Some US taxpayers are beginning to receive letters from the IRS resulting from #FATCA bank account disclosures from foreign banks. The letters encourage compliance and have an educational tone. 👇 pic.twitter.com/PlMRd7aEA9
— John Richardson – Counsellor for US persons abroad (@ExpatriationLaw) February 23, 2026
In October I published a post about the U.K. division of Fidelity cleansing itself of U.S. citizen customers. Since the beginning, it has been clear that FATCA has made U.S. citizen customers a problems for non-U.S. banks. Today I was informed that FATCA reporting to the IRS has begun to find its way to U.S. citizens directly. As the above post from X.com indicates, some individual U.S. citizens are receiving communications from the IRS. The communication notes the existence of the “foreign financial asset” and that the asset should have been reported.
Significantly the letter notes the bank where the unreported account was located. In this case the bank was “Bank Hapoalim B.M” which is apparently one of Israel’s largest banks.
Interestingly on April 30, 2020 Bank Hapoalim admitted to helping U.S. citizen customers hide assets and avoid U.S. taxation. This resulted in a deferred prosecution agreement and a penalty. (The Department Of Justice Press Release is available online.) A reading of the press release strongly suggests that customers of this bank may be presumed to be guilty by association.
For those who want ONLY the “Readers Digest” version of this post …
Boston, USA based Fidelity has grown to be a global bemouth in the world of investment management for individuals. Their UK division (and perhaps others) will NOT do business with individuals even “suspected” to be US citizens.https://t.co/x0r50l50DH
— John Richardson – Counsellor for US persons abroad (@ExpatriationLaw) October 31, 2025
This is a long but important post. For some the post will be too long to read and digest. The post is about Fidelity. Those of a certain age will associate Fidelity with legendary fund manager Peter Lynch author of “One Up On Wall Street“.
There is an international trend of financial firms avoiding U.S. citizens. This post is specifically about Fidelity UK (1) refusing to accept U.S. citizens as clients and (2) proactively ridding their client base of those who they know are U.S. citizens or have reason to believe “may be” U.S. citizens!
I recently became aware of the following letter sent by Fidelity U.K. to certain undesirables …
This is Part 5 in a series of posts that I began writing in 2023. See the Appendix for links to all of the previous posts. The context of this series of posts is that FATCA IGAs require “foreign financial institutions” to provide the U.S. Social Security numbers of their U.S. citizen customers. This is a problem because:
1. The banks cannot provide to the IRS what they sometimes don’t have.
2. Many Americans abroad do NOT have a Social Security number to provide.
Prior to Canada’s implementation of FATCA on July 1, 2014, the Canadian parliament held hearings. The hearings took place over two days in May of 2014. I appeared as a witness on Mary 14, 2014. Excerpts from the testimony appear in the above video. What follows is a transcript of my opening statement. I think I would say the same thing today.
The Chair (Mr. James Rajotte (Edmonton—Leduc, CPC)):
I call this meeting to order.
This is meeting number 35 of the Standing Committee on Finance. Our orders of the day, pursuant to the order of reference of Tuesday, April 8, 2014, are the study of Bill C-31, An Act to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measures.
Colleagues, we have two panels before us this afternoon.
In the first panel, we’re very pleased to welcome Mr. John Richardson, and, from the Canadian Bankers Association, the acting vice-president, Mr. Darren Hannah. From the Canadian Council of Chief Executives, we have Mr. Brian Kingston, and from the Office of the Privacy Commissioner of Canada, we have Privacy Commissioner Madam Chantal Bernier.
Bienvenue. Each of you will have five minutes maximum for your opening statement.
We’ll begin with Mr. Richardson, please.
[Expand]
Mr. John Richardson (As an Individual):
“Thanks very much for the chance to appear today.
I did take the time to watch yesterday’s session, which was actually enormously helpful to me, as I’m sure it was to you. I have a couple of thoughts, though, that are my own but directly link to that. The signing of the FATCA IGA can be seen as either good news or bad news.
First, interestingly, is the good news. It’s the point that Professor Cockfield made yesterday. In fact, what this does ensure is that Canada is absolutely 100% in compliance, no ifs, ands, or buts about it. That’s what it means to have signed that agreement.
