original article in French HERE
reposted from Anmerican Expatriates Facebook Group
ACCIDENTAL AMERICAN’: I LIVE HELL. I HAD TO GIVE UP MY DUAL NATIONALITY (I.E. RENOUNCE MY US CITIZENSHIP)
Keith Redmond says:
Thank you Fabien Lehagre or making sure this injustice stays in the press! The homeland US press refused to report on it. I know Caroline and her story is one of millions where the US government is ruining the lives of people outside the US.
English translation below.
Caroline, 37, was born in the U.S. of French parents and lived there for two years. Franco-American, her dual nationality was unfavorable to her when she discovered that she had to pay taxes there. The U.S. is one of the only countries in the world to base the taxpayer’s status on nationality and not on place of residence. Stuck in a legal imbroglio, it tries desperately to regularize its situation.
Caroline says:
I was born in 1979 in Los Angeles. My parents were French, but they were expatriates in the United States for professional reasons.
All my life, I had dual French-American nationality. Even though I only lived for the first two years of my life on the other side of the Atlantic, I always found it amusing to have this double status. I was the only one of my siblings to have this peculiarity.
I remember returning to the United States when I was seven, then in 2008 with my husband. Always with my French passport since I never redone my American identity papers.
A legacy blocked because of “my clue of americanity”
Since July 2014, France and Switzerland have undertaken to disclose the tax data of their US residents. For the moment, this device is not reciprocal. As a lawyer, I had heard about the Fatca (Foreign Account Tax Compliance Act), a law to combat tax evasion, but I never thought I would be directly involved.
I have always paid my taxes in France, and since I have never really lived on American soil, why should I have had to pay taxes in the United States? I was wrong. In reality, the United States is one of the only countries in the world to base the taxpayer’s status on nationality and not on place of residence.
I understood it in September 2014, a few months after the death of my father. The succession had to be settled. I thought there would be no worry, but I received a letter from my father’s bank, BNP-Paribas, to point out that I had a “clue of americanity” because of my place Of birth. So I was concerned about the famous Fatca law.
To unlock the legacy, I had to prove that I was in good standing with the US Treasury (the IRS). In the meantime, the succession would be blocked.
It was the cold shower. After cashing in, I thought I wanted to be in order. If I were to pay, no worry, I would do it to live in peace.
I needed my US tax number. I have never had
I contacted the American Embassy to inquire. I was asked what was my tax number (Individual taxpayer identification number)? I did not have any. What to do ? I had to provide them with a US Social Security number. Same, I never had one. My father never used it because he was an expatriate.
By searching the internet, I learned that to obtain my social security number, it was necessary to have an extract of birth certificate. Immediately, I thought to myself. It’s good, the situation will soon be resolved. In France, it is obtained in a few clicks, but in the United States, it is another pair of sleeves.
To obtain such a certificate, I had to go there because the American embassy in Paris did not issue the required notarized document. No power of attorney was possible. And even if I did, I had no guarantee since I no longer had any American identity papers.
At the foot of the wall, I had to give up my dual nationality
This administrative imbroglio impacted not only me but all the members of my family. It was impossible to mourn the loved one whom we had lost. The situation was totally blocked.
I was also pressed for time: my husband and I had to move to Switzerland in January 2015.
After finding out, I realized that I could never open a bank account in Switzerland – a sine qua non for working in the country – without proving that I was in good standing with the US IRS. It was the snake biting its tail.
I checked with tax lawyers. I was asked 5,000 dollars to take my case. Can not imagine. During all this time, I harassed the US embassy which was unable to give me a solution. One day I came across a woman who said to me:
“If you do not want to do anything about your American nationality, the easiest way would be to give it up.”
At the foot of the wall, that’s what I did. Out of spite, I renounced a right because I saw no other way out.
It cost me the modest sum of 2,350 dollars
The American Embassy sent me a 25-page file to complete, written entirely in English in an indecipherable technical vocabulary for a non-bilingual person. I was asked to tell my story, to explain the reasons why I had to give up my nationality before stating a list of incredible consequences.
Once the form was completed, I got an appointment at the embassy. When I arrived, I was installed in a room with protective glass. I was not allowed to drink, to eat and my laptop was confiscated.
An official entered the three-square-meter room. She spoke with a hallucinatory flow. I did not understand anything. I asked to be assisted, that was refused me. Clearly, she did not care what I could live.
