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Two Proposed US Laws That Would Affect Americans Living in Panama

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Editorial: Two proposed US laws that would affect Americans living here

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She would make it easier for Americans here to get banking services.

Two bills in the US Congress that may be of
great importance to Americans living here

Perhaps it’s good news or perhaps it’s bad news that arises amidst the bad news of a US Congress with a largely fanatic majority and a largely anachronistic minority, both of which appear to be mostly ineffective. Probably it’s a mixture of both and probably nothing will change, but US citizens ought to pay attention and perhaps contact the senators and representatives from the states and districts from whence they hail.

The United States is one of very few countries that taxes on the basis of citizenship rather than residency within the country. We could argue back and forth the reason for this and the justice of that scheme, but in any case politicians from both major parties have for years legislated to enforce it against those who would hide money from the Internal Revenue Service in foreign jurisdictions. Or is it about US banks claiming dibs on the accounts of Americans, compelling them to use money laundering centers in states like Nevada instead of in countries like Panama?

One of the enforcement laws is the Foreign Account Tax Compliance Act — FATCA — which in general compels Americans with $10,000 or more in an overseas bank or brokerage account, or invested in a corporation such as the ones in which many upscale Panamanian homes are held, to report this to Uncle Sam. The penalties for failure to comply can be draconian and there are non-disclosure penalties for banks and brokerages with US citizen clients as well. A lot of banks use the FATCA requirements as an excuse to reject all American depositors other than the ultra-rich ones. It’s now hard for a US citizen to get a bank account in many countries, including Panama. Moreover, foreign citizens married to Americans in effect have to reveal their financial affairs to US authorities due to the requirements of FATCA and other US tax laws. These requirements have led thousands of people to renounce US citizenship.

A lot of politicians in Washington have temporized, have been driven by stereotypes or have entirely ignored the issues due to the perception that those who live overseas but vote in their states or districts are too few to affect their own electoral prospects. In the Republican ranks there are those who like any and all tax dodges for the rich and would thus repeal FATCA altogether. On both the Democratic and Republican sides of the aisle there are those relatively few who would switch from citizenship to residency as the basis for income taxation. And then there is the “safe harbor” proposal for which Democrats Abroad has been working for several years. It would make FATCA inapplicable to those who live in the countries where they have accounts. Few of the Americans for whom Panama is a place to hide money actually live here. The US citizens who live here are rarely in Panama for tax reasons.

Thus there is Representative Carolyn Maloney’s exemption from FATCA’s application to accounts in Panama (or any other foreign jurisdiction) held by people who live in Panama (or another country in which they hold accounts). It doesn’t mean that the very rich don’t have to declare their interest and dividend income and doesn’t change the citizenship basis for taxation. It just spares most American citizens living abroad and the banks and brokerages in which they have accounts from a lot of paperwork and some potentially onerous penalties for minor infractions. Maloney is a Democrat from New York with a fair number of foreign-born residents in her district and more than the average number of absentee constituents who cast their ballots for or against her from abroad. She’s one of the few members of Congress who has paid a lot of attention to the six to eight million Americans living outside the USA. Her proposed Overseas Americans Financial Access Act, which follows the 2015 recommendation of the IRS Taxpayer Advocate Service, would make life easier for Americans living in Panama. It’s worth a few calls or emails to Congress to boost this proposal.

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He would tax money transfers from the USA to anyone in Panama.

Then there is Alabama Representative Mike Rogers and his Border Wall Funding Act of 2017, enrolled as HR 1813. This is an act of financial aggression aimed at all Latin American and Caribbean countries, said to be for the purpose of discouraging “illegal aliens” and raising funds to build Donald Trump’s wall along the Mexican border.

The argument is that people come to the United States from Latin America and the Caribbean to work and send money back to families in their countries of origin. In a lot of countries such remittances are an important source of financial sustenance for many families. Thus Rogers, one of those Republicans who likes to raise taxes, would impose a two percent tax on all money transfers from the United States to anywhere in Latin America or the Caribbean.

There is no practical, legal and fair way to limit this tax to just foreign citizens in the USA, to just those foreigners who are in the United States without proper documents, or to just the services like Western Union and MoneyGram. There are laws against discrimination on the basis of national origin — which were never all that popular with Rogers’s white Alabama constituents to begin with. To shut down transfers through the most popular services would move them over to ATMs, PayPal, bitcoin operations or other alternatives. It’s also not practical to restrict the tax to only certain classes of people on the receiving end.