Interestingly, the agreement specifically states that nothing happens until Canada makes it clear that it has done all of the legwork needed to actually implement the agreement, which I would assume to be all of the enabling legislation that we find in Bill C-31. Given that’s the case, as Professor Cockfield pointed out, there’s absolutely no reason to rush this whatsoever, absolutely none. This should not be in the dark recesses of an omnibus bill. It should in fact be brought to see the light of day in a separate bill.
The second aspect of this that’s very interesting in the IGA itself—and this question was asked yesterday—is who this applies to. It applies to U.S. persons and is defined in the agreement as “U.S. citizens or residents”. Now, what is extremely significant is that U.S. citizens are defined solely by the United States today, tomorrow, and forever. That means that someone who is a U.S. citizen today might not be a U.S. citizen tomorrow—and I’ll have more on this as we continue the discussion—but given that the U.S. has the right to define who a citizen is, given that I presume Canada would cede that right to them, I think it’s extremely important, absolutely essential, under any FATCA agreement that the definition of a U.S. citizen could never, never, never include any Canadian citizen who is a resident in Canada.
Third, we’ve got the whole problem of what FATCA actually means. Having watched a few of these committees, I see a lot of technical discussion of FATCA and a lot of discussion of regulations. In other words, there’s a lot of talk about how to implement this agreement, but precious little on what it actually means in terms of the lives of Canadians, and precious little in terms of what it means in terms of the country itself.
The simple fact of the matter is that FATCA, once implemented, will allow the U.S. to put a permanent capital tax on Canada every day of every year for as long as this agreement is in effect, simply by virtue of using U.S. citizens in Canada to tax and siphon revenue out of the country. It is a myth, an absolute myth, and it is completely wrong that under U.S. tax laws, U.S. citizens will not owe tax to the IRS. This is for two reasons. The first is that the U.S. tax code is hostile to anything foreign, and that would include anything in Canada in general, but secondly, anything that involves tax deferral, and it is plainly obvious that all of the pillars of Canadian retirement planning do in fact involve tax deferral.
So it is a myth that U.S. citizens would not owe tax. It is a myth. Interestingly, as I read in something yesterday, the opposite of truth is not the lie: the opposite is in fact the myth. This agreement will have severe consequences for Canada and Canadians.”
Part A – Prologue – It’s not about FATCA. It’s about U.S. citizenship taxation
U.S. citizenship taxation is a mechanism that is used by the United States to:
1. Capture the residents of OTHER countries and claim they are really U.S. residents; and
2. Impose U.S.taxation on the non-US source income actually received (or in the case of GILTI, transition tax, foreign trust rules, etc. not actually received) by those residents of other countries.
FATCA is a mechanism used by the United States to force other countries to search for and locate their own residents who are (because of a U.S. birth place) effectively the property of the United States. In practical terms, the mechanism used is the “FATCA IGA” and the countries who sign the “FATCA IGA” are partner countries. The job of the partner country is three-fold:
(i) to locate and determine which of their residents are either U.S. citizens or are suspected to be U.S. citizens
(ii) to report their financial information to the Internal Revenue Service of the United States
(iii) to deny bank services to those individuals who do not cooperate with the FATCA inquisition.
In effect, (as the court decision makes clear) the purpose and effect of FATCA is to assist with exporting U.S. citizenship taxation into other countries. In the same way that modern extradition treaties are used to export U.S. criminal law around the world, FATCA is used to export U.S. citizenship taxation around the world. The following post also argues that U.S. citizenship taxation (if it matters) is a violation of international law.
On July 25, 2025 a Dutch court confirmed its view that the Netherland’s FATCA IGA with the United States is NOT subject to any provisions of the GDPR. In other words, U.S. citizens, who are residents of the Netherlands and call the Netherlands home do NOT have the same rights as citizens of other countries!
In paragraph 7 of its decision, the court confirms that Accidental Americans in the Netherlands are NOT afforded the same rights as other Dutch residents as follows:
Beoordeling door de rechtbank
7. De rechtbank stelt voorop dat zij begrip heeft voor de op zitting door eisers geuite gevoelens van frustratie en onvrede. Eisers hebben duidelijk gemaakt dat zij door het hebben van een dubbele nationaliteit nadelige gevolgen ondervinden als gevolg van Amerikaanse wetgeving. De rechtbank kan begrijpen dat de uitwisseling van financiële gegevens van eisers met de VS door de Belastingdienst een zekere impact kan hebben op eisers. Dat laat onverlet dat de rechtbank de beroepen moet beoordelen aan de hand van de aangevoerde beroepsgronden en de toepasselijke wet- en regelgeving (het toetsingskader).
