Category Archives: FATCA Letter

FATCA Reporting, The Banks And Their U.S. Citizen Customers: The Saga Continues

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Reposted with permission from The Isaac Brock Society.

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.

This is interesting news.

Of course:

“To be FORMwarned Is To Be Forearmed!”

John Richardson Follow me on X.com/Expatriationlaw

Part 5 – Fidelity U.K. – Cleansing The Firm Of “Suspected” U.S. Citizens And The Problems They Bring

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For those who want ONLY the “Readers Digest” version of this post …

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 …

Unconfirmed USP Sell To Cash Letter

Some of you may be satisfied to read the letter.

For those interested in the general context and discussion, here is the complete post …

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Part A – Introduction and context

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.

3. Many former U.S. citizens have relinquished U.S. citizenship without necessarily having a Certificate of Loss of Nationality (“CLN”).

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Americans abroad and the compliance dilemma: What should be considered before contacting a lawyer

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The “Readers Digest Version …

It’s difficult to be a U.S. citizen living outside the United States