Q: We keep hearing disturbing things about H.R. 2847, which will take effect July 1. Can you please explain exactly what that means to us? — Jim Dillon, Atlanta
A: The Hiring Incentives to Restore Employment (HIRE) Act (H.R. 2847) was passed in 2010 to help businesses hire unemployed workers. It includes the Foreign Account Tax Compliance Act (FATCA), which will crack down on American citizens residing overseas who might be evading paying U.S. taxes by hiding assets in foreign financial institutions. FATCA will require those institutions to issue reports to the IRS on accounts of more than $50,000 held by U.S. citizens beginning on July 1 or face a 30 percent withholding tax on all its transactions concerning U.S. securities. Opponents of the act include American Citizens Abroad, a non-profit, non-partisan group “whose mission is to defend the rights of Americans living overseas.” The Republican National Committee wrote FATCA “creates a strong incentive for foreign financial institutions to divest (or not invest) in U.S. assets, resulting in capital flight; hurting the United States economy” in its resolution to repeal the act in January. Some financial services companies are using FATCA — through marketing lines like, “It will usher in the true collapse of the U.S. dollar” — to scare consumers into buying their products, according to Snopes.com. Robert W. Wood, a tax attorney and contributor to Forbes.com, wrote: “… FATCA is almost surely here to stay.” At least 48 countries, including Germany, France, Japan, Canada, Brazil, South Africa and South Korea, are FATCA compliant. More information on FATCA can be found on the Department of the Treasury’s website (www.treasury.gov).
Andy Johnston wrote this column. Do you have a question about the news? We’ll try to get the answer. Call 404-222-2002 or email q&a@ajc.com (include name, phone and city).
