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The Little Red #FATCA Book – Review, Identify & Report on U.S. Persons How #FATCA affects the non-US World

Posted on by Posted in Issues regarding US persons abroad 22 Comments

reposted from the citizenshipsolutions blog

As many of you know, the long-awaited #FATCA hearing will take place three weeks from today. This is exciting and followed by the news that Congressman Mark Meadows will reintroduce his repeal FATCA legislation. Closely matching is the effort of Nigel Green & Jim Jatras. The recent letter, endorsed by major think tanks, etc is here . We still await the hoped-for tax reform. The fate of those who have not yet chosen whether to become compliant and/or renounce hangs in the balance. Regardless of the outcome(s), our direction will become much clearer in the next little while.

There are so many aspects to #FATCA and how it affects the lives of expats, I suspect it is impossible to be aware of them all. One of the best things we can do, as “ambassadors” is to make sure we are thoroughly conversant with all aspects of it as we discuss it with our family and friends, on online articles and blogs.

j fatca forumJohn Richardson has long been writing about this and has re-organized his “Little Red FATCA Book.” It is likely the most complete account anywhere. I will be reposting it on all the appropriate websites, blogs and Facebook Groups/Pages. Please, share this as widely as possible. Convincing Homelanders, as impossible as it seems, will go farther than perhaps anything else, in garnering support from Congress to rectify this horrid situation. Please, don’t give up, go out and comment everywhere and make sure you know your facts!
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The “Little Red FATCA Book” is a collection of posts that I created over an 18 month period. I have decided to collect the individual posts and organize them in one place. I have grouped the individual posts into three broad chapters which I will call Chapter A, Chapter B and Chapter C. This is a “work in progress”. Some of the posts are incomplete.

FATCA which is essentially the enforcement mechanism of U.S. “Place of Birth Taxation” is a controversial topic. Feel free to post your thoughts and comments.

John Richardson

More at citizenshipsolutions blog

22 thoughts on “The Little Red #FATCA Book – Review, Identify & Report on U.S. Persons How #FATCA affects the non-US World”

  2. “Got it. It does sound repressive & needs 2 be changed-has 2 be better ways 2 crack down on tax abusers”
    Patricia — that’s an answer to my answer! I’m quite proud of it. This person had started with something like “the rich should pay!” but then responded to my explanation — I tried to calmly illustrate the absurdity of the situation and to underline the fact that FATCA has, in my opinion, mostly done collateral damage to ordinary middle class people, the overwhelming majority of which are law-abiding taxpayers and in fact owe no taxes to the US. It’s really important that we get homelanders on the left to understand the problem, make it bipartisan. And there are, like that person says, certainly many better (and cost-effective) ways to go after true tax evasion without punishing honest citizens and forcing them to renounce.

  3. Thanks for posting the date of the hearing in Washington! Having an actual date is a big step up from “sometime in April or May”. Many thanks!

  4. When Trump was elected I had some hope he could drain the SWAMP and repeal all the 72,000 page Marxist Tax Code. The SWAMP is loaded with politicians whose only job is to be re elected. They along with the “K” Street lobbyists who are mostly former SWAMP DWELLERS, meaning retired or defeated politicians who can go right onto the floor of the congress and spread as much money as it takes to get whatever they want.
    Trump has a few politicians who actually want the SWAMP drained, but the entrenched Republicans and the entrenched Democrats are as much against Trump as they are eager to be re elected. The House Ways and Means Chairman, where all tax legislation starts, pretend it will be tax reform and all they have ever done is add a few hundred pages to the 72,000 already so jumbled you couldn’t read them in a year and call it TAX REFORM, when you and I know it is pure BullSh—t. There will have to be a citizen uprising at the polls before the entrench career politicians and the bureaucrats, before anything is done.

  7. There’s a very disturbing comment left on the citizenship solutions site. Has anyone else ever heard of this happening before?

    http://www.citizenshipsolutions.ca/2017/04/05/the-little-red-fatca-book-review-identify-and-report-on-u-s-persons-how-fatca-affects-the-non-u-s-world/#comment-16762

    I have watched in HORROR as my grandchildren have been subjected to FATCA criminal reporting requirements from their first date of birth as they had established foreign educational accounts greater than $10,000 established by their grandparents for their future educational needs. Now these grandchildren are citizens of their birth country in Central America and can’t renounce their US Citizenship and shed their FATCA and other reporting requirements until they reach 18 years of age…. The USA Embassy refused to issue USA VISA’s in their foreign Passports and mandated all four grandchildren register their foreign births in the USA Embassy and obtain USA Passports.