An English translation of Paragraph 7 is:
7. The court first of all states that it understands the feelings of frustration and dissatisfaction expressed by the plaintiffs at the hearing. The plaintiffs have made it clear that they suffer adverse consequences as a result of American legislation due to their dual nationality. The court understands that the exchange of the plaintiffs’ financial data with the US by the Dutch Tax Authorities may have a certain impact on the plaintiffs. Nevertheless, the court must assess the appeals on the basis of the grounds for appeal put forward and the applicable laws and regulations (the assessment framework).
The decision of the Dutch court underscores the simple reality that U.S. citizenship is indeed a disability in the 21st Century.
Part B – A brief summary of the decision – Accidental Americans in the Netherlands do NOT have rights under Article 18 of the GDPR
— John Richardson – Counsellor for US persons abroad (@ExpatriationLaw) July 26, 2025
In summary:
Because the Netherlands has signed a FATCA IGA with the United States, individuals described in the IGA (U.S. Citizens) have NO rights under Article 18 of the GDPR!
Eindelijk een lichtje aan de horizon voor de toeval Amerikanen! Wat gaat de 🇳🇱@toezicht_AP doen voor de 🇳🇱staatsburger? Na een schaamteloos optreden op 25 maart in de rechtbank te Arnhem! Ipv op te komen voor de bescherming van burgers zitten zijn in de broekzak van @Financienpic.twitter.com/pxBvdleEiG
The only way this nightmare ends is for the world to stop allowing the United States to claim the tax residents of other countries as U.S. tax residents. This means that citizenship taxation must come to a complete end!!
No carveouts! No optouts! Just a complete separate of citizenship and tax residency!
In that post, I suggested that FATCA litigation fails because it has to date focused on certain results of FATCA (privacy breaches, discrimination, etc.) No FATCA litigation (to date) has focused on the reality that U.S. “citizenship taxation” is the reason for FATCA and therefore the cause of all the FATCA related problems. The effect of FATCA and the FATCA IGAs is to enforce U.S. citizenship taxation on the world (including and PRIMARILY on individuals who are tax residents of other countries). A principal purpose of FATCA is to export U.S. tax laws into other countries. By signing the FATCA IGAs, these countries agree to assist the United States in identifying which of their country’s residents (and often citizens) are also U.S. citizens and should therefore be subject to U.S taxation. Put another way: the purpose of the FATCA IGAs is to expand the U.S. tax base into other countries.
For background on the issue of the United States claiming the residents of other countries as U.S. tax residents see:
The conclusion of the September 2024 post was that:
Future FATCA litigation should focus on whether it is a violation of international law for the United States to impose citizenship taxation (the reason for FATCA) on the residents of other countries (who suffer the effects of FATCA).
The purpose of this post is to continue the analysis and to explore the specific question:
Is U.S. citizenship taxation – the process of claiming nonresidents as U.S. tax residents – a violation of international law?
Is it a violation of international law for the United States to:
1. Claim the residents of other countries as U.S. tax residents; and
2. Impose U.S. taxation on the non-U.S. source income of those individuals who do NOT live in the United States?
(I am introducing and developing the argument cannot impose U.S. citizenship taxation on the tax residents of OTHER countries. The United States, has of course the sovereign right, to impose citizenship taxation on U.S. residents.)
If U.S. citizenship taxation, as applied to the residents of OTHER countries, conflicts with the norms of international law, then the foundation for FATCA (as applied to non-U.S. residents) crumbles. In theory, this would provide courts and tribunals a justification for refusing to apply FATCA obligations in relation to individuals who are tax residents of other countries and are not residents of the United States. In addition, it might cause countries to give careful consideration to the effects of the “saving clause” which is part of all U.S. tax treaties.
It is my hope that this post will analyze this question by identifying and outlining “some” of the relevant issues. Perhaps, this post will “begin’ a discussion about this important issue. Should U.S. citizens, because and only because of their citizenship, become “dual tax residents” simply by moving from the United States?