She asked me a few questions. I asked her if my tax situation would be in order after this waiver. She replied that it was not her problem before I exposed all the consequences of my act: it would be much more difficult for my children to study in the United States and not sure that I could ever get A visa if I were to settle there.
She’s gone for an hour so I can think about it. When she came back, I explained to her that my decision was made. I was then asked to go to the cash to pay the processing fees: it cost me the modest sum of 2,350 dollars!
I still have this sword of Damocles above my head
I waited almost three months to get my act of renunciation. The first barrier was crossed, it was necessary from now on that I am working on my regularization with the American tax authorities.
To the extent that I was going to receive an inheritance over 50,000 euros, I risked being taxed by the IRS. No worry to pay, I just wanted to no longer live with this sword of Damocles hanging over my head.
I have contacted them many times, but as I do not have a tax number or a social security number, I have not been able to find a way out of this impasse. No one was able to tell me whether I was going to pay a fee or not. I was even advised to continue “going about my business”, waiting for a providential outcome.
Regarding my father’s inheritance, the situation did not unlock overnight. The bank asked me to complete form W8-BEN, but again, I had to provide a US tax number. My act of renunciation was not enough.
Tired, furious, and accompanied in my steps by the collective “Americans accidental”, I decided to send emails to the governor of the bank of France, various government advisers, the Ministry of Foreign Affairs, etc. I do not know what happened, but one day the BNP called to tell me that the situation was going to be unblocked.
It took two years to glimpse the end of this story. But I’m still not reassured. I know that at any time, the IRS can fall back on me and ask me to pay taxes with retroactive penalties. The sword of Damocles is still there.
The feeling of being rejected on all sides
What is rather comical is that it is not the first time that I have to fight to prove my nationality. In 2008, I had a hard time renewing my French passport. Two years earlier, Nicolas Sarkozy, then Minister of the Interior, had passed a law requiring foreign-born persons of parents born abroad to provide proof that they were French.
My father was born in Morocco, my mother in the Congo, at the time of the colonies, both of them French, but that was not enough. It was necessary, although in possession of a national identity card and a French passport, that I recover the birth certificates of my family over three generations to prove that I was of French nationality!
With this new misadventure, I feel rejected. For two years I have lived a veritable calvary, and my family, too. My mother even told me that if she had known, she would have returned to France to give birth.
I am not the only one in this situation. The “accidental Americans” would be close to 50,000 people. Some have disbursed several thousand euros without getting out of business. Maybe it’s time to create a cell to regularize our situation? For, at present, no solution exists.
I don’t do facebook or twitter. Please, I hope someone will put this poor woman’s mind at rest. There is absolutely no reason for her to file anything with the IRS. We all know what a can of worms that would open. Keith Redmond- tell her !
@Portland
Keith says he knows her and he’s been very adamant lately. I am sure he will.
This story is sadly one that is currently going on in many countries throughout the world. Innocent people being abused and extorted of their hard earned money by a global bully. There is no longer any excuse for this happening, as the case has been made endless times over the past seven years to high level Treasury officials and Members of Congress. In spite of that, nothing has been done and I sadly doubt that anything will be done. When will the people fighting this wake up and finally realize that they are not dealing with a democratic system, nor with “representatives” whose interest is serving the nation and insuring justice for all? Even with Trump and the Republican platform promising to address this injustice, I doubt that anything will ever be done. Once again, if you actually believe that something will be done, then you believe that there is a true democratic system in place and a mission for justice and fairness by those in power. I was once, like the lady who wrote the letter above, in a similar situation. I tried everything, wrote to Congressmen and women, contacted the Embassy in my home country. I never got anywhere and was told on two occasions by two different Congressmen’s offices that I should return to the U.S. in order to no longer be subjected to double taxation and all of the similar things that are spoken about in the letter above. I was even told by one Congressman’s office, that they don’t represent U.S. persons living outside the U.S. and that I should just “pay my fair share” in taxes and penalties. I asked how I can vote to help change the law and was told that a U.S. person living permanently outside of the U.S. can only vote in a Presidential election and that I had no representatives in Congress, but I should respect the laws and file and pay taxes to the U.S without having any democratic channel to change the law. And they have the audacity to call that a free country and a democracy. After many problems and losing thousands in lawyer fees and the renunciation fee, I finally severed my ties to a country that I only lived in for one year and three months as an infant. I feel deeply sorry for all those who are victims of this injustice and advise them to renounce as soon as you can. This won’t get better anytime soon.
