The U.S. government – under a new law incorporated in the Hiring Incentives to Restore Employment Act signed by President Barack Obama on 18 March 2010 – is demanding that international financial institutions reveal which of their clients are U.S. citizens with accounts of more than $50,000. Foreign banks are, in effect, being asked to act as the international enforcement arms of the Internal Revenue Service. Those banks that don’t comply will be subject to a 30% withholding tax on all payments made to them in the U.S. Many banks and wealth managers have decided it is far easier to politely show their U.S. clients the door.

Earlier this month, the law firm Withers conducted a survey of bankers, accountants, independent financial advisers, trust companies and other private client advisors to analyze the impact of the HIRE Act. Over half said they have seen instances where Americans were denied investment and banking services in the last two years. And 95% expect this to increase as a result of the HIRE Act.

David Treitel, a tax director, at U.S. Tax & Financial Services, said that at least 20% of the American customers serviced by his company’s London and Swiss offices have had their bank accounts closed over the past year.

The Hire Act is only the latest in a raft of different laws aimed at American expats, American residents with off-shore accounts and the institutions that service both groups. Jay Krause, a partner at the law firm Withers, says: “The difficulties that American expats face predates the HIRE Act. But the new law will take it to a whole new level. I think that it is the most remarkable piece of tax legislation ever enacted.”

The U.S. government already taxes expatriate citizens on their worldwide income regardless of where it is earned or where they live, making them the only people in the developed world who are taxed in both their country of citizenship and country of residence. Many expats complain that these rules are getting tougher and the penalties more draconian by the year.

continue reading at the WSJ

However, I still get most of my walking around money by hitting the ATM and withdrawing funds from a US account.  Banco Industrial has a branch with ATMs just south of the park (as well as ATMs adjacent to Cafe Barrista on the northwest corner of the park), but I discovered that the BAC branch at the park (west side, 5th Ave, north of Cafe Condesa), allows withdrawals of up to 2500Q.  When you hit the ATM as often as I do, the extra 500Q comes in handy.

Clean, secure, convenient and 3 ATMs (working most of the time, better than most here)

To put it in perspective, 100Q will buy three or four bottles of wine, or six Honduran cigars, a JesseJackson (dark, sweet and jealous), at JP’s RumBar or a California Roll, Miso Soup and glass of sake at Nokiate.  I guess it should also be said that 100Q will buy 4 pounds of lomito at the mercado or 80 of the largest diapers at the bodegona.

A friend of mine was asking how I had used so many checks in such a short period of time, so I thought I would look through my register.  I was only mildly surprised that I had recorded in my register only about half of the checks.  The reason?  All the rest were voided.  You see, here in Guate if there is the slightest mistake in the check, the bank won’t cash it.  So when I write ‘July’ instead of ‘Julio’, and change the ‘y’ to a ‘i’ and add an ‘o’, they reject it.  Or if I write ‘La $%!@#&! Empresa Electrica’ instead of ‘La Empresa Electrica’, they won’t take it.   I tried that once.

So while I was at the bank ordering new checks and begging Maria Carmen Valenzuela Hernandez Nunoz to set me up with online banking, I asked if I could pay my electric bill at the same time.  She batted her eyes and said, “Si”.  Turns out I made a mistake on the check, and of course I didn’t have any left, which resulted in a 45 minute process whereby Maria had to figure out how to pay the electric bill (in their own system), without a check from me.  We eventually got it done.

I’ve yet to receive my new checks.

Update: A friend reminds me that the bank won’t mail anything, I have to go back to pick them up.  Isn’t it odd that in the US, most banks won’t give you anything, they insist on mailing it to a confirmed residential address, and here you can’t get anyone to mail anything, you always have to pick it up in person.

Rarely a day goes by now that I’m not hit up for money.  Everyone needs it, and I’m not talking about that circle of expats who support each other whenever the inevitable banking snafus impact cash-flow.  I’m talking about the near-constant stream of people on the phone and at the door asking for money.