For each issue I will suggest an answer and provide a backup source(s) for further inquiry.
Suggested conclusion:
This post is a “thought experiment”. I believe that a credible argument can be developed that U.S. citizenship taxation – as applied to those who are tax residents of other countries – is a violation of CIL (“Customary International Law”). What follows are the “individual components” of the argument, along with commentary on each. The individual components are organized in the following outline:
Outline
Part A – Some Theoretical Concepts
1. What is US citizenship taxation? U.S. citizenship taxation defined
2. What is meant by international law?
Part B – Tax Residency And International Law
3. Is the concept of “tax residency” generally subject to the rules of international law?
4. Concepts of tax residency as expressed through tax treaties including treaty tie breakers
Part C – Can The Method Of Taxation Violate Individual Rights As Expressed In Human Rights Documents?
5. Professor William Thomas Worster – Taxation and Human Rights
6. Barriers To Emigration Under International Law
Part D – U.S. Citizenship Taxation And the Tax Sovereignty Of Other Nations
7. U.S. Citizenship Taxation As A Method To Siphon Capital From Other Nations
8. The Common Law Revenue Rule As An Expression Of Tax and Territorial Sovereignty
Part E – U.S. Tax Treaties And The “Saving Clause” – Contracting Out Of The Principles Of International Law?
9. Taxation Perspective: Is the “saving clause” an agreed upon override to the “revenue rule” and other international norms?
10. Information Perspective: Can FATCA information extraction generally be used to refuse to provide information about a country’s tax residents?
11. Enforcement Perspective: Should exemptions from cooperation on enforcement of tax debts extend to the disclosure of FATCA information? The cases of Canada, Netherlands, France, Sweden …
Part F – Possible Conclusions …
For those who don’t want to read the rest:
The purpose of this post has been to develop a general theory of why U.S. citizenship taxation – to the extent that it claims the tax residents of other countries as U.S. tax residents – is a violation of international law. Theory aside, there is no other country in the world that uses an attribute (citizenship), that is often an immutable characteristic (place of birth), that bears no presumptive relevance to a physical or economic connection to a country, as a sufficient condition for tax residency. In so doing, the United States is defining tax residency in terms of the “circumstances of birth”, rather than the “circumstances of life”. The only effect is to claim the residents of other countries as tax residents of the United States (even when they are residents and often citizens of those other countries).
It is respectfully submitted that, for these reasons, that citizenship taxation is a violation of CIL (“Customary International Law” and should NOT be tolerated by the international community.
In developing my argument, I have included links to previous posts. The linked posts are NOT part of this post, but are supplied for further reading on each topic.
October 24, 204 – @VP@KamalaHarris promises to take the tax, banking and financial services concerns of "Overseas Americans" seriously.
October 28, 2024 – The @JoeBiden Kamala Harris administration issues IRS Notice 2024-78 which effectively incentivizes BOTH FFIs and the #IGA…
— John Richardson – Counsellor for US persons abroad (@ExpatriationLaw) November 3, 2024
October 24, 2024 -Letter to Americans abroad from Kamala Harris
In a letter addressed to Americans abroad Vice President Harris said that she takes the concerns of US citizens overseas seriously, “whether it’s improving access to consular services, addressing the complex challenges you face with banking, taxation, and financial services, or ensuring equal treatment in immigration and citizenship processes.”
October 28, 2024 – Biden Treasury Letter To Americans Abroad – Notice 2024-78 – Either Comply With FATCA and U.S. Citizenship Taxation or Renounce U.S. Citizenship
The IRS today released Notice 2024-78, extending the temporary relief provided in Notice 2023-11, subject to the procedures and requirements of Notice 2024-78, for certain foreign financial institutions required to report U.S. taxpayer identification numbers (U.S. TINs) for certain preexisting accounts as defined in an applicable Model 1 intergovernmental agreement (IGA).
If a foreign financial institution in an eligible Model 1 IGA jurisdiction complies with the procedures described in the notice, then the U.S. Competent Authority will not determine there is significant non-compliance with the reporting Model 1 FFI’s obligations under the IGA solely as a result of its failure to report U.S. TINs associated with its preexisting accounts for the 2025, 2026, and 2027 calendar years.
