s Clubs Overseas (FAWCO). “In FAWCO I’ve been hearing more and more from women being taken off joint accounts because the spouses just don’t want this kind of intrusion into their personal and business affairs, or to risk the bank closing the account.
“Often the women themselves don’t have a lot of money and don’t have to report under FATCA – banks don’t report little €1,000 accounts. So if you keep her on little accounts and take away her signature authority on investment accounts, then the bank’s not going to have to report on her. But where does it leave her? With no financial independence or security.
“You can have a basic savings account, but the good ones with tax deferred like assurance vie, intelligent investments that people want to make for retirement – they’re saying you can’t have them. It’s in the actual terms and conditions of some banks that they’re not available to Americans.”