The blame must be shared by governments around the world (except maybe Trinidas and Tobago) that jumped to attention at the US’s bidding and promptly threw their citizens under the bus. Perhaps they didn’t forsee these easily forseeable cases, or perhaps they didn’t care, or they were afraid. Of course the US’s blackmail wasn’t to be taken lightly but they could have called the bluff and threatened retaliation.
A smart and more practical solution would’ve been to write in exceptions to the IGA for people residing in the country. A citizen of a country residing in a country would be considered by local banks to be non reportable to any other country.
That said this story had a particular twist to it : the inheritance. It opened my eyes, as I might be in that same situation (being French) in the future. Jeez, time to renounce after all. Still have a psychological obstacle to doing so but…
@Fred
The other consideration is YOUR estate. If you wait until you have a net worth of over $2,000,000 before you decide to renounce, then you are deemed a covered expatriate and your children (IF they are still Americans) will have to pay the IRS 40% of whatever is left after the French take their share.
Regarding covered expatriate status and estates or gifts – US tax is only a problem if your children are US residents. If they live outside the US when they inherit money, the IRS won’t be an issue. If the children were born outside the US, even better, they don’t have the birthplace to flag so even if they qualify for citizenship it’s vastly easier to fly under the radar and avoid FATCA and all the rest.
“Regarding covered expatriate status and estates or gifts – US tax is only a problem if your children are US residents. If they live outside the US when they inherit money, the IRS won’t be an issue. If the children were born outside the US, even better, they don’t have the birthplace to flag so even if they qualify for citizenship it’s vastly easier to fly under the radar and avoid FATCA and all the rest.”
Provided you’re careful who you choose as your executor.
@ Nonanoymous
Not sure about that. If their US place of birth is recorded by the banks into which their inheritance is received, the banks will report those accounts to the IRS, also if they are an executor to your estate and have a US birthplace they are now at risk as they have signature authority to the estate accounts which are required to be reported. If they are non US born then they may have a degree of anonymity,…unless they are asked the US person question.
Yes, best not to have an executor who is a US resident I suppose. If the executor were a non-resident US citizen that might only be a FATCA reporting problem – US still can’t tax the estate if everyone involved stays out of the country – but still a potential hassle and delay.
This is precisely why my sister (with no US citizenship) is named as executor and will have any power of attorney. Not because I’m worried about the IRS getting a chunk – the family and the money are all in Canada – but because I don’t want any snags with banks or lawyers who might become aware of my dual status.
Because our daughter has US citizenship (though fortunately born outside the US so FATCA-proof) I may need to tread carefully with regard to covered expatriate status. In the very unlikely event that she should choose to live permanently in the US, I would look at doing whatever I need to do so that she could safely inherit what crumbs might be left.
Regarding previous conversations, a rather encouraging post from Keith Redmond on the Facebook group:
Dear Members: I had a lengthy, robust call yesterday with an individual who spent 25 years in upper management with the Department of Treasury IRS Criminal Investigation. He confirmed what I thought about the IRS. There is more bark than bite. He stated that there are many, many Americans overseas who have no business in entering the US tax system and that Accidental Americans UNDER NO CIRCUMSTANCES should enter the US tax system. He confirmed that there are MANY US tax pros who prey on Americans overseas and Accidental Americans through fear and falsehoods. (e.g. you will get arrested, etc.). Any US tax professional who pushes and scaremongers these individuals to comply are not professionals and should not be used! He confirmed that the IRS is NOT going to go after you in your country of residence (most especially if you are a citizen of that country) and the IRS is NOT going to arrest you at the US border. The IRS does not have the resources to do this plus they go after those who have committed a crime not the average American overseas. He stated that Americans overseas not succumb to the fear. Excellent conversation and I am glad my views have been validated.
Nonanaoymous
Also if they are ‘compliant’ us citizens abroad who maybe want to return to live and work in the USA one day, they are required to fill in a gift and estate tax form, on which they will be required to state the source of the inheritance and ‘coming soon on irs form 708’ if the estate came from a ‘covered expatriate’.
@heidi
I speak only of Canada here. A bank can report whatever the hell it wants under FATCA (which in our case means reporting to the Canadian tax authorities, not directly to the IRS) but the US has no ability to touch the money. Worst they can do is send you a “hey, what’s up?” letter.
@Nononymous – my legatees will be my executors. 🙂
@heidi
If a person plans on returning or moving to the US in the future, all bets are off. That’s a totally different compliance problem.