Notice 2024-78 is the first indication of how seriously (NOT) the Biden/Harris administration takes the concerns of Americans abroad. In brief, the message from the Biden Administration to (an update to Treasury Notice 2023-11) Americans abroad is:
Either comply with FATCA and U.S. citizenship taxation or renounce your U.S. citizenship!
As described by AARO (“Association of American Residents Overseas”) in an April 7, 2023 blog post:
On March 29 the Senate Finance Committee Democratic staff issued a report titled “Credit Suisse’s Role in U.S. Tax Evasion Schemes of its investigation of Credit Suisse’s compliance with a 2014 plea agreement with the Department of Justice involving the bank’s participation in a conspiracy to hide offshore accounts from the IRS.
Per Committee chair Senator Ron Wyden’s (D-OR) press release, the report details Credit Suisse’s role in a “potentially criminal tax conspiracy” involving accounts of a U.S. based family that were closed 10 years ago, recycles the Clinton/Bush era tax evasion case by U.S. businessman Dan Horsky, and discusses large undeclared accounts belonging to 23 ultra-high net worth U.S. citizens.
We are surprised that such a large and well-resourced committee working for two years was unable to unearth so little misconduct at a mega-bank that has now collapsed due to mis-management. Most outrageously, the report states that “Dual citizenship affords unique opportunities for cross-border tax evasion,” which gives the impression that ordinary Americans living abroad are prone to criminal tax evasion.
AARO has a meeting scheduled with Senator Wyden’s office in May during our annual Overseas Americans Week, during which we will express our extreme dissatisfaction with this characterization. We will let you know if there are any developments.
AARO deserves thanks and credit from all Americans overseas for publicly pushing back on the report created and published by the Democrat led Senate Finance Committee. The report is outrageous, a waste of public funds and appears to be a “back handed attempt” to justify the hiring of more IRS agents and increasing/justifying the imposition of FBAR penalties. The report is NOT (contrary to media reports) really about Credit Suisse. The report uses Credit Suisse as a “prop” to remind the people of America, that there are some people in America (it all took place ten years ago), who deliberately attempt to evade the payment of U.S. tax. The modus operandi includes moving their money to financial institutions and entities outside the United States. Yes, it’s true. Of course, as an added benefit the Senate Finance Committee gets to demonize Swiss banks (in general) and Credit Suisse (in particular). But make no mistake. The Senate Finance report is NOT about Swiss banks. It’s an advertisement to justify the hiring of more IRS agents funded by the Inflation Reduction Act, to legitimize the imposition of more FBAR penalties and to suggest that Republicans are (somehow) soft on tax evasion.
Why this report is dangerous for U.S. citizens generally and for Americans abroad specifically
— John Richardson – Counsellor for US persons abroad (@ExpatriationLaw) February 9, 2023
A “Hell greater than the sum of the parts”
There are people in the world who really don’t understand (or say they don’t) what exactly is the problem with U.S. citizenship based taxation. They claim to not understand why defining “tax residency” based on the “circumstances of birth” rather than the “circumstances of life” is a problem. They fail to consider how taxation based on “circumstances of birth”, interacts with U.S. tax treaties and FATCA to create a “hell that is greater than the sum of the parts”.
The circumstance of a U.S. birthplace is used as a justification to regulate the lives of people with no connection to the United States and impose U.S. taxation on income that has no connection to the United States and is received by someone who does not live in the United States.
Citizenship taxation has practical and contextual meaning only its application to tax residents of non-US countries. The U.S. uses the circumstance of a “U.S. birthplace” to reach out and “claim” the tax residents of other countries as U.S. “tax residents”.
The purpose of this post is to explain how the interaction of U.S. citizenship taxation (claiming those with a U.S. birth place as U.S. tax residents when they are tax residents of other countries), the “saving clause” (not allowing U.S. citizens with dual tax residency to assign tax residency to the country where they actually live) and FATCA (the tool to hunt, find and enforce the extraterritorial U.S. tax and regulatory regime on the residents of other countries) creates a whole hell greater than the sum of the parts.
Many people understand the three components of “citizenship taxation”, the “saving clause” and “FATCA” as separate entities. Few appear to understand how those three components interact together to destroy the lives of U.S. citizens with dual tax residency. The U.S. has created a “fiscal prison” for its citizens. Seven video accounts of the impact of the U.S. citizenship tax regime are available here.