What it all means is a tax on all money transfers, including from Americans in the USA to Americans in Panama. It would be a tax on electronic commerce of all kinds, including the donations of readers in the USA to The Panama News.

The Border Wall Funding Act is both malicious and impractical. It would make life more expensive for US citizens — and the Panamanian relatives of US citizens — living in Panama. It would require a new layer of federal bureaucracy to enforce. It would impede small businesses in both Panama and the United States. It’s a bad idea, bad enough that US citizens living in Panama should make sure to be registered to vote back in the places of last residence in the States and contact the senators and representatives from these places to object to this.

 

http://www.thepanamanews.com/2017/04/editorial-two-bills-before-the-us-congress-that-would-affect-americans-in-panama/

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I would think the Mike Rogers proposal would be unlikely to pass.  But crazier things have happened.  Would this keep us from getting money from our U.S. bank accounts transferred to our Panama bank?  A lot of non-thinking going on there. 

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6 hours ago, Brundageba said:

Probably tack a fee.....just a thought

There is already a foreign transaction fee when you take money from a U.S. bank from the Global Bank ATM.

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2 hours ago, JudyS said:

There is already a foreign transaction fee when you take money from a U.S. bank from the Global Bank ATM.

 

10 hours ago, Moderator_02 said:

a two percent tax on all money transfers from the United States to anywhere in Latin America or the Caribbean.

Fees and taxes would be two different things with two different beneficiaries?

Edited by Keith Woolford

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Ugh.  And things stateside just keep getting more interesting..and by that, I mean just plain uglier!   Our plan is to access our money via a Fidelity ATM card as needed and not 'transfer' funds in large chunks.  I wonder if that would be subject to a fee. Currently,  Fidelity refunds any fees from foreign ATMs when obtaining cash, which is why we opened that account.   

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4 hours ago, Panawanna said:

Ugh.  And things stateside just keep getting more interesting..and by that, I mean just plain uglier!   Our plan is to access our money via a Fidelity ATM card as needed and not 'transfer' funds in large chunks.  I wonder if that would be subject to a fee. Currently,  Fidelity refunds any fees from foreign ATMs when obtaining cash, which is why we opened that account.   

Ask Fidelity, but most wire transfers usually carry a fee of at least $50.

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Yes, you are likely right.  I was referring to the ATM card.  If we withdraw cash from any ATM, Fidelity reimburses for any ATM fees.  If we do a wire transfer, I'm sure there is a cost involved.

We plan on a Friendly Nations visa so will have money in a local bank regardless.  I hear Global is one of the better ones?

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I'm pretty sure that Fidelity charges a 1% foreign transaction fee on ATM withdrawals, while re-imbursing any other fees.

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Also, I think Fidelity's charge for an international wire transfer is $10 - $15. The receiving banking institution in Panama will likely charge you a similar additional amount.

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Gordon, you are correct.  1% stands but all other fees are covered.    What is the recommendation for drawing money from the U.S. as necessary?  If we open a Panama bank account then wouldn't we have to pay transfer fees to get our money deposited?  And then the FATCA headache..  Guidance is appreciated.

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I suggest opening an account here and writing checks sporadically for deposit in that account, allowing for the three weeks it will take to clear in most instances. Since your ATM fees are reimbursed, you may want to get most of your spending money that way. I've found that I really don't need a bank account, but I keep it and some money in it in case of emergency. I keep my bank account balance under $10,000 to avoid having to file under FATCA. I don't have a checking account anymore since so many people reported that they had checks bounce because the bank didn't recognize their signature. I only have savings. Just my experience.

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We have a Charles Schwab Visa Debit card. They reimburse us for world wide ATM and Foreign transaction charges. We have a savings and checking account with Banco General and use their bill pay for paying local bills such as Cable Onda, Cable & Wireless, and Fenosa.There is no charge for this. We do pay ten cents per check transaction. We avoid wire fees and US check bank deposit due to the local bank charges. We have written over 30 checks and none have ever bounced. 

We simply use our Charles Schwab card and replenish our Banco General accounts as needed.

The service with both Charles Schwab and Banco General are first class.

Edited by TwoSailors

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Don't you love being charged to covert U.S. dollars to U.S. dollars?  I cancelled any credit card that charges the fee.  One rep told me it costs just as much to multiply by 1 as to multiply by 3.457 , but the companies don't have to check daily for new exchange rates. I know this isn't a transaction fee, but your comment reminded me of that foolishness, too.