  8. @Patricia Moon

    Not sure what’s so disturbing here.

    The second part, being required to register the birth and obtain a US passport before travel to the US, is consistent with the law that US citizens must enter the country with a valid US passport. In this case it became a problem because the family lives in and are citizens of a country where a visa is required for travel to the US, so they had to go visit the embassy, and at some point must have informed the consular official that the children were US citizens – oops. (This won’t be an issue for Canadians because we don’t need visas, but you can still occasionally run into border difficulties using a Canadian passport with US birthplace.) There was a thread either here on or the Facebook group about consular officials being able to issue visas at their discretion, for example in a case where a US citizen needed to travel before they could obtain a passport.

    As for the first part, reporting of educational savings accounts, it’s not totally clear what the poster is on about, but again, that’s consistent with how FATCA works. I’d be curious as to why the children were identified as US persons if they were not born in the US but rather in their country of residence. Was this due to parental citizenship being known to the bank – which doesn’t necessarily mean that the children inherit US citizenship – or was it voluntarily reported, or was it due to the money being donated by grandparents from a US address? Lots of possibilities, but at this point it’s just FATCA reporting so “HORROR” seems a bit hysterical.

  9. Yes, Patricia, it is disturbing — how we are blindsided without knowing. Seems to be back to the exceptional US CBT acquired citizenship (rather than claimed) and taxation / FBAR filing requirement for children who have yet to reach the required age of adulthood for renunciation of that *acquired* USC. Even then, that of age child cannot renounce *acquired USC* without *requisite mental capacity*, with a parent, a guardian, a trustee unable to do so on that person’s behalf.

    https://travel.state.gov/content/travel/en/legal-considerations/us-citizenship-laws-policies/citizenship-child-born-abroad.html

    Acquisition of U.S. Citizenship by a Child Born Abroad

    Birth Abroad to Two U.S. Citizen Parents in Wedlock
    A child born abroad to two U.S. citizen parents acquires U.S. citizenship at birth under section 301(c) of the Immigration and Nationality Act (INA) provided that one of the parents had a residence in the United States or one of its outlying possessions prior to the child’s birth. The child is considered to be born in wedlock for the purposes of citizenship acquisition when the genetic and/or gestational parents are legally married to each other at the time of the child’s birth and both parents are the legal parents of the child under local law at the time and place of birth.

    Birth Abroad to One Citizen and One Alien Parent in Wedlock
    A child born abroad to one U.S. citizen parent and one alien parent acquires U.S. citizenship at birth under Section 301(g) of the INA provided the U.S. citizen parent was physically present in the United States or one of its outlying possessions for the time period required by the law applicable at the time of the child’s birth. (For birth on or after November 14, 1986, a period of five years physical presence, two after the age of fourteen, is required. For birth between December 24, 1952 and November 13, 1986, a period of ten years, five after the age of fourteen, is required for physical presence in the United States or one of its outlying possessions to transmit U.S. citizenship to the child.) The U.S. citizen parent must be the genetic or the gestational parent and the legal parent of the child under local law at the time and place of the child’s birth to transmit U.S. citizenship.

    …combined with requirements to file FBAR / FINCEN114: https://www.irs.gov/irm/part4/irm_04-026-016.html

    https://www.expattaxcpas.com/fbar-filing-requirements-for-children/
    FBAR FILING REQUIREMENTS FOR CHILDREN
    ARE THERE FBAR FILING REQUIREMENTS FOR CHILDREN?
    WHEN DOES MY CHILD NEED TO REPORT HIS FOREIGN BANK ACCOUNT INTEREST ON MY FORM 8938?

    Optimized-baby-72224_1280 (1)A child is responsible for filing his own FBAR report if the aggregate value of his foreign financial accounts exceeds $10,000 at any time during the calendar year. If for any reason, including age, a child cannot file his own FBAR report it is the responsibility of the child’s parent or other legally responsible individual to file on behalf of the child. The child should sign his FBAR. If he is unable to do so, a parent or other legally responsible individual must sign for the child.