This problem can be solved ONLY by the United States redefining its rules for “tax residency” so that “citizenship” (the circumstances of one’s birth”) is not relevant to “tax residency” (the circumstances of one’s life).
This post is to identify the component “Part”(s) of the problem. It is organized in “Sections” and “Parts” as follows:
Section I – How The Problem Was Created
Part A – Tax, Residency and Tax Residency Part B – The general problem of dual tax residency Part C – Introducing the treaty tie break and how it can be used to end “dual tax residency” under a relevant Canadian tax treaty” Part D – The general principles of the U.S. Canada “tax treaty tie break – How “circumstances of life” are used to assign tax residency Part E – Food for thought – Citizenship the least important factor for the treaty tie break Part F – Two possible examples of assigning residence to one country by using the “treaty tie break” – Green Card Edition Part G – U.S. Citizens CANNOT Benefit From The “Tax Treaty Tie Break” – Hello “Saving Clause” Part H – The “Saving Clause” And The Inability For U.S. Citizens To Use The “Treaty Tie Break” Is How The United States Captures The Residents Of The Treaty Partner Country And Claims Them As U.S. Tax Residents Part I – The Tax Treaty Tie Break And Implications For U.S. Tax Compliance And For FATCA And The CRS Reporting
Section II – How Dual Tax Residents Experience The Extraterritorial Tax Regime
Part J – The U.S. exports a more punitive from of taxation to tax residents of other countries Part K – The Problem Of Investing, Retirement planning and Retirement Planning – The Punitive Taxation And Reporting Requirements of PFICs and Foreign Trusts Part L – The Problem Of Non-U.S. Pensions – How Are They Treated Under The Internal Revenue Code? – Different Rules For Different Countries Part M – Discouraging U.S. Small Business Abroad – The Treatment Of Small Business Corporations Generally And On A Country By Country Basis Part N – The “FBAR Marriage”: How Marriage To An Alien Results In Higher Taxation, More Reporting, Difficulties With Asset Transfers, Higher Divorce Costs And Possibly A Requirement To File A Tax Return With As Little As $5 Of Income
Section III – How The U.S. Extraterritorial Tax Regime Attacks The Sovereignty Of Other Countries
Part O – The U.S. taxation of residents of other countries attacks and erodes the tax base of those other countries
Section IV – Solving The Problem: Regulatory And Legislative Solutions
Part P – Regulatory Solution: “A Regulatory Fix For Citizenship Taxation Part Q – Regulatory Solution: Amending The “Saving Clause” In U.S. Tax Treaties Part R – Territorial Taxation For U.S. Citizen Individuals Part S – Redefining U.S. Tax Residency To Move To Residence-based Taxation”
In 2011 Canada's Finance Minister Jim Flaherty recognized that FATCA was being applied to target people with @taxresidency OUTSIDE the USA. He stated the obvious: "Canada is not a tax haven!" Raising the question: why were CDN residents targeted by FATCA?https://t.co/KrN3Bs8CmV
— John Richardson – Counsellor for US persons abroad (@ExpatriationLaw) January 16, 2023
Although FATCA was clearly motivated by the behaviour of US citizens resident in the United States, Treasury did NOT interpret the “purpose” as being limited to prevent abuses by “residents of the United States”. Rather Treasury appears to have interpreted the purpose of FATCA (very broadly) to target residents of other countries.
Had Treasury done what it was required by statute to do (consider the purpose of IRC 1471) it might have approached its responsibilities very differently. What began as an attempt to curb the behaviour of US residents became an attack on residents of other countries who happen to be US citizens. The evidence further suggest that the FFIs most heavily impacted by FATCA are located in the high tax jurisdictions where US citizens abroad are most likely to reside. Can it reasonably be concluded that the purpose of IRC 1471 – AKA FATCA – was to attack the residents of other countries and the banks in those countries? If not, then why did Treasury target the whole world, rather than the parts of the world with conditions that facilitated tax evasion for resident Americans? Can anybody seriously make the claim that banks in Canada, the UK, Australia New Zealand and other first world democracies were attractive locations for tax evaders? Yet, this is precisely what Treasury did.