In the states, I had different comfort levels with loaning money, close friends or family always qualified for an instant, no questions-asked $100 or $200.  More than that, and we have to have a sit-down.  Rarely is the money paid back, but if you loan what you can afford to give, then you’re okay.

Well, I’m starting to feel overwhelmed here.  The most recent example came when Maid #4 approached me at the beginning of her shift and began a long story about her roof.  I didn’t understand everything, but she obviously needed money to repair it.  I was on the way out the door and told her I’d talk to her later.  As it turns out, my appointment was with a friend of mine who is a local and bilingual, so I asked him to call and chat with her.  I hate doing that, but when precision is important, I’ve found it’s best to get a local who is bilingual over an expat who is ‘fluent’. I know my Spanish comprehension on the phone is only a fraction of what it is in person, so no offense intended to my local expat readers.

This friend, I’ll call him Mateo, he picks up the phone and starts chatting away.  15 minutes later, he hangs up the phone and says, “She wants to borrow money; something about her roof”.  Great.  “Yeah, but what else did she say”, I ask.  He goes on to explain that she needs to replace her roof, her other employer (el Patron), hasn’t paid her in a long time, and if I’ll loan her the money, she’ll take a reduced paycheck for a few pay periods.

You know what comes next…”Quanto Quetzales?”.  Mateo responds, “She wants to borrow 300Q, and she’ll pay you back over the next three pay periods”, (six weeks).  It seems reasonable, so the next day at dinner I provide her normal paycheck (400Q), and give her an additional 300Q.  She seems confused, and over the course of a mind-numbing  10 minute conversation, (my experience is GuateWomen like to talk, and she’s going slow for me), I realize she is asking for 3000Q, not 300Q.  The Wife, overhearing all of this, is staring at me with wide-open eyes, while I’m remembering that scene from National Lampoon’s Vacation (7:50 into the clip), where Clark Griswald offers the brother in-law (Eddie), a loan and starts pulling $20s out of the wallet while asking, “How much do you need?”.  Eddie replies that he needs $52,000 and Clark starts putting the $20s back into his wallet.

Reflect for a moment how in my prudence I asked a Guatemalteco friend of mine to talk with Maid #4, and how he must have heard every detail of her building plans over the course of their extended conversation.  How could 300Q be confused for 3,000Q? To put it in perspective, 300Q represents 10 days’ pay for the maid, where 3,000Q is, well, for you Obama disciples, that’s more than three months’ pay, and of course she’s hoping to pay it back at a rate of 100Q a pay period, so we’re talking 30 pay periods…more than a year.

Keep in mind that to date the longest a Maid has been with me is Maid #3 and that’s 120 days.  And that is the one who after 60 days cut her hours by 40% but wanted the same pay.  (You won’t believe what she asked me recently, but you’ll have to wait for that story.)

I like Maid #4, she’s the one who took the initiative to show up at the house and start working.  We still haven’t figured out how that all came to be, no one has taken responsibility credit for that maneuver.  She works hard, most of the time, and she’s an experienced grandmother who doesn’t shrink from a screaming two year-old who’s ripped off his dirty diaper and is swinging it around the room.  But 3000Q ($375)?!

She explained that she was sorry to ask, but that her bank (BanRural), charges her 20% per month on loans.  For the amount in question, the interest alone would eat up 80% of her monthly compensation from me.  A little rich for a new roof, eh?  If she took just six months to pay it back, the roof would cost her 6,600Q.

Of course, my first thought was that I need to go into the banking business in Guatemala.  My second thought was that I am, in effect, already in the banking business, just not-for-profit.  I’m already lending/giving money to virtually everyone who asks.  Unlike the Guatemalteco bankers, I’m paying Gringo prices as well, so I’m contributing more than my fair share to the local economy.