However, If you’re an “accidental” who never wants more to do with the US than possibly visit Disneyland one day, you really don’t need to bother with the IRS. The big problem for those folks is banking access in their home countries – serious problems in places like France or Switzerland where service can be denied, minor distress in Canada where you can either lie about citizenship (they never ask to see documentation) or just shrug it off on the assumption that data sent to the US will simply disappear into a void.
To clarify an earlier post. My (non-US) sister will be my parents’ executor and have power of attorney should that ever become necessary. I can’t remember who my executor is but presumably one of the in-laws, also non-US so no issue there.
I will place a link to this story and the comments in my next (and final) communication to the United Nations if nothing has transpired on our Human Rights Complaint before the summer. This is just beyond the pale.
Heather: As far as the comments go I would like to particularly highlight this: “I was even told by one Congressman’s office, that they don’t represent U.S. persons living outside the U.S. and that I should just ‘pay my fair share’ in taxes and penalties. I asked how I can vote to help change the law and was told that a U.S. person living permanently outside of the U.S. can only vote in a Presidential election and that I had no representatives in Congress, but I should respect the laws and file and pay taxes to the U.S.”
WTF! This is so far beyond the realm of right and reason it would be an utterly unbelievable statement if all of us here didn’t know from experience that this is EXACTLY how that bunch of sanctimonious fools who’ve made up the US government over the years actually think (if they bother to think at all). They “thought” this way back in 1913 when the accursed law of CBT was first installed; they “thought” this way in 1924 when Cook vs. Tait determined that an expat gained benefit from a piece of Mexican property because he was American(!); they “thought” this way when they declared that all expats were residents of Washington, D.C. for tax purposes (that’s an outright lie!. I live in Canada and I’ve never been within 300 miles of Washington, D.C.); they “thought” this way in 1970 when the FBAR came into being making the US government “entitled” to know the entire contents of an expat’s financial portfolio right down to the account numbers. And they “thought” this was in 2010 when they declared that all the world’s banks and nations were beholden to them to hunt down all their “US Person” clients and citizens. Etc., etc. etc. I’m damned if I will ever reveal my account numbers to a liar and thief!
This post has boiled my blood. Quite appropriate for the final day of the administration that has irrevocably altered my life. For the sake of what is left of my well-being I MUST believe in the hope that the incoming administration has offered to us. Tomorrow will certainly be a new day, not a happy one for some, but a better one for us, I have to hope.
@ Nononymous
There are a plethora of situations here, in which all US deemed persons need to be cognizant of before making their decisions. That is why it is important to put all the info out there.
” There is absolutely no reason for her to file anything with the IRS.”
Really? Then how does she maintain a bank account if her banks require proof of being on the IRS’s good side?
@Nononymous
“If the children were born outside the US, even better, they don’t have the birthplace to flag so even if they qualify for citizenship it’s vastly easier to fly under the radar and avoid FATCA and all the rest.”
True for some but not all. Non-Japanese surname, brown hair and blue eyes are a dead give away that my children are “hafu” (half). Even at their young ages and the realities of FATCA and its IGA yet unrealized, questions of their nonJapanese lineage are numerous.
@Heidi
“If they are non US born then they may have a degree of anonymity,…unless they are asked the US person question.”
No need to ask in Japan at least. It is recorded in their “my number” info which every entity they deal with will have on file.
‘True for some but not all. Non-Japanese surname, brown hair and blue eyes are a dead give away that my children are “hafu” (half).’
If they’re stuck with a non-Japanese surname, see if they can get German or Irish or whatever citizenship by ancestry, like lots of other “halfs” living in this country. If you get it for yourself too, maybe you can even get changes to the “My Number” cards of your children. But I bet you can get their surname changed to their Japanese parent’s surname.
Brown hair and blue eyes aren’t a dead giveaway, even though racists make an unwarranted racist allegation that they can’t possibly be Japanese.
“an individual who spent 25 years in upper management with the Department of Treasury IRS Criminal Investigation […] confirmed that the IRS is NOT going to go after you in your country of residence […] The IRS does not have the resources to do this plus they go after those who have committed a crime not the average American overseas.”
My wife knows better, and she was never even an American, not even green card holder or investor or anything other than socializing and touring on a B-2 visa.
Maybe the reason the IRS finds the resources to do this is that one of the IRS’s identity thieves was an employee of the Department of Treasury IRS Criminal Investigation?
