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Moving PlannerAmerican Citizens Abroad

Google Hangout with Dorothy van Schooneveld of American Citizens Abroad (ACA).

Dorothy kindly put together this Q&A about the ACA:

What is the ACA?

  1. American Citizens Abroad is a non-partisan, non-profit organization started by, and run by, Americans abroad. We represent the interests of the global community of Americans living outside the United States with respect to their relationship with US laws and regulations.
  2. We came into being because the US does not have any Governmental focal point in Washington concentrating on concerns specific to its citizens abroad.
  3. ACA was founded in 1978 by a group of concerned Americans led by a charismatic fellow named Andy Sundberg.
  4. It was the outgrowth of a group founded several years previously by Americans who were concerned that their foreign-born American children could lose US nationality as adults. Overseas Americans, pulling together, got that law changed.
  5. It was obvious that there were numerous other problems unique to Americans living abroad, so ACA was founded.
  6. For most of its life, ACA has been a Geneva-based non-profit association under Swiss law. However, we have recently established an office in Washington, DC and incorporated as a non-profit in the US. So we are no longer a "foreign entity" in the eyes of the US Government, which facilitates things. Technically speaking, the Geneva group is now a "country chapter" of the US non-profit corporation, and we are getting inquiries about more possible country chapters elsewhere.

Who can be a member?

  1. Any interested individual can become a member by going to our website: www.americansabroad.org and clicking on "Join Now". Annual membership is only $70 (or $55 if you are 65 or over).
  2. We have membership in some 90 countries worldwide. Twenty years ago we started a system of volunteer in-country representatives, which has grown now to 68 such Country Contacts in 45 countries on 6 continents.
  3. Most of our members are Americans resident abroad, of course, but a solid percentage are people living in the US - perhaps they dream of moving abroad, or have lived abroad in the past. Other members are "wannabe" Americans, who do not yet have citizenship, or "accidental Americans" (generally born in the USA during their parents' short-term residence there), who want to understand the implications of their US citizenship, or even "have-been" Americans, who have renounced US citizenship but retain an interest in the issues.

Why should I be a member?

  1. ACA calls itself "the Voice of Americans Abroad"
  2. We work on behalf of ALL the estimated 7 million Americans abroad, and ACA functions thanks to thousands of hours of volunteer labor.
  3. Nevertheless, it is impossible to function without overhead, and membership dues form a substantial part of our annual budget.
  4. If you have ever turned to our website for information, or asked us a question, or receive our information-packed monthly e-newsletter - or just believe in the abstract that there SHOULD be someone out there speaking out on behalf of Americans living outside the USA, then you should be a member.
  5. We want more members! We want more ACTI VE members!

What issues does ACA work on?

Any number of issues - just take a look at our website! A few examples:

  1. Voting - we work to encourage and facilitate voting from abroad. This is a right gained only after active campaigning by the overseas community, in 1975. Yet there are still born-abroad American citizens who are obligated to file US tax returns, but are not permitted to vote in federal elections due to specific state laws.
  2. Social Security and Medicare - living abroad can cause complications there, too. Some people have their Social Security reduced because they have another, foreign pension. Others have to pay into Social Security and Medicare when they establish a business abroad, despite the fact that they pay into comparable systems in their country of residence
  3. Citizenship - there are still complications related to citizenship transmission that we do not feel should be there.

Currently, as many people know by now, there are primarily financial problems related to taxation and to having or retaining non-US bank or financial accounts. And even problems with obtaining or retaining US bank accounts, once you are based abroad.

Let me call to your attention that ACA has a separate, secure portal accessible via its website (http://www.americansabroad.org/issues/taxation/share-your-banking-or-tax-story/) on which people can tell their personal banking or taxation experiences, and can specify the degree of anonymity the story should have. When making points to Congress or to the press, these individual stories add a human touch that really adds to the impact. We have used these stories to impress members of the Americans Abroad Caucus in the House of Representatives, for example, and shared them with the Taxpayer Advocate's Office of the IRS. Nina Olson, the National Taypayer Advocate, is a strong supporter of overseas Americans.

Who does ACA advocate for?

  1. YOU, and all American residing abroad!

What are the most important issues facing overseas Americans today?