In the end, I left the extra 300Q on the table, which disappeared along with her Gringo-sized dinner.  If nothing else, it cuts down on the total she has to come up with. Am I good for more in two weeks?  I’m undecided.

What would you have done?

When I left the US, I contacted my bank and let them know I would be traveling in Central America indefinitely.  (Don’t screw up and tell them you’re moving permanently, then they’ll flag your account and make life VERY difficult down the road-more on that in a future installment).

The bank noted my call and said no problem.  Hehe.  Little did I know.

I spent months in Mexico and had no problems.  It only took a few weeks for me to have problems in Guatemala.  The Wife had gone to la bodegona and filled up nearly two grocery carts with food.  The bill came to over 2000Q, the check-out process was extraordinary (requiring the help of 3 little boys who hang around at the cash registers, offering assistance), only to find that my credit card didn’t work.

I had managed to avoid this trip, hating shopping more than a visit to the dentist, and so I got her call, tired, frustrated and undoubtedly irritated (with me).  After all, she’s standing there with two full carts, one of our kids, and several local boys, all observing the unfolding drama and her attempts to communicate in two decade-old high school Spanglish.

While on the phone, I logged on to my account and verified there was plenty of money in the account.  What could be the problem?

She had the guy in charge of credit cards (you don’t pay right at the register, you have to go to a special counter to pay by credit card), and asked him to run it again.  He did, and shook his head at her.  Fortunately, she had another card issued by a different bank, and handed it to him.

Incredibly, he looked at the card and asked her for ID.  I hadn’t considered that they would check ID-they never had mine-but I guess because she had a huge bill and had been declined twice, he was worried.  Well, since her name wasn’t on this card (it was a corporate card of mine), he wouldn’t run it.

Doing my best to avoid leaving $250 worth of groceries at the checkout lane, I told the Wife to walk all the way to the other end of the store to the ATM, and see if she could withdraw cash using the 2nd card.  The guy agreed-reluctantly-and she was able to withdraw 2000Q.  (Would you want to put back two grocery carts worth of gringo food?).  This, plus the cash she had on her, paid the bill.

The poor Wife arrived home 30 minutes later, embarrassed, tired, and without enough cash to pay the kind taxi driver who had waited for her throughout the experience.  He didn’t have change for 100Q (!), so I raided the kids’ piggy banks and put together the 50Q he wanted for helping to load groceries and drive her home.  Shortly thereafter (about 30 minutes, to be precise), I had navigated all the menus on my bank’s phone support system and reached a live person.

The very sweet Indian lady on the phone confirmed that my card had been blocked due to suspicious usage.  The suspicion, in fact, was that it was being used in Guatemala.  Yes, it had been used with regularity in Guatemala AND Mexico for months before that, without problem, and YES, I had called to warn them, but for some reason it was blocked.  After verifying who I was by giving every private and personal fact of my life, she released the hold and apologized, in that unique English that only Indians, educated by the British, can speak.

Less than a week later the card was declined again.  I won’t trudge through the embarrassing details of the circumstances this time, let me just say I didn’t have the cash on hand to pay.  A phone call to the bank later in the day revealed that they had blocked my card again, this time for pulling out too much cash in too short a period of time.  Apparently if you use a card as a credit card, it’s one thing, but hitting the ATM daily and pulling out the max can trigger a red flag of sorts. (No doubt somebody in a government agency got a piece of paper with my name on it as well, and with raised eyebrows said, “Oh yeah, that guy…”).

Why bother contacting your client and inquiring about the usage, when you can just shut off the card?  Well, the kind Pakistani man couldn’t answer that, but he did release the block and suggested I “limit” my use of the ATM, but should feel free to use it as a credit card without further problems.  He didn’t say it, but of course the reason is the US government believes anyone who deposits money in one country and withdraws it in another is engaged in money laundering.

Remember how I mentioned that few places accept credit cards, and those who do, don’t always, and consider what I had just been told.  Now I couldn’t use the ATM freely, but have few places where plastic is accepted.  It was becoming clear I needed another solution.  You’ll have to wait for installment 4 to hear about that.

