On Friday, December 30, 2022, the IRS issued Notice 2023-11, which provides temporary relief from the FATCA reporting rules for non-U.S. banks (known as FFIs, “foreign financial institutions”) in about 90 countries (known as Model 1 Jurisdictions). The notice specifically provides relief for reporting of U.S. TINs (Social Security or ITIN numbers) for 2022, 2023, and 2024.

Democrats Abroad is encouraged by the recognition by Treasury and the IRS that modifications to the FATCA-reporting regime are necessary. Although temporary relief for non-U.S. banks is a positive step, the temporary relief is provided to FFIs rather than directly to Americans abroad. We would prefer permanent relief that resolves the core problem caused by FATCA: loss of access to non-U.S. bank accounts for Americans abroad.

In 2022 the Democrats Abroad Taxation Task Force met with IRS and Treasury officials to raise awareness of the ongoing tax and financial-access issues experienced by our constituency. We are pleased to see some of our views are recognized in this IRS notice. We look forward to an ongoing productive dialogue with these government agencies and Congress in order to resolve the tax and financial-access issues that severely impact the daily lives of Americans abroad.

Highlights from the notice that are relevant to Americans abroad include:

• Treasury and the IRS acknowledge that foreign countries, non-U.S. banks, and U.S. citizens (including for Americans living abroad) are concerned about account closures when a U.S. TIN has not been provided.
• Treasury and the IRS acknowledge notification that some non-U.S. banks are refusing to open or maintain accounts for Americans abroad, or are “otherwise providing access to accounts on less favorable terms than apply to other account holders, even if the U.S. citizen provides a U.S. TIN.”
• One of the requirements for FFIs to receive relief is for the relevant country to encourage its banks not to discriminate against Americans abroad who do provide a U.S. TIN.
• Even though Americans abroad and FFIs had up to 6 years to provide U.S. TINs for FATCA reporting, TINs were still not provided.
• Relief to FFIs is limited to reporting on accounts opened before a certain date and is conditional upon the bank providing U.S.-citizen customers with information on how to come into tax compliance and/or renounce citizenship.
• Relief also obliges banks to take steps to encourage tax compliance by U.S. citizens like providing links to the IRS and U.S. State Department’s websites.

The FBAR/FATCA Task Force has closely followed the progress of the FATCA lawsuit (Mark Crawford et al vs US Department of Treasury et al) filed by Sen Rand Paul and others seeking to stop FATCA.  Yesterday, April 26, the case was thrown out of court.  This was, in many respects, expected after the judge denied the plaintiffs' request for a preliminary injunction to stop the enforcement of the Act last September. The plaintiffs then added four plaintiffs, but the judge has found that the plaintiffs still fail to demonstrate standing to sue and the violation of a protected interest.*

The plaintiffs can, of course, appeal the judge's decisions.  We continue to follow this case and will keep you up to date with any further developments.

And we continue the work to promote our recommended reform to FATCA, the Same Country Safe Harbor for Americans Abroad, which would exempt the accounts of Americans abroad in their legal country of residence from FATCA disclosure.

Please contact the FBAR/FATCA Task Force at any time with questions: [email protected]

*This is from the court order terminating the case:  "...the Court finds that none of the Plaintiffs has standing to sue Defendants. No individual Plaintiff has suffered an invasion of a legally protected interest, which is concrete and particularized, and actual or imminent, not conjectural or hypothetical. Moreover, no alleged injury is fairly traceable to the actions of the Defendants, but rather, the actions of an independent third party. Finally, there are no allegations that it is likely that the alleged injury will be redressed by a favorable decision."

After an action packed September full of results and news, our FATCA work has continued apace. The results are not as evident in this last quarter as they were in September, but we continue working to generate Senate support for "Same Country Safe Harbor", details below.

As those following FATCA would expect, a great deal has happened this month – and it is not over yet.  This is due largely to (what we were treating as – see below!) the looming September 30 2015 deadline for the first transfer of the financial account information of US Persons to the IRS under the terms of the FATCA legislation, regulation and intergovernmental agreements.

