Archive for FATCA

Accidental Americans Get Relief! New Announcement From The IRS

Manasa Nadig

Stop the presses, hold the phones, drop everything you are doing! The Internal Revenue Service announced “Relief Procedures for Certain Former Citizens” on September 6th, 2019. If you are an “Accidental American” and planning on renouncing your U.S. Citizenship, you should be reading this.

Let’s dig back a bit and refresh our memories: The United States Constitution provides through the 14th Amendment that “all persons born or naturalized in the United States” are citizens of the USA. A person born abroad to a U.S. citizen parent or parents acquires U.S. citizenship at birth if the parent or parents meet conditions as specified in § 301 and following sections of the U.S. Immigration and Nationality Act.

Those who have acquired U.S. citizenship in such a manner may not be aware of the obligations and consequences of this status. As you my dear readers already know from my blog, that by law, U.S. citizens regardless of where they live have to report and possibly pay tax on their world-wide income to the Internal Revenue Service.

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Written by | Posted in Accidental Americans • FATCA

U.S. Citizenship And Immigration Services To Close All But Seven Of Its Overseas Offices

Helen Burggraf

The U.S. Citizenship and Immigration Services has announced that it plans to close all but seven of its 23 overseas offices, including those in London, Frankfurt, Rome and Bangkok.

This represents a change from its earlier plan, announced in March, that it would close all 23 of the outposts.

In a statement, the USCIS said the “organizational changes” would “allow more effective allocation of USCIS resources to support, in part, backlog reduction efforts.”

It said the offices it plans to keep open would be those in Beijing and Guangzhou, China; Nairobi, Kenya; New Delhi, India; Guatemala City, Guatamala; Mexico City, Mexico; and San Salvador, El Salvador.

“The first planned closures are the field offices in Monterrey, Mexico, and Seoul, South Korea, at the end of September,” the USCIS statement said.

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Written by | Posted in FATCA • Internal Revenue Service

UK MP Vows To Continue Speaking Out On Behalf Of Accidental Americans Living In Britain

Helen Burggraf

Preet Kaur Gill, a British Labour Party member of Parliament from the greater Birmingham area,  has said she plans to continue asking questions of the UK government on behalf of U.S.-born British citizens – like at least one of her constituents, who are facing unprecedented “negative financial implications” as a result of the way such individuals are pursued for tax by the U.S. authorities.

Gill’s vow to continue speaking out on behalf of such dual U.S./British citizens comes as resistance is reported to be growing on the part of European governments to continuing to accommodate the American government’s extra-territorial tax enforcement efforts, which is currently done in part through intergovernmental agreements signed in the wake of the 2010 passage of the Foreign Account Tax Compliance Act.

Under FATCA, non-U.S. financial institutions around the world are required to report to the U.S. on those accounts they hold on behalf of American citizens. They do this by reporting the information to the authorities in the country in which the financial institution in question is located – which in turn, under the terms of the IGA, forwards the information to the U.S. Internal Revenue Service.

As reported here last month, a growing number of the more than 100 countries that have signed up to participate in a new, global automatic banking information exchange program modelled on FATCA, and organized over the last few years by the Brussels-based Organization for Economic Cooperation and Development, have begun to question the fact that the U.S. has opted not to participate – and is understood to be giving as its excuse the fact that it has FATCA, and therefore has no need to.

Such countries are said to be frustrated in particular because the U.S. has failed to “reciprocate” with respect to the information it receives from them through their FATCA agreements with the same kind of information on accounts held by their taxpayers in U.S. financial institutions.

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Written by | Posted in Accidental Americans • FATCA

Foreign Financial Institutions To Report U.S. Taxpayers Bank Information: FATCA Intergovernmental Agreements

U.S. Department Treasury

FATCA was enacted in 2010 by Congress to target non-compliance by U.S. taxpayers using foreign accounts. FATCA requires foreign financial institutions (FFIs) to report to the IRS information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest.

FFIs are encouraged to either directly register with the IRS to comply with the FATCA regulations (and FFI agreement, if applicable) or comply with the FATCA Intergovernmental Agreements (IGA) treated as in effect in their jurisdictions.

For jurisdiction status on intergovernmental agreements and relayed agreements and date jurisdiction agreements are treated as having an IGA in effect read below:

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Written by | Posted in FATCA • Foreign Bank Accounts

The United States Imposes A Separate And Much More Punitive Tax On U.S. Citizens Who Are Residents Of Other Countries

John Richardson - The United States Taxes Citizens Who Reside In Another Country

On February 28, 2019 TaxConnections kindly posted my first post comparing the way that 19th Century Britain and 21st Century America Treated Its Citizens/Subjects. The post received a great deal of interest resulting in more than 120 comments (largely reflecting the frustration of Americans abroad and accidental Americans).

The purpose of that post focused largely on citizenship and the fact that the United States imposes worldwide taxation on U.S. citizens who are tax residents of other countries and do NOT live in the United States. What that post did NOT do was to focus on HOW the Internal Revenue Code applies to U.S. citizens who do NOT live in the United States.

The Bottom Line Is:

The United States is in effect imposing a separate and more punitive tax system on its citizens abroad. Strange but true. The purpose of this post is to explain how that works and to provide specific examples.

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Written by | Posted in FATCA • John Richardson Tax Lawyer • TaxConnections

Expatriates Are Very Upset With The United States IRS: 120+ Comments Educate You Why

John Richardson On Expatriate Taxes

We continue to receive commentary on the article written by TaxConnections Member John Richardson of Citizenship Solutions. His blog post on USA Of The 21st Century Is Like Britain In The 19th Century has hit a nerve with many expatriates around the world. The blog post and the 120+ comments that follow explain what is happening to those who happened to be born here but do not live in the United States. There is more to learn that will leave you at the edge of your seats so stay tuned to this post.