    If a parent files form 8814, Parents’ Election To Report Child’s interest and dividends, and elects to include certain unearned income from the child on the parent’s return, the parent is considered to have a financial interest in the child’s account and thus these accounts must be reported on the parent’s form 8938. Note these accounts should be marked as “custodial accounts”. The child’s accounts are included in the calculation to determine whether or not the parent satisfies the reporting threshold. See FBAR information for form 8938 threshold filing requirements. If no form 8814 is filed, the child’s accounts do not have to be recorded on the parent’s form 8938. If a parent does not file form 8814, the US child may have to file his own 8938 if the total value of his foreign financial assets is more than $200,000 at year end or $400,000 at any point during the year.

    Another example…
    http://www.jamaicaobserver.com/news/ask-us-embassy/Understanding-the-Consular-Report-of-Birth-Abroad_11481172

    Q. I’m a US citizen and I filed an immigrant visa petition for my Jamaican-born son to immigrate to the United States. However, when he attended his visa interview last week he was told to apply for a Consular Report of Birth Abroad. Since he’s my biological child, why can’t the embassy issue his immigrant visa? What is the difference between a Consular Report of Birth Abroad and an immigrant visa?

    A: If you were a US citizen at the time of your child’s birth, your son may already qualify for US citizenship. Visas cannot be issued to US citizens, so when a child born to a US citizen applies for a visa, the child’s US citizenship status has to be determined before the visa can be processed. Unfortunately, visa fees cannot be refunded, so it is important to determine whether your child may have a claim to US citizenship before you apply for the child’s immigrant visa.

    To transmit citizenship to a child, the US citizen parent must demonstrate that he or she was physically present in the United States for a certain period of time before the child’s birth. In most cases, the US citizen parent must have been present in the United States for a total of five years before the child’s birth, including at least two years after the parent turned 14 years old. The parent does not have to have been a US citizen during that period of physical presence. The US citizen parent also must show that he or she is the biological parent of the child. If all requirements are met, the child qualifies for US citizenship and can be issued a Consular Report of Birth Abroad (CRBA), as well as a US passport.

    CRBA and US passport applications should be submitted to the American Citizen Services Unit. Applications are accepted by appointment only. An appointment can be made online at no cost by visiting http://kingston.usembassy.gov/appointments.html. The application cost for a CRBA is US$100, and the application cost for a US passport for a child under 16 years old is US$105.

  10. The poster who watched in horror wrote FATCA but probably should have written FBAR. I bet the poster doesn’t know the difference. For someone who’s just encountering this horror, it likely takes time to learn the difference.

    Someone went to a US embassy to apply for visas for the babies. Maybe the applications were for tourist visas. Maybe the babies didn’t submit their own applications. Maybe the embassy learned the parents’ citizenships.

    Good news is that they don’t need a birdcage. The babies should sign their own FBAR forms, using their own natural ink.

  11. @Nononyomous

    I know what the US laws are and so on……I am referring to the reaction of the grandfather and the fact that US law was imposed on the spot. If you are not disturbed by that, why are you here?

    so they had to go visit the embassy, and at some point must have informed the consular official that the children were US citizens – oops.

    Nope, they knew the parents were Americans, which is why they forced them to register and get US passports. I don’t know why you would doubt that the grandfather (author of the comment) was horrified. It sounds like the grandparents funded the education plans and had no expectation the US would be involved at all.

  12. I’m not disturbed by the fact that a US embassy wouldn’t issue visas for children it considered to be US citizens, but instead requested registration of birth and passports. That’s a consequence of the children being born to US citizens in a country that requires visas for travel to the US. It sucks, but it’s not particularly disturbing to me in that it’s a consistent application of US law. If the parents don’t want to obtain passports, they are free to not do so as long as they forego visits to the US.

    As with most things here, the problems arise when you want to interact with the US – visiting, working, keeping assets or pensions, or whatever. At that point life becomes more complicated. This does not disturb me as a dual citizen – I can avoid the complication by avoiding the US. (Americans without a second citizenship are in a weaker position here, I realize.)

