The National Taxpayer Advocate has recommended that the reporting rules under the Foreign Account Tax Compliance Act and for foreign bank account reports in effect be merged to simplify the duplicative disclosure requirements that make it difficult for American expatriates to have bank accounts in the foreign countries where they live.
The expatriate advocacy group Americans Living Abroad has been pushing for relief from the onerous requirements of FATCA, which was included as part of the HIRE Act of 2010. FATCA requires foreign financial institutions to report on the holdings of U.S. taxpayers to the Internal Revenue Service, or else face stiff penalties of up to 30 percent on their U.S. source income. The older rules for foreign bank account reports, or FBARs, require taxpayers themselves to report on their holdings in overseas bank accounts. Both sets of requirements are aimed at discouraging taxpayers from hiding their assets in secret bank accounts abroad, but have also led many U.S-born expatriates to face difficulties in maintaining bank accounts, even if they haven't lived in the U.S. for years.
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