International Tax Law: Tax Help for “Accidental Americans” | Tax Law TipsInternational Tax Law: Tax Help for “Accidental Americans” | Tax Law Tips

International Tax Law: Tax Help for “Accidental Americans”

Picture to accompany article about accidental americans tax mattersSeveral weeks ago, we discussed the IRS’ amnesty program for a slim sector of ex-pats and so-called “accidental Americans.” Now, EU representatives sent Treasury Secretary Steve Mnuchin a letter urging the United States to make further accommodations for people stuck in cross-border tax limbo.

What are “Accidental Americans”?

Analysts estimate that about 500,000 “accidental Americans” live in the United Kingdom and European Union. What’s an “accidental American”? It’s a person who was either:

  • Born in the United States and moved out of the country as a baby or child; or
  • Someone who was born outside of the United States to U.S. citizens who registered them but never ended up living in the United States.

Many “accidental Americans” don’t know they’re U.S. citizens tethered to stateside tax obligations.

EU Authorities Confront IRS Over Ex-Pat Taxes

The United States and Eritrea (a small northeast African nation) are the only two countries in the world that tax non-resident citizens on worldwide income. “Accidental Americans,” who are often unaware of their U.S. tax responsibilities, get caught in the crossfire.

Things may grow even more precarious for these ex-pats when the FATCA protocol initiates on January 1, 2020. Rumors are swirling that banks will freeze the bank accounts of people they suspect of being U.S. citizens that haven’t provided tax ID data.

[Aside Box] What is FATCA? The Foreign Account Tax Compliance Act requires foreign banks with stateside branches to hand over information about U.S. taxpayers. The penalty for non-compliance is business-crushing fines and potential diplomatic hurdles. Consequently, banks are going out of their way to get Uncle Sam what he wants when he wants it. [End Aside Box]

Additionally, EU officials encouraged the US to ditch its $2,350 expatriation fine, simplify filing requirements, and reduce the number of back-tax years that ex-pats must pay before they can denounce their U.S. citizenship. (It’s currently six.)

US Easing Restrictions Slightly

The IRS did announce amnesty measures for a very narrow group of “accidental Americans,” which you can read about here.

Since then, the nation’s revenue department has vowed to consider each case individually and not automatically fine banks for failing to deliver the desired data. After all, there’s only so much banks can do if people aren’t aware of their U.S. citizenry status. Regardless, some EU authorities remain leery because nothing binds the U.S. to its promise. Plus, it gives the IRS all the power to decide if a bank breached the rules.

Tax Help for “Accidental Americans”

The Gordon Law Group regularly works with ex-pats who didn’t realize they have U.S. tax obligations. We have the experience and relationships you need to clean up any cross-border tax messes.

Whether you’re caught in a FATCA web or something similar, get in touch. We’ll confidentially chat about your situation and advise. If we’re not the best fit for your case, we’ll point you in the direction of what is.

Solve your international tax compliance hiccups and hold on to your money. We know how.

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