Awful lot of work, time and money for tissue thin protection.
If the actions you suggest would end all possibility of being required to follow US law while in Japan AND remove all possibility of losing banking services due to US law, then they would be woth doing…if I could afford it.
I wrote this as a post but don’t have authoring privileges, so am adding it here as a comment. Note to Calgary: If you replied, I haven’t read it because cannot access my email.
MANY EXPATS CAN’T RENOUNCE. HERE’S WHY.
I’ve noticed that some posters here assume that most Americans abroad have a second citizenship. That may be true for you lucky Canadians and Europeans, but I wonder if it’s true for most US expats.
Many expats are retirees, who moved to places like Asia and South America specifically because the cost of living is lower than in the US, so they could live better on their pensions. Others are Engish teachers who couldn’t find a job in the US. Hardly the rich fatcats that the media portrays, I would guess that most of them only have their US citizenships.
Getting citizenship in most Asian countries is extremely difficult, and most expats don’t have the kind of money required to buy citizenship in St. Kitts or other such places that offer citizenship by investment.
Many of the retirees are receiving Social Security retirement benefits. If they do manage to obtain a second citizenship and renounce, they might lose all or part of those payments. Whether an ex-citizen retains the payments depends on whether the country they reside in has a tax treaty or totalization agreement with the US, or is in another category of countries that qualify for other reasons. These treaties are common in First World countries but rare in the Third World.
The SS rules are different for aliens than for citizens. If your country of residence/citizenship does qualify under SS rules, your SS payments would still, in most cases, be reduced by 28% after you renounce. For many, that’s unacceptable. And there are plenty of countries where someone who renounces would lose 100% of the SS that he or she earned through decades of work.
There’s a big difference between these people and a 30 year old who is not vested in SS and wants to start a business abroad, with all the accounting headaches that come from having to file taxes with two different countries. He or she has a very good incentive to renounce and little to lose.
Then of course there is the extortionate fee and paperwork requirements to renounce, which also discourage renunciation.
Also, have you ever spent time on an expat forum that has lots of Americans? I hate to say it, but most of them are the same sheeple as the Americans who reside in the states. Travel hasn’t broadened them much. They’re still “USA! USA! USA!” believers and bemoan that it’s not so easy for them to watch US football or keep up with the Kardashians on their TV sets in Asia. For many of them, renouncing the citizenship of the bestest country in the whole wide world is simply unthinkable.
For many expats who have just one or two foreign bank accounts, the FBAR forms are not that difficult, and they just shrug and accept that reporting to the Financial Crimes Enforcement Network every year is the price of being a free citizen of the bestest country ever, the one that can and does beat up other countries with one hand tied behind its back! Go USA!
Until the US starts droning expats to punish us for escaping from the plantation, littering the streets of our adopted countries with our bloody corpses, the media will continue to ignore our issues, as the US media are just the mouthpiece of the government. The only media outlets that have written sympathetically about our plight are publications like Forbes and the Wall Street Journal, who probably do it only as a sop to their large expat readerships. To the rest of the mainstream media, we will always be the rich tax evaders and money launderers who don’t want to pay our fair share. That’s the meme that the government wants embedded in the public mind, and the media follow orders.
Apart from deliberately becoming stateless with all the difficulties that entails, perhaps the only action US expats without a second citizenship might take is to ask for political asylum in the countries where they reside, which probably wouldn’t be granted because practically all governments are afraid of angering the US. (One wonders if an expat could still receive SS payments after being granted asylum based on the US’s egregious human rights violations. Probably the congress would pass a law aimed specifically at anyone who tried this, to deny them their benefits.)
To summarize, many expats are trapped and can’t escape the persecution. Others have learned to love their servitude, as Aldous Huxley predicted. That’s why, although renunciations will continue to soar (especially if Trump disappoints and doesn’t repeal FATCA and CBT), the vast majority of US expats will suffer silently and not renounce.
So if you’re counting on a floodtide of renunciations, far beyond 5,000 a year, to embarrass the US into ending the abuse, it probably won’t happen. The court cases have a better chance of success, as does intense lobbying directed at the Trump government and foreign governments.
@Fred – “A smart and more practical solution would’ve been to write in exceptions to the IGA for people residing in the country. A citizen of a country residing in a country would be considered by local banks to be non reportable to any other country.”
Presumably the US would not have agreed to allow an exception for residents, given that they’ve recently rejected the ACA’s Same Country Exception proposal.