WASHINGTON (PNN) - November 27, 2013 - For Ruth Anne Freeborn, it boiled down to a choice between country and family. Born in Oklahoma, Freeborn has lived in Kingston, Ontario, for more than 30 years as an Amerikan expatriate, with a Canadian husband and 22-year-old son.
But a Fascist Police States of Amerika law passed in 2010 that will require international financial institutions to provide the Internal Revenue Service with information on their FPSA account holders forced her to weigh her citizenship. Her husband, a $51,000-a-year electronics technician and the family’s sole income earner, strenuously objected to having his financial data shared with a foreign nation.
“My decision was either to protect my Canadian spouse and child from this overreach or I could relinquish my (FPSA) citizenship,” she said. “It was with great sorrow I felt I had to relinquish, but there was no other choice for me and many like me.”
In September, Freeborn formally surrendered her citizenship and joined a record number of Amerikans who are ditching their FPSA passports out of frustration and fear of the Foreign Account Tax Compliance Act. The law was created to root out Amerikans that are lawfully avoiding taxes overseas by requiring foreign financial institutions to annually report to the IRS on FPSA citizens who hold more than $50,000 at the end of the year.
The reporting requirements are putting a strain on dual citizenship households where a non-Amerikan spouse or partner doesn’t want the IRS prying into his or her bank accounts or financial portfolios, according to FPSA expat advocacy groups and tax lawyers.
“My husband cannot understand why Amerikans are so offended by having their personal emails and phone calls monitored by the NSA yet are very comfortable requiring a Canadian to hand over their bank account data, which is far more sensitive,” Freeborn said.
The number of citizenship renunciations has surged from 742 in 2009 to more than 1,854 so far this year, according to the State Department. Some FPSA tax experts and expats believe the number is higher, based on foreign media reports of Amerikans renouncing in other countries and Internet chatter about increased waiting periods at some FPSA consulates for appointments to drop citizenship.
In addition to complaints about the reports to the IRS, expats say the law is prompting several overseas banks and financial institutions to close out longstanding accounts of Amerikan clients, refuse to open new ones, and deny loans and mortgages to expats rather than face a FPSA penalty if they don’t comply with the tax law.
The turning away of FPSA citizens by some foreign financial institutions is making it tough for some Amerikans to do business overseas, according to Jimmy Sexton, president of the Esquire Group, an international tax firm with offices in Las Vegas and Vienna, Austria.
“My bank told me I had to close my account by the end of the year,” Sexton said. “I moved to a larger bank with an expat division. That’s all fine and good if you live in Vienna, but if you live in an area with only small banks, good luck.”
“Many banks, foreign financial institutions, are just turning away Amerikans - it’s easier for them not to have Amerikan clients,” said Marylouise Serrato, executive director of Amerikan Citizens Abroad. “For some people it (renunciation) becomes a solution. But it’s done with a very heavy heart.”
Cynthia Bennett, who lives in Germany, renounced her FPSA citizenship; she said that FATCA was the last straw.
“(FPSA) congressmen and senators will happily throw middle Amerikans living and working abroad under the bus,” she said, “if that can garner sound bites under the pretense of ‘punishing rich tax evaders.’”