With the announcement last week from one of our major local banks, HSBC Private Bank Bermuda that they would no longer support accounts owned by US citizens, Bermuda residents with dual-citizenship with the United States, and green card holders living in Bermuda, the concerns elucidated in many of my earlier columns regarding US tax compliance have come to pass.See recently, The Lonely American: Counting the financial cost of being an American exile living abroad and The Bottom Line Magazine March/April 2011 column Citizen International: financial perspectives in a global environment, “Will FATCA Rule the World? The US steps up Pressure with the Foreign Account Tax Compliance Act".Fortunately, Butterfield Bank Private Bank confirmed this week that they will be taking queries from clients meeting their strict “know your client” compliance rules.It is estimated that more than 4,000 US citizens, Bermuda residents with dual citizenship with the United States and green card holders reside permanently in Bermuda.For other US citizens in other countries there is Little to No Place Left to Turn. There are then, for thousands of ordinary people, living ordinary lives outside the United States little or no alternatives remaining to place an investment, purchase life insurance, accumulate a pension, or even deposit funds and pay every day expenses. International financial planning for these individuals is now an oxymoron. How can you plan when you cannot invest anything for the future, but may have to live literally on cash under the mattress? Regrettably, these lonely US citizens are finding out what it truly means to be called ‘the ugly Americans'. The effect on loyal American individuals and their families, many of whom have lived abroad most of their lives, is absolutely disastrous.US citizens abroad who have unintentionally been noncompliant with the circuitous requirements of the US Treasury/IRS FBAR (Report of Foreign Banks and Financial Accounts), are facing additional tax reporting, filing and possible financial hurdles (more on FBARs in another commentary). It is critically important for any Americans (US citizens, Bermuda residents with dual citizenship with the United States and green card holders) in Bermuda (or elsewhere) who feel that they may fall into these categories to understand these issues related to foreign accounts, foreign investments, foreign pensions, foreign trusts (whether trustees, protectors, grantors, guarantors, or beneficiaries), foreign companies (directors, shareholders, officers), and foreign estates to consult with an internationally experienced qualified United States tax planning professional to fully understand their US tax compliance exposure.The American Citizens Abroad (ACA) is actively lobbying to repeal the FATCA Act. They are appealing to every American (as described in categories above) to also lobby their congressmen by writing letters to inform them of the personal effect of this Act on their lives.Disclosure: Martha Myron is a member of the ACA Tax Advisory Council and ACA Country Contact for Bermuda.American Citizens Abroad (ACA), an organisation of US citizens living overseas, has released a new report showing how the Foreign Account Tax Compliance Act (FATCA) jeopardises trillions of dollars of investment in the United States, and makes it difficult if not impossible for American companies and financial institutions to be successful in a competitive global environment.FATCA legislation, which was buried in the HIRE Act passed by Congress in 2010, becomes effective in January 2013, only 18 months from now. But because its implications are so far-reaching and complex, the US Treasury Department has not yet issued regulations on how to implement it, leaving banks, insurance companies, pension funds and mutual funds around the world in limbo as to how to put into place the onerous provisions of the new law.“The goal of FATCA was to identify US citizens with undeclared assets hidden in overseas bank accounts,” said Jackie Bugnion, ACA director. “Although ACA applauds this goal, the way this new law is structured is totally disproportionate and unworkable - the equivalent of using a bulldozer to destroy an ant hill.”The full report entitled, “Why FATCA is Bad for America and Why It Should be Repealed Now!” may be viewed by clicking:www.aca.ch/fatcapp.pdfACA is working with a coalition of partners to oppose FATCA including the National Taxpayers Union (NTU), various American Chambers of Commerce and banking trade associations.“If truth in advertising laws had to apply to Congress's handiwork, the term ‘FATCA' would stand for Full of Adverse Tax Consequences for Americans,” said Pete Sepp, executive vice-president of NTU. “Ironically, as a bigger chorus of policymakers calls for a ‘repatriation window' to bring overseas financial assets back to the US, FATCA would have the effect of chasing those assets away from our shores. NTU is proud to stand with American Citizens Abroad and a growing number of allies to repeal FATCA and restructure our flawed tax system.”Under FATCA, any institution in the world that holds US securities must declare all US account-holders directly to the IRS, or face a punitive 30 percent penalty on any transaction in those US securities. FATCA creates an administrative nightmare for banks overseas, and a double reporting burden on both American businessmen operating abroad and overseas American residents who must have foreign bank accounts to function.The law has already had highly negative consequences for the US and its citizens overseas, even before it has gone into effect. Some banks overseas have closed the accounts of US citizens, and have sold off all US holdings, rather than comply with the heavy administrative burden of FATCA. ACA points out in the report that total foreign investment in the US currently exceeds $21 trillion.The sale of even part of these holdings would have a devastating effect on US markets, and consequently on jobs in the US, on US exports, and on the US economy overall.Because most Members of Congress are unaware of the unintended consequences of FATCA, ACA is urging individuals to write to their Congressional representative asking that they repeal this flawed legislation. Information on how all Americans at home and abroad can send their letters to Congress- along with a sample letter- may be viewed on the ACA website atwww.americansabroad.orgACA also responded to a Statement Senator Carl Levin's “Stop Tax Haven Abuse Act” unveiled on July 12, 2011“Senator Levin's 61-page Stop Tax Haven Abuse Act is well intentioned in its objectives but economically crippling in practice. We are already seeing the ripple effects of the Senator's Foreign Account Tax Compliance Act (FATCA) which is causing ordinary Americans to lose their bank accounts and exposing them to financial ruin.hile ACA supports efforts to track genuine tax evaders, the millions of law-abiding citizens who will be swept up in this dragnet is the equivalent of using a bulldozer to destroy an anthill.The average Americans living and working overseas are exactly the kinds of “honest, hardworking Americans” Senator Levin claims to protect, yet his bill will do the opposite.Among those living overseas are Peace Corp volunteers, employees of multinationals, clergy, housewives, and others, 44 percent of which are making less than $46,000 annually and 69 percent under $81,000.What the Senator's press release does not tell you about FATCA is that these individuals could risk losing their bank accounts or face enormous penalties for errors or omissions on their tax returns - in some cases a sizable portion of their life savings - even if they owe no taxes at all.What's more, according to the US Bureau of Economic Analysis, total foreign investment in the United States currently exceeds $21 trillion.If even a portion of this investment is lost - as Japanese, Australian, and European banking associations have already threatened to do - it will far exceed any sum, and far less than the $100 billion fantasy, that Senator Levin expects to collect as a result of this ill-conceived legislation.The US crippling trade imbalance and ongoing debt crisis should be a wake-up call for government officials to stop hindering America's competitiveness overseas with bills such as FATCA and the Stop Tax Haven Abuse Act and employ fair tax policies that track tax evaders without hurting law abiding citizens and our economy in the process.”American Citizens Abroad (ACA), the voice of more than 5.2 million Americans overseas, is a non-partisan, non-profit association of volunteers based in Geneva, Switzerland, with worldwide membership in over 90 countries. ACA has represented the interests of American citizens residing overseas for more than 30 years on issues ranging from banking and taxation to voting registration.American Citizens Abroad (ACA represents the interests of Americans living and working outside the US to the executive branch of the US Government, the US Congress, and the US Federal Judiciary to ensure that Americans overseas are treated with equality and fairness. ACA keeps Americans overseas informed and supports their role as informal representatives of the US.For more information visit the ACA website at www.americansabroad.org