Would Rosa Parks File Her FATCA Forms Or Move To The Back Of The Bus?

America’s greatness is her policy of equality to all and nondiscrimination. Rosa Parks is famous for her stance on refusing to give in to racial discrimination. Who will be the Rosa Parks and stand up against America’s policy of geographic discrimination?

FATCA discriminates against American citizens living offshore since these expats (who by and large file and/or pay taxes without having direct representation) are required to file the form, while an extremely small minority of Americans living on the mainland are subject to its regulations.

 

FATCA singles out Americans living out of the country and demands information from them that citizens living on American soil have no requirements to report to the government. FATCA requires Americans abroad to report their assets to the government.

But why doesn’t it require such reporting of local Americans?

Americans living in the U.S. aren’t required to report their assets for tax purposes… only their income. After all, income tax is levied on income and capital gains. Why the disparity and forced accounting of assets of some Americans solely on basis of their address? Why is Uncle Sam able to snoop in your living room inParisorMadrid, but not LA or NYC?

Innocent until proven guilty

America’s legal system works on the presumption of innocence… unless you happen to live abroad. FATCA assumes unless you file its forms (in addition to the FBAR required) you’re a tax evader.

And since theUnited Statesis treating Americans abroad as guilty, so are foreign banks and financial institutions. Many foreign institutions are refusing to open accounts for Americans. Indeed, recently I went to change banks and couldn’t open the account on the spot; I had to wait for special approval.

FATCA also creates the risk of unfair punishment. If innocent people make innocent errors in reporting, the fines for improper reporting are costly. The fines could wipe them out…even if they don’t owe any taxes.

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Douglas Goldstein, CFP, is an investment advisor and author of Rich As A King: How the Wisdom of Chess Can ...

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