Expats may face more rules with U.S. tax changes
Proposed U.S. legislation to restrict the use of so-called tax shelters would invoke the Patriot Act to punish firms that are deemed to be impeding U.S. tax enforcement.
The legislation also would deny uncooperative foreign banks the authority to issue credit cards that would be valid in the United States. The use of the Patriot Act now is reserved for institutions that are active money launderers.
In addition, U.S. citizens who deposit money or receive a benefit from a private foreign corporation would be considered to have control of that firm for U.S. tax purposes. Under current law U.S. citizens who hold a foreign bank account that accumulates more than $10,000 at any time in the year have to file paperwork with the U.S. Internal Revenue Service. The legislation would expand that requirement to all foreign bank accounts located in one of 34 countries identified as a tax haven.
Costa Rica is one of those countries.
The legislation and President Barack Obama's plan to clamp down on offshore corporations is starting to generate opposition in foreign countries as officials there begin to understand the ramifications.
The U.S. Stop Tax Haven Abuse Act bill actually is two separate pieces of legislation. U.S. Sen. Carl Levin, a Michigan Democrat introduced Senate bill 506 March 2. It was sent to the Senate Finance Committee for study. The bill has five cosponsors.