An organization that lobbies on behalf of U.S. expats has teamed up with the State Department Federal Credit Union to offer banking services to get around onerous FACTA requirements.
The Foreign Account Tax Compliance Act has made U.S. expats toxic to banks in Mexico and other foreign countries. Introduced in 2010 as a reaction to Swiss tax evasion scandals, FACTA used the threat of imposing withholding taxes to force foreign banks to pass on information about the bank accounts of U.S. citizens.
Since FATCA began compelling foreign banks to report their U.S. account holders, many have suddenly cut themselves off from U.S.-born expats.
In response, American Citizens Abroad, which is a member organization, announced its partnership with the SDFCU in unveiling the ACA/SDFCU Account in place of an overseas bank account.
SDFCU accounts have traditionally been only for American diplomatic staff working abroad. The newly conceived ACA/SDFCU Account is available to all U.S. citizens living abroad. SDFCU has over 67,000 members around the world.
Account holders receive a chip-enabled debit card, a credit card, a checking account, a savings account, loans, and use online and mobile banking — just like a typical bank account. And since it’s a U.S. account, FACTA rules don’t apply.
Funds are insured by the National Credit Union Insurance Fund, similarly to the way bank deposits are insured by the Federal Deposit Insurance Corporation. This Fund is backed by the U.S. government. SDFCU is a federally chartered credit union and therefore regulated and supervised by the National Credit Union Administration, an independent federal agency.
To get an account, gather a photo ID (ideally your passport), proof of address, a signed Form W-9 showing that you are a US taxpayer, a credit card or bank account and routing number to fund your new account initially — and then sign up as an ACA member. Dues are $70 a year, or $55 if you’re over 65 years old, or pay a one-off $600 lifetime membership fee.
Then go to the SDFCU website and click on “overseas applicant” in the bottom left.
The plan wins a big thumbs up from overseas tax preparer Bright!Tax, calling it a “potentially a great solution for U.S. expats struggling with foreign banks as a result of FATCA.”
