THE TRANSATLANTIC MAGAZINE
THE TRANSATLANTIC MAGAZINE
The latest edition of the National Taxpayer Advocate's Purple Book has been published, and this year it reiterates a recommendation that the IRS should harmonize reporting requirements for FBAR and FATCA in order to make life simpler for overseas Americans.
This year's Purple Book is the fourth edition of the annual report, which is submitted by the National Taxpayer Advocate (NTA)to the IRS with feedback and legislative recommendations designed to improve procedures for US Taxpayers, both at home and abroad.
The 9th recommendation in this iteration of the report is a familiar one, recommending that the IRS "Harmonize Reporting Requirements for Taxpayers Subject to Both the Report of Foreign Bank and Financial Accounts and the Foreign Account Tax Compliance Act by Eliminating Duplication and Excluding Accounts a US Person Maintains in the Country Where He or She Is a Bona Fide Resident".
This recommendation has appeared in all four Purple Books since its inaugural edition in 2017. It highlights a problem which the current NTA, Erin M. Collins, explains creates "increased compliance burdens and costs" for many "US taxpayers, particularly those living abroad".
In the report, Collins writes that "If adopted, these recommendations would reduce the compliance burdens for US taxpayers, who now must file additional complex forms themselves or pay higher tax return preparation fees". Collins also suggests that changes could "reduce the compliance burdens for FFIs, some of which are reluctant to do business with U.S. expatriates because of the significant costs and regulatory risks associated with ongoing FATCA compliance. This reluctance makes it difficult for U.S. citizens to open bank accounts in certain countries".
As many US citizens abroad will know, existing FATCA regulations, which require FFIs (Foreign Financial Institutions) to report data on clients with US Connections, have led to many institutions refusing to accept Americans as clients, and in cases closing the accounts of existing US citizen customers.
The report also highlights many of the problems faced by Americans with regards to Economic Impact Payments (EIP), which were issued as part of a stimulus package in light of the coronavirus pandemic. The report explains that refund delays, EIP underpayments, late notices and a lack of information were some of the issues faced by millions of Americans in 2020 as the IRS was severely stretched by the pandemic.
To read the full Report, go to www.taxpayeradvocate.irs.gov/reports/2020-annual-report-to-congress
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