  1. At the moment, it is the purse that hurts - or has the potential for hurting.
  2. There is once again talk in Washington of eliminating the FEIE - foreign earned income exclusion - which permits Americans filing from abroad to exclude a fixed amount of earned income (not pensions or passive-investment income) from taxation by the US.
  3. There is ever-increasing pressure on "smoking out" American citizens (and green card holders) resident abroad who have not been filing US tax returns. Many of these people never dreamed that they would have to file tax returns despite the fact that they do not reside or earn money in the States. Yet these people are, in the eyes of the IRS, non-compliant taxpayers who can be liable for considerable penalties for previous non-filing.
  4. Add to this other reporting requirements, and the new legislation requiring foreign banks to report to the US on any US citizen or green card holder clients, and one starts feeling under attack on all sides - sheerly for living outside the US as an American.

The IRS has initiated "offshore volunteer disclosure" programmes, to get people back into the tax system - and assess impressive penalties for their previous non-filing. It is not a carrot-or-the-stick technique; there is not really a carrot in sight!

I'm not an American or am I?

  1. This is a good point. There are, indeed, many individuals who technically have American citizenship but are unaware of it.
  2. They could be the "accidental Americans" that I mentioned before, who happened to have been born while their parents were in the USA.
  3. Or they can even be people - or children of people - who took on a second nationality at a point in time when the US did not permit that. They were told at that time that they had lost their US nationality, but subsequent legislation with retroactive clauses reversed that position and, often unbeknownst to these individuals, they were then dual citizens.

What are FBAR and FATCA?

  1. You can find tons of information on both of these on the ACA website.
  2. FBAR stands for the Foreign Bank and Financial Accounts Report. Technically, this is an informational form which US taxpayers (in the US or abroad) need to file BY June 30th of each year with the Treasury Department (not the IRS).
    While it is a form that has existed for a long while, it was largely overlooked until 2003, when Treasury gave the IRS the task of enforcing compliance. This year for the first time it is required to file it electronically. It needs to be filed by every taxpayer who has had a cumulative total in all foreign accounts which exceeded $10,000 at any time during the previous year, and you must list each account in some detail. Failure to file has an automatic penalty of $10,000 per year - or more, if it is determined that you "wilfully" failed to file.
  3. FATCA, the Foreign Account Tax Compliance Act, is legislation passed in 2010, which is starting to come into effect in 2014. It requires, among other things, for every "foreign financial institution" in the world to report directly or indirectly to the IRS on all accounts held by "US persons" - that is, principally US citizens and green card holders. This is causing havoc in banks and investment companies worldwide, and necessitates billions of dollars of investment for them to be able to retool their software to identify all "US persons". There are a good number of foreign financial institutions that find it easier just to divest themselves of any Americans.
    You'll often see articles with Americans referred to as "toxic clients", and this is why.
    In addition FATCA has its own, separate, form for reporting financial assets which largely overlaps with the FBAR form that I just mentioned, but this second form must be filed together with one's 1040 income tax return. Fortunately, this doesn't have to be filed by persons with modest means.

How is the ACA helping overseas Americans?

  1. ACA has two basic functions: that of "education" of -- and about -- Americans abroad, and "representation" of the worldwide American community in Washington.
  2. The ACA website reflects a good deal of our educational efforts. The American Citizens Abroad Global Foundation, Inc., a non-profit corporation founded alongside ACA, Inc., will soon be involved in educational outreach projects.
  3. On the "representational" level, ACA in Washington, DC is involved on a daily basis in contacts with Congress and various agencies of the US government.
  4. ACA concentrates on proposing solutions to various problems, and this is very well received so far in Washington.
  5. For example, we have just filed a document with the Senate Finance Committee on International Tax Reform, pushing for Residence-based Taxation as opposed to Citizenship-based taxation (unique to the US among the developed countries).
    In it we also propose a "same country rule" on reporting of foreign bank accounts - that is, accounts in your country of residence would be deemed not to be "foreign" financial accounts.
    We also underscore the importance of having a penalty-free way for people who have not been filing US tax returns to get back into the system.
  6. ACA is now regularly quoted by major media worldwide.
    A number of years ago, a wonderful woman named Phyllis Michaux, who founded a Paris-based group called AARO (Association of Americans Resident Abroad) wrote in her memoirs of her disillusionment in discovering that issues related to overseas Americans were not just on the back burner in Washington, but not even on the stove.
    Well, now Americans abroad - all 7+ million of us - are beginning to be recognized. There is a long ways to go, but the impetus is building. We need all to work together: united we stand, indeed!


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