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My Citibank United Mileage Visa does not charge a foreign exchange fee for charges made in Panama.  It did do that when I was in Africa, a fee to convert rands to dollars.  But it doesn't charge a fee when dollars are used (as in Panama).

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5 hours ago, TwoSailors said:

We have a Charles Schwab Visa Debit card. They reimburse us for world wide ATM and Foreign transaction charges. We have a savings and checking account with Banco General and use their bill pay for paying local bills such as Cable Onda, Cable & Wireless, and Fenosa.There is no charge for this. We do pay ten cents per check transaction. We avoid wire fees and US check bank deposit due to the local bank charges. We have written over 30 checks and none have ever bounced. 

We simply use our Charles Schwab card and replenish our Banco General accounts as needed.

The service with both Charles Schwab and Banco General are first class.

I don't understand what you mean about avoiding "US check bank deposit due to the local bank charges." Can you please clarify?

Edited by Bonnie

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1 hour ago, Bonnie said:

I don't understand what you mean about avoiding "US check bank deposit due to the local bank charges." Can you please clarify?

Banco General charges a fee for deposit of a US Bank check as well as wire fee charges.

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That's what I thought. Global does NOT charge a fee for deposit of US bank checks. They DO charge for wires, but I can't remember how much. I haven't wired any money for about nine years.

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23 hours ago, Bonnie said:

I suggest opening an account here and writing checks sporadically for deposit in that account, allowing for the three weeks it will take to clear in most instances. Since your ATM fees are reimbursed, you may want to get most of your spending money that way. I've found that I really don't need a bank account, but I keep it and some money in it in case of emergency. I keep my bank account balance under $10,000 to avoid having to file under FATCA. I don't have a checking account anymore since so many people reported that they had checks bounce because the bank didn't recognize their signature. I only have savings. Just my experience.

Bonnie

With a saving account you could ask your ATM CLAVE CARD to be used on the banks ATM without any Fee.  Also most supermarkets and stores accept your ATM CLAVE Card for payments.  You can draw money from other banks ATM but you will be charged a minimum fee. 

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9 hours ago, TwoSailors said:

We have a Charles Schwab Visa Debit card. They reimburse us for world wide ATM and Foreign transaction charges. We have a savings and checking account with Banco General and use their bill pay for paying local bills such as Cable Onda, Cable & Wireless, and Fenosa.There is no charge for this. We do pay ten cents per check transaction. We avoid wire fees and US check bank deposit due to the local bank charges. We have written over 30 checks and none have ever bounced. 

We simply use our Charles Schwab card and replenish our Banco General accounts as needed.

The service with both Charles Schwab and Banco General are first class.

I have a checking account with the BB&T bank at US and have also a Visa Debit Card with the.   They charged me if I use any ATM in Panama or any other country about $5 each transaction.  They also charged me a Foreign Transaction Charges for any transaction paying with the Visa Debit card in Panama or any other country.  If I deposit a check in any bank in Panama they will also charged me with a Foreign Transaction Charge.  

I did have this account open because the US companies I represent sent me my commissions to that account faster and easier but next time I travel to Florida I will see if I can change to another bank.

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1 hour ago, Bonnie said:

That's what I thought. Global does NOT charge a fee for deposit of US bank checks. They DO charge for wires, but I can't remember how much. I haven't wired any money for about nine years.

I just got charged $10.70 as a fee for depositing a US bank check at Global Bank.

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1 hour ago, Bonnie said:

 They DO charge for wires, but I can't remember how much. I haven't wired any money for about nine years.

Global Bank this year.

Incoming:   $65.00 plus 7% ITBMS

Outgoing:   $42.50 plus 7% ITBMS

Those figures are based on transactions under $10,000, and I'm not sure if the amount has any bearing on charges or not.

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1 hour ago, Roger B said:

Bonnie

With a saving account you could ask your ATM CLAVE CARD to be used on the banks ATM without any Fee.  Also most supermarkets and stores accept your ATM CLAVE Card for payments.  You can draw money from other banks ATM but you will be charged a minimum fee. 

I have a savings account at Global, but I don't use it for living expenses. It's too much trouble to repeatedly have to replenish it and then wait three weeks. The other alternative is to keep a lot of money there, but then I become obliged to file under FATCA. I have no fee associated with my ATM card from my bank account in the states, so that's the best alternative for me. The money in Global primarily is for emergencies, like the Clave machines being down when I'm in need of cash.

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1 hour ago, JudyS said:

I just got charged $10.70 as a fee for depositing a US bank check at Global Bank.

I've never been charged for depositing a US check in my savings account.

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