Update on our Grassroots Campaign in support of the FATCA Same Country Safe Harbor for Americans Abroad

It’s been a tremendously busy month for the FBAR/FATCA Task Force.  I’ll try to keep this account of our work succinct:

• As you know from last month’s report, the co-chairs of the Americans Abroad Caucus, Rep Carolyn Maloney (D-NY) and Rep Mick Mulvaney (R-SC), have drafted a letter from Congress to the Treasury and the IRS asking for them to urgently implement the FATCA Same Country Safe Harbor for Americans abroad.[1]  Representatives Maloney and Mulvaney circulated the letter on Capitol Hill with a covering letter asking their Congressional colleagues to sign on.
• Democrats Abroad launched our grassroots campaign shortly thereafter, asking Americans abroad to message their members of Congress urging them to sign on to the letter.  Our goal was 1,000 messages.
• At the end of the first week more than 5,200 individuals participated in the campaign.

Another step forward for FATCA Reform: Americans Abroad Caucus Chairs circulating FATCA reform “sign on letter” through the House.

This month Democrats Abroad and all those campaigning for relief from FATCA reporting for Americans living abroad hit a milestone in our advocacy campaign.

SPECIAL REPORT

Please note that the Task Force published a Special Update earlier this week on the publication in the New York Times of a nefarious Op-Ed suggesting that Democrats Abroad has neglected the interests of Americans abroad in the matter of FATCA.  Democrats Abroad has responded with a Letter to the Editor of the New York Times refuting the claim by demonstrating that the Same Country Safe Harbor provision that we and the non-partisan organisations of Americans Abroad are working for have a far greater probability of providing urgent relief from the FATCA burdens than a repeal bill or constitutional challenge.  We will notify members of the publication of our Letter to the Editor by the New York Times. 

PRELIMINARY FINDINGS FROM RESEARCH ON FINANCIAL ACCOUNT CLOSURES

Many thanks to all who responded to our request for help with the next phase in our FATCA Reform research and advocacy work.  We asked that Americans abroad impacted by FATCA-related financial account closures send to the FBAR/FATCA Task Force redacted copies of any bank documents - letters, emails, policy statements, other - that demonstrate a connection between FATCA compliance and a denial of financial service.

 Yesterday the New York Times published an Op-Ed about FATCA entitled “An American Tax Nightmare.”   The piece is a fairly accurate portrayal of the problems FATCA has created for ordinary Americans living abroad.

The piece goes on from there with less accuracy and a measure of speculation dressed up as fact.  Importantly, the piece suggests that Democrats Abroad and the Democratic National Committee have neglected the interests of Americans abroad where FATCA is concerned. 

As you know, Democrats Abroad established the FBAR/FATCA Task force in 2011 and has been working to reform FATCA for the last four years.  Our recommended FATCA reform is the Americans Abroad Safe Harbor.  This provision would exempt from FATCA reporting the accounts of American citizens who are legally resident in the country in which the account is held.  The non-partisan organisations representing Americans abroad[1] also support the Safe Harbor reform and are actively advocating for it.  Further, the Democratic National Committee demonstrated its support for FATCA reform with a resolution passed at its meeting in August 2014.

Democrats Abroad responded to this invitation from the Senate Finance Committee to provide input and ideas on reforming the US tax code to one or more of five Tax Reform Working Groups.  Democrats Abroad made a submission to the Individual Income Tax Reform Working Group and the International Tax Reform Working Group promoting our recommendation to reform FATCA, the FATCA Safe Harbor for Americans Abroad.  Our submissions and attachments to the papers are attached herewith.

During the week starting Monday February 23, 2015 Democrats Abroad was part of a "delegation" of representatives** from the following organisations representing Americans living outside the US which had a series of meetings in Washington DC about FATCA:

• American Citizens Abroad (ACA)
• Association of Americans Resident Overseas (AARO), 
• Democrats Abroad (DemsAbroad), and
• Federation of American Women’s Clubs Overseas (FAWCO) and FAWCO Alumni USA (FAUSA).

Subgroups of the members of the delegation conducted 35 meetings across the five days** with the offices of these officials and discussed 1) the adverse impact FATCA is having on Americans abroad[1] and 2) reforming the FATCA implementation rules to create a Safe Harbor from FATCA reporting for Americans abroad[2] and the banks and brokerage houses they have accounts with.