    As for the grandfather’s reaction I can’t really comment further because it’s really not clear what’s going on. We have no idea what type of accounts these are, who’s contributing the money and where, why the children would have been identified as US persons so as to require FBAR and/or FATCA reporting.

  13. Yes we do know. The grandfather/grandmother bought the accounts; they are education accounts and the parents applied for the visas with the father being a USC. Since it is a recurring issue here, i.e., whether or not the US CAN impose citizenship, some would find it disturbing.

  14. I imagine the grandparents may be horrified because their act of love for their grandchildren was transmuted by the US into a lifelong tax obligation for the babies.

    I felt a similar horror when I learned of CBT for the first time, and realized that I could have accidentally got my children lumbered with the IRS by having got them passports for visits to the US during their childhood.

    Many parents must have felt similar horror. You think you’re doing the right thing for your child, or your grandchild, then along comes America and commodifies the child into a source of income. Horror is the right word.

  15. @iota

    Gary (the grandfather) is having the classic OMG moment. And bc he’s a granddad, his first concerns are his little ones. Even those who accept CBT and all this ridiculous “life control” ( having to report every possible taxable penny) must at first, at least feel how unfair it is.

    I was pretty horrified at the prospect of losing our house in order to pay FUBAR fines. Thank goodness I came to my senses!

    http://www.citizenshipsolutions.ca/2017/04/05/the-little-red-fatca-book-review-identify-and-report-on-u-s-persons-how-fatca-affects-the-non-u-s-world/#comment-16768

  16. @Patricia – yes, the FBAR penalties are certainly one of the first and scariest things one hears about after learning of CBT. It’s a pity the mitigation guidelines aren’t as well-publicised as the $10000 fines. Much less scary.

  17. I think what made my OMG moment bearable was my fundamentally criminal nature. Literally the first thought upon learning about FBAR etc. was “they’ll never find me!” Followed quickly by “they’d never see a cent anyway!” And within a very short space of time I’d confirmed that compliance among those with no US ties was “voluntary” – driven by fear, ignorance or misguided notions of honesty, or a rational calculation of the price worth paying for peace of mind.

    I followed the “Gary” thread and submitted a reply. Acquiring US passports was unfortunate but not the end of the world, as the kids are still without the demon US birthplace. I don’t find the embassy’s actions all that shocking or surprising, I expect they have a relatively clear set of guidelines as to who is and isn’t a US citizen, and once that determination is made they only have one option, to require registration (with discretion to issue a tourist visa for urgent travel apparently).

    What I do find baffling is the decisions around the children’s education savings. If staying off the US radar were a concern, accounts independent of the US parent could easily have been set up, without US indicia. Being compelled to acquire US passports doesn’t mean automatic FATCA reporting – someone needs to tell the bank about the children’s citizenship. Moving the money to the US certainly doesn’t improve matters.

    But these were probably decisions made in haste without full information, though presumably by now the US citizen parents are aware of their own reporting and compliance issues.

  18. @Nononymous, Your “they’d never see a cent anyway!” doesn’t make you in any way fundamentally criminal. It makes you human, in that you’re applying a basic, decent sense of natural justice. Something that the US tax code lacks. It’s exactly the same as refusing to be shaken down by scammers. There’s nothing “criminal” about that.

  19. ‘Even those who accept CBT and all this ridiculous “life control” ( having to report every possible taxable penny) must at first, at least feel how unfair it is.’

    Why complain about having to report every possible taxable penny? The abuse starts not with being taxable, but with being double-taxable. The abuse grows immensely with having to report far more complicated stuff that doesn’t even affect taxes.

  20. ‘If staying off the US radar were a concern, accounts independent of the US parent could easily have been set up, without US indicia.’

    Maybe Grandpa didn’t see the “US government property” tattoo on the babies’ FBAR signature instruments until after the accounts were opened?

  21. My OMG moment used similar words but rearranged them a bit. My first thought was this has got to be wrong: “The US can’t possibly be that stupid”. After very little research I discovered that it was, in fact, true: “They really are that stupid”. After that it didn’t take me long to decide: “I’ll never send a penny to those criminals”!

  22. Well in less than 5 minutes “we could lose our house” turned into “over my dead body.”

    never go back, name change, transfer it all, whatever.

    Since not an accidental etc, first chance to get out, I took it.

    Not a single regret.

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