For me and my fellow Americans, April 15 is the dreaded deadline for the annual rite that comes with citizenship - filing taxes. In the past year, that process has become even more gruelling, thanks to the unveiling of Form 8938, also known as the 'Statement of Special Foreign Financial Assets' under the Foreign Account Tax Compliance Act, which was launched to crack down on offshore tax evasion.
The new form requires US citizens working overseas to share all bank account details, including income earned from the accounts, as part of their tax return. More specifically, anyone who has more than US$200,000 in specified foreign assets must file. Failing to do so comes with a starting fine of US$10,000.
Whether intended or not, the form sends a negative message to Americans working overseas. It feels like a slap on the wrist, an invasion of privacy and, in the end, a forced financial striptease. At the very basic level, it has added a migraine to a headache. The form was so convoluted that this year I took my taxes to an accountant, who rightfully charged extra for the added headache.
The US government appears to be the winner in the crackdown and, on a brighter note, it may create more jobs for bean counters at the Internal Revenue Service.
Proponents of Form 8938 like to repeatedly highlight cases such as that involving the Swiss banking giant UBS, which was fined US$780million in 2009 for helping thousands of Americans evade taxes.
Offshore tax evasion is not to be taken lightly, but the majority of Americans working overseas are middle-class citizens. According to the Association of Americans Resident Overseas, there are more than 6.32million Americans living abroad in 160-plus countries, and that number is growing as the US economy continues to potter along.