Last Thursday, Bob Bauman, International Living’s legal counsel, wrote a sobering article about what could well be the end of global banking privacy as we know it. (See Foreign banks to become IRS spies using Qualified Intermediary program?)

As Bob explains, Americans–both at home and abroad–are being blocked from holding bank or investment accounts in Swiss banks. (And the movement could spread to other countries.)

In Switzerland, tens of thousands of Americans’ offshore accounts have been shut down and new-account requests denied. Banks don’t want to jump through the compliance and reporting hoops the IRS now demands for accounts held by Americans.

Those of us living overseas (and, so, with foreign bank accounts and other foreign holdings) have seen this coming for some time. Last year, as Swiss bank UBS wrangled with the IRS over the disclosure of U.S. account holders, Suzan and I were notified that our bank in Denmark, Jyske Bank, was forming a new unit. This unit was created specifically to hold the accounts of U.S. clients and to comply with U.S. Securities and Exchange Commission rules on investment advice and practices.

This was clearly a move by Jyske to get ahead of the situation and avoid the kind of legal arm-twisting that Bob wrote about last week.

Suzan and I have relied on the advice of several qualified U.S. tax accountants over the past few years to make sure we’re in compliance with all currently applicable laws concerning foreign holdings, including bank accounts, trusts, and real estate.

But as Bob so clearly explains in his article, it’s getting harder and harder to stay compliant… the rules are changing all the time.

What does it mean if you’re living in, say, Ecuador and have a local bank account from which you draw funds to pay for items like your electric bill or groceries? For now, it seems to be business-as-usual.

But as the bologna gets sliced thinner and thinner, who is to say where it will stop? In their attempt to ferret out "tax cheats" and to collect revenue, how far will the IRS muscle its way into the private affairs of U.S. citizens?

Will Suzan and I someday discover that the IRS is interested in knowing exactly what items we buy here in Merida or anywhere else in the world using our U.S. credit cards? Will they suddenly require an accounting of precisely how and where we spend the money we get from foreign ATMs?

Along with Bob Bauman, we’re watching and listening very carefully. Over the next few months, we’ll bring you the straight scoop–and the solutions.

Stay happy and healthy,

Dan Prescher
Publisher, International Living

P.S. When you decide to live or invest overseas, you’ll find there are a fair number of "housekeeping" issues to contend with–everything from how you’ll bank to where you’ll shop for groceries or how you’ll arrange for health Insurance. Nothing you couldn’t figure out for yourself, eventually. But why do it the hard way? At our Live & Invest Overseas Conference in Las Vegas, Oct. 1-2, 2009, we’ll talk about all of those "necessities" and share our own hard-won advice. We’ll show you the best, most efficient, most cost-effective ways to get from where you are now to living your dream life overseas. This program is designed to cut years off your learning curve. And you can save $200 (or more) when you reserve your place now.