Foreign banks are telling their U.S. customers to take their business elsewhere as the banks try to avoid complying with a new tax law due to come into force next year, CNNMoney reported.
The U.S. Foreign Account Tax Compliance Act, which requires businesses to report all assets held by Americans, aims to recoup the hundreds of billions of dollars the federal government says it loses each year from tax evasion. But it's also leading global banks big and small to dump U.S. customers rather than wrestle with the complicated law.
"U.S. citizens living abroad are really having a hard time with their banks," said Gerard Laures, a partner in the financial services tax division at KPMG.
Proper compliance - which means reporting everything from basic savings accounts to pension funds, investments and more - could easily cost institutions millions of dollars each year, he said. And penalties are severe; businesses face a 30 percent tax on U.S.-sourced income if they fail to comply.
"Many banks have taken the decision to tell U.S. customers to go away," Laures said.