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.
Form 8938 will be of more serious concern as the number of expatriate Americans continues to grow. These Americans have been forced to think outside the box and go beyond their borders to make a living. Increasingly, they are ordinary people who may have been laid off. They include fresh college graduates who have struggled to find stable jobs that are a match for their intelligence and hunger to work.
The US should be proud that its citizens are surviving and thriving outside its borders. According to the regional and state employment rates released by the US Bureau of Labour Statistics this month, the US national jobless rate is little changed from February at 8.2per cent and a mere 0.7 percentage points lower than in March last year.
The number of long-term unemployed (those jobless for 27 weeks and over) stayed stagnant at 5.3 million in March, and they accounted for 42per cent of the unemployed.
Uncle Sam should consider giving Americans working and living abroad a break - a tax break, that is. And Form 8938 should be scrapped; its very existence is an insult to Americans working abroad.
Rather than focusing on crackdowns on tax evasion and creating more forms, the US should focus its energies on sharpening its competiveness so that it can keep jobs within its borders for its citizens.
Amy Wu is an American-born Chinese writer and commentator now living in Hong KongTopics: Finance Finance United States Federal Insurance Contributions Act Tax Tax Avoidance and Tax Evasion Taxation in the United States