A woman I know, who is a member of the AWC here, despite having moved up north in Sweden several years ago, emailed me yesterday to tell me about something that had just happened to her asking if anyone else in the club was having the same issue. One of her banks, where she and her (also American) husband have their savings accounts, had written to them telling them that since they were American citizens, the bank was closing their account.
Sweden recently signed the FATCA agreement with the U.S. As of July 1st, 2014, Swedish banks are obligated to report to the U.S. on the holdings of their American customers, something those customers are already obligated to do themselves with the FBAR and other bank reporting forms required by the IRS and U.S. Treasury. Sweden joins a long list of countries that have already caved in and signed the FATCA agreement with the U.S.
For those of you who don’t know, American citizens who have foreign bank accounts must already report the amount of money in ALL said bank accounts if the total amount of money in them is more than $10,000 ALL TOGETHER on any given day in the year. That includes pension plans, retirement savings, IRAs, mutual funds, checking, savings and ANY account your name is on… including all such accounts for your kids, if you are a joint account holder with them.
Because I have joint accounts with both my husband and my children, that means that I am essentially reporting on my husband’s money as well, to a foreign (for him) government. My kids are both American citizens, so despite having never lived in the U.S., they will also be required to complete the U.S. tax filing and bank reporting requirements when they are of age.
Despite never owing anything, I have always complied with the American tax laws and filed my reports every year. When I first learned about the FBAR requirement a couple of years ago, I immediately took steps to get into compliance there as well. Penalties for not complying run in the tens of thousands of dollars. The fact that despite all that, I could still be kicked out of my bank accounts and denied service is extremely distressing, not to mention discrimination. How are expats like me supposed to live and work in Sweden without basic banking services?
The woman that wrote to me has already contacted the Swedish Tax Authorities, who were appalled that the bank had closed her account purely on the excuse that she and her husband are American citizens, DESPITE the fact that they are ALSO Swedish citizens, AND have lived and worked in Sweden for over 30 years. Banks are obligated to do the reporting to the US, but because it is at their own expense, many banks around the world are opting to close and deny customer accounts because they don’t want the hassle.
She is also threatening to go to the media and to contact a lawyer, both steps I applaud. This is the first person in my circle of acquaintances to be affected by FATCA, but I’m willing to bet she won’t be the last. I was also informed by the FAWCO UN Liaison when I emailed her last night about this, that it’s not just non-American banks that are closing accounts. The Association of Americans Resident Overseas (AARO) recently had their U.S.-based Wells Fargo account closed, presumably because the account owners are non-resident. Which means that even if I was forced to move all my banking to a U.S. bank I have no guarantee that they won’t ALSO be closed because I am non-resident.
Isn’t it already unbelievable enough that American expats are subject to citizen-based taxation (WITHOUT REPRESENTATION, I might add), instead of residence-based, meaning that we must potentially pay double taxes if we make “enough” money, but that we must also inform the U.S. government of how much money we have in our bank accounts AND that foreign banks have are essentially being bullied by Uncle Sam into doing the SAME reporting on us? Americans living IN America don’t have to do this. We are not “hiding money in off-shore accounts”. We live and work here. No wonder the amount of Americans officially renouncing their citizenship has skyrocketed.
If I think too much about all this, I feel like my head is going to explode.