Hitting the ATM on a daily basis became a regular feature for me, and it took me a while to reconcile my bank statement with all the ATM withdrawals.  I realized that in the US almost all of my banking was electronic, either online billpay or debit/credit card usage.  I rarely carried much cash.  Looking at my online statement, I was shocked at how much cash I had withdrawn.

The closer I looked, I began to see problems.  For example, I was seeing withdrawals on days that I had not gone to the ATM.  On other days I was seeing multiple withdrawals.  I knew that on some days I had hit multiple ATMs, owing to their low maximum per-machine withdrawal, but I knew that wasn’t right because to keep under my card’s daily limit, the 2nd withdrawal in a day was always a lesser amount.

What I concluded was that the ATMs were saying I had withdrawn money even when the ATM had not given money.  If you remember from part 1, it’s not uncommon for an ATM to be out of service, although it will rarely say so.  It will just say your card is declined, or funds are unavailable, etc.  (Ironic that neither people nor machines here can ever directly admit responsibility for anything).

In short, on several occasions I had attempted to withdraw 2000Q, the machine rejected me, but told my bank the money had been withdrawn.  If you think that’s not a big problem, contact your bank in the US, tell them you were in Guatemala, tried to withdraw money but didn’t get it, but that your statement shows it was withdrawn anyway.  If you bank with a small, local bank, you might get a lot of help (and alot of questions from small-town bankers who probably don’t know where Guatemala is).  If you bank with a big national bank, be prepared for six months of red tape before they do anything.

Moral of the story:  if you have ANY problems with a ATM in Guatemala, make an immediate note of the date, time and location of the machine, and contact your bank immediately to advise them of the issue.  As with anything, the sooner and more aggressive you are in dealing with a problem, the easier it will be (ultimately) to resolve it in your favor.

Well, sure enough on May 2nd the guard hands me the bill as I pull through the gate, and it shows that I owe a little over 4,000Q for March and April.  I’m a little disappointed to see that despite our efforts at cutting back, we haven’t managed to reduce our consumption much.  I’m posting the bill at the end of this article for those of you who are interested in the cost of living here.

On May 5th a man from the electric company shows up at our house and tells the Wife he’s there to cut the power off because, “You haven’t paid your bill in over 3 months so we must disconnect you”.  In a panic, she calls me, and I tell her that we do owe for 2 months, the bill is on my desk and to go ahead and give him a check.  He refuses, and the Maid informs the Wife that you can’t pay the guy, you can only pay the company.

Wife calls me back again, gives me the update, and I suggest she offer the kind gentleman a beer and 50Q and ask him to come back in a day or two.  Being very proper and from a upstanding WASP family, she hesitates, and before you know it, the lights are off and the guy has disappeared.  Although I’m in Antigua, I don’t have my checkbook or the electric bill, and I know I won’t be able to communicate with the electric company well enough to get my information out of their black hole computer (they don’t accept your word even if you’re fluent, you must bring a copy of your bill), so I go home, get the electric bill and checkbook, hear all about how the power is off from children, and endure the stares of the Wife and Maid.  I consider mentioning that at least the oven is gas-powered (although the hot water heater, refrigerator and microwave are not), but think better of it.

On the way back to Antigua, it occurs to me that I’ve already withdrawn the daily maximum from my local bank account (2000Q), and that I’ve spent a good chunck of that at the mercado and buying kids’ shoes.  To get more money out of my local bank account, I’ll have to stand in line to make a withdrawal.  I brought my checkbook, but now I’m wondering whether or not the electric company will accept my check.

When I arrive at the electric company on the northwest corner of central park, the line is out the door and half a block towards the arch.  I can’t afford to stand in that line only to be told they won’t take my check, so I walk to the bank of ATMs on the west side of the park and pull 4000Q out of two different accounts in the US.  Then it occurs to me that I once saw someone paying their electric bill at my bank (Banco Industrial), so I walk there, hoping the line is shorter.  It is, but only marginally.  I decide it’s worth the try, and after a short 30 minute wait, the teller greets me politely and takes my bill.

I’m thinking it’s been a relatively pain-free experience and that the electricity might be back on by dinner when the teller informs me that she can’t take payment on my account because my electricity has been disconnected.  Apparently I do have to go to the main branch and stand in line.

Five minutes later I’m in line at the electric company, which means I’m getting hassled by the young Mayan girls who work Calle del Arco.  The line is moving pretty fast, and within 15 minutes I’m inside, gratified to see there are five tellers working.  I then discover that there are actually two different lines, one for people paying their bill, the other for some unknown, but apparently simpler process.  That line is served by 3 of the 5 tellers, while the line for the people paying their bill is served by only 2.

Another 30 minutes pass and I’m only 10 people from the front of the line.  I’m beginning to wonder about the likelihood of getting the power back on today, now that it’s pushing 4pm.  Then the power goes off.  It didn’t occur to me just what that might mean until I reflected on the collective groan of the other 50 or so people standing in line; computers are rather picky about requiring electricity.

To my shock, the tellers keep working, and as I slowly round the corner, I see the computers are still on.  Obviously there’s a generator running somewhere, and business is apparently still being transacted (although I must admit to wondering whether they’re always willing to take customer cash, whether they can immediately credit the account or not).  About this time I get a text message from the Wife saying the Maid claims you must go to la capital to pay once they’ve disconnected you.  I’m beginning to understand what it must be like to be a postal worker.

Eventually it is my turn and I hand over my bill and begin counting out forty 100Q bills.  The teller interupts me and explains that because my electricity is turned off, I must pay a reconnection fee.  In the midst of all this, I hadn’t thought about it, but it makes sense, and I say, “No problema; quanto questa”?  She then explains that I must go to the second floor of the building to pay the reconnect fee, then return to the first floor to pay the rest of the bill.  I’m incredulous but have learned enough to just go along.

A quick visit to the second floor reveals that they have nothing to do with reconnection of accounts, and I must return to the first floor and see a special woman about reconnection.  The guard doesn’t want to let me back in, thinking I’m cutting the line.  I understand his concern because it’s now raining-hard.  Eventually I’m able to cobble together enough Spanish words and he points me to the ’special woman’.

This line has only 10 people in it, and 10 minutes later I’m glad that entire families come to pay their bill together and the lady prints off a receipt showing that I must pay 160Q to reconnect.  I turn around and take a look at the line, wondering whether or not I should even stay to pay, knowing now that I won’t have electricity tonight anyway.  Because of the rain and the few open windows, it’s stifling inside, and due to the rain, now incredibly humid.   Just as I’m about to decide to leave, the pretty senorita who helped me before takes pity on me, and waives me to her.  I hand over forty-two 100Q bills and she proceeds to stamp, stamp, stamp away, pounding the counter in front of her almost in unison with the thunder outside.  I never thought it would sound so wonderful.

As I walk out into the rain, wondering where the closest beer can be acquired and calculating how much time and money I lost during this experience, I’m contemplating what lessons can be learned from this afternoon.  For my beloved readers’ benefit, I’m posting my conclusions here:

1. Pay your bills on-time; don’t count on GuateTime applying to payables;
2. Figure out how to setup online banking so you don’t have to stand in line;
3. If you fail at #1, issue a standing order to your spouse and children to bribe anyone who comes to the house and wants to disconnect vital services;
4. If you fail at #2, send the maid, gardener or taxi driver to stand in line for you.

Check back on this article to see how long it takes for the electricity to come back on; friendly expats say 24-72 hours.

Update:  Power was restored almost exactly 24 hours after it was turned off.

That homemade, low-speed wind turbine sounds better all the time.