Read this post that has 120+ comments and growing by the day and please forward to expatriates you know to add commentary.

https://www.taxconnections.com/taxblog/the-usa-of-the-21st-century-is-like-britain-in-the-19th-century/#.XH3XiKJKiJB

Please add your commentary below to continue to educate others on the consequences of United States FATCA tax laws on your life.

Written By TaxConnections CEO, Kat Jennings

 

Written by | Posted in Expatriate Taxes • FATCA • Internal Revenue Code

WOW! A Big Reaction To The Article Posted Yesterday Called “USA Of The 21st Century Is Like Britain In The 19th Century”

John Richardson About Americans Citizens Abroad

Yesterday, we posted an article called The USA Of The 21st Century Is Like Britain In The 19th Century written by John Richardson of Citizenship Solutions in Canada. John is an internationally recognized expert on the subject of dual citizenship and accidental Americans. The post created a significant amount of reaction and response which I want to bring to your attention today. It is important to understand the impact of U.S. tax laws and how they are affecting Americans who moved long ago to another country, or may have just been born here but do not reside in the United States.

It is a great article and the commentary continues to highlight the issues faced by many. You can read the article and the comments at this link:

https://www.taxconnections.com/taxblog/the-usa-of-the-21st-century-is-like-britain-in-the-19th-century/#.XHkuBqJKiJA

Your comments are welcome to continue enlightening the world.

Kat Jennings, CEO TaxConnections

 

Written by | Posted in Expatriate Taxes • FATCA

So You Have Received A Bank Letter Asking You About Your Tax Residence For Common Reporting Standards (CRS) Or Foreign Accounting Tax Compliance Act (FATCA) Part 4

John Richardson - Part IV

Part F – A “U.S. citizen” cannot use a “tax treaty tie breaker” to break U.S. “tax residence”. How then does a “U.S. citizen” cease to be a “U.S. tax resident”?

  1. I am a U.S. citizen. I do not live in the United States. I live in Canada. I am a Canadian citizen. How do I stop being subject to the all of the FBAR and other reporting rules, tax rules (including PFIC),  life restrictionsand inability to effectively invest and plan for retirement imposed by the Internal Revenue Code?
  2. Yourelinquish U.S. citizenship. Please note that a “renunciation” is one form of “relinquishment”. In general, the date of relinquishment of U.S. citizenship is more important than the form of relinquishment of U.S. citizenship. A Certificate of Loss of Nationality (“CLN”) may or may not (depending on the date of relinquishment) be necessary to cease to be subject to U.S. taxation.
  3. In simple terms, where do I get information about the process of renouncing U.S. citizenship?
  4. You can start here.
  5. What are the tax consequences of relinquishing or renouncing U.S. citizenship?
  6. The Internal Revenue Code describes the tax consequences of relinquishing/renouncing U.S. citizenship. See Internal Revenue Code S. 877A (the “Exit Tax” rules).

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Written by | Posted in Common Reporting Standard • FATCA

So You Have Received A Bank Letter Asking You About Your Tax Residence For Common Reporting Standards (CRS) Or Foreign Accounting Tax Compliance Act (FATCA) Part 2

Part B – The Combined FATCA/CRS Letter

This letter is particularly worrisome for Canadian residents (whether Canadian citizens or not) who were either born in the United States or are (otherwise) U.S. citizens or U.S. permanent residents (AKA Green Card Holders). Could this mean that they would be required to apply for a U.S. Social Security number?

What follows is a sample of a letter …

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Written by | Posted in Common Reporting Standard • FATCA • TaxConnections

IRS Rules: FATCA Reporting For U.S. Taxpayers

IRS, U.S. Citizens Reporting Foreign Assets, TaxConnections

The Foreign Account Tax Compliance Act (FATCA) is an important development in U.S. efforts to combat tax evasion by U.S. persons holding accounts and other financial assets offshore. The Treasury Department and the IRS continue to develop guidance concerning FATCA. For current and more in-depth information, please visit FATCA.

Under FATCA, certain U.S. taxpayers holding financial assets outside the United States must report those assets to the IRS on Form 8938, Statement of Specified Foreign Financial Assets. There are serious penalties for not reporting these financial assets (as described below). This FATCA requirement is in addition to the long-standing requirement to report foreign financial accounts on FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR) (formerly TD F 90-22.1).

FATCA will also require certain foreign financial institutions to report directly to the IRS information about financial accounts held by U.S. taxpayers or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. The reporting institutions will include not only banks, but also other financial institutions, such as investment entities, brokers, and certain insurance companies. Some non-financial foreign entities will also have to report certain of their U.S. owners.

Therefore, if you set up a new account with a foreign financial institution, it may ask you for information about your citizenship. FATCA provides special (and lessened) reporting requirements about the U.S. account holders of certain financial institutions that do not solicit business outside their country of organization and that mainly service account holders resident within it. In order to qualify for this favorable treatment, however, the local foreign financial institution cannot discriminate by declining to open or maintain accounts for U.S. citizens who reside in the country where it is organized.

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Written by | Posted in FATCA • FBAR • IRS

Supreme Court Decision Further Confirms FATCA Is Here To Stay

One of the key pieces of legislation used by the U.S. government in its effort to combat tax evasion abroad is the Foreign Account Tax Compliance Act (FATCA). To the surprise of many, FATCA remained completely untouched by Trump’s sweeping tax reform passed late last year.

A recent decision by the Supreme Court further evidences that FATCA likely will not be repealed or amended any time soon. Last month, a legal challenge to FATCA was thwarted when the United States Supreme Court refused to review the Sixth Circuit Court’s decision affirming a lower court ruling which dismissed the case brought against FATCA.

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Written by | Posted in FATCA • Supreme Court
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