April11_2011_Meeting_Email

Terry Ralph M
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Yates Willard W [[email protected]]
Tuesday, April 19, 2011 11:48 AM
Terry Ralph M
Yates Willard W
Meeting with ACA

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NUUU

On April 11, 2011, a meeting was held to provide representatives of the American Citizens (ACA)
Abroad organization an opportunity to express their concerns regarding FBAR reporting under USC
Title 31 and the Foreign Asset Tax Compliance Act (FATCA). Participants in the meeting were as
follows:
Treasury/IRS CC

ACA

Michael Plowgian (OTP)
Jesse Eggert (OTP)
Craig Gilbert (CC:INTL)
Joseph Henderson (CC:INTL:Br1)
Willard Yates (CC:INTL:Br1)

Marylouise Serrato (ACA Executive
Director)
Eric Way (US Tax Liaison – Overseas
Amercans Week)
John Fredenberger (Association of
Americans Resident Overseas)
Jackie Bugnion (Director – ACA)

American Citizens Abroad (ACA) is a non-profit, non-partisan all-volunteer organization that
represents the interests of Americans living and working outside the U.S. to the Executive Branch of
the U.S. Government, the U.S. Congress, and the U.S. Federal Judiciary to ensure that Americans
overseas are treated with equality and fairness. ACA keeps Americans overseas informed and
supports their role as informal representatives of the United States.
Foreign Financial Asset Reporting required by Titles 26 (FATCA) and Title 31 (FBAR)
ACA’s primary concerns focused on taxpayer burden that they assert is caused by FBAR reporting
and will be caused by the new financial asset reporting under FATCA. They discussed the burden of
these filing requirements on Americans living offshore, which had already been reported by them in
public comment letters submitted to FinCEN (re FBAR reporting) and the IRS (re FATCA). For
example, they repeated their concerns that the new Form 8938 will take much more than the one
hour and 5 minutes indicated to properly complete and file. They noted that the values of foreign
financial assets are often not easily obtained, that some financial assets, such as foreign pensions
and life insurance policies, cannot be valued at all, and that by the very nature of FATCA, foreign
financial assets are defined in foreign currencies and, therefore, should be valued as such for
purposes of Form 8938 reporting. ACA also noted that the U.S. tax code generally imposes taxes on
income, not assets, and that the information required to be reported on Form 8938 is not necessary
for the proper functions of the Internal Revenue Service.
FATCA Chapter 4 (section 1471-1474)
Chapter 4 of FATCA expands the information reporting requirements imposed on foreign financial
institutions. The Chapter 4 provisions of FATCA impose a 30 percent withholding tax on U.S. source
payments of fixed, determinable, annual, periodical income. Otherwise available treaty benefits are
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denied with respect to “withholdable payments” made to a foreign financial institution (an “FFI”),
unless the FFI enters into an agreement with the IRS to comply with various information reporting and
withholding requirements with respect to “U.S. accounts.” ACA asserted that these new requirements
will have a chilling effect on foreign investment in the United States. ACA also asserted that many
foreign banks will no longer provide account services to U.S. persons and, in some cases, have
closed existing bank accounts of U.S. persons.
IRS response
ACA’s concerns were duly noted. Messrs. Yates, Henderson and Gilbert advised ACA that in drafting
regulations under section 6038D re foreign financial asset reporting, they were taking into account the
many public comments re filing burden that have been received in response to a draft copy of Form
8938, Statement of Specified Foreign Financial Assets, made available to the public. They also noted
that also they had worked on the FBAR working group that drafted the regulations recently issued by
FinCEN and the FBAR concerns raised by ACA were better addressed to FinCEN or other IRS Chief
Counsel functions.
Foreign Currency Conversion Issues
ACA also raised foreign currency conversion issues to Messrs. Plowgian and Eggert. The IRS
personnel were not involved this discussion.
The meeting ended after approximately one and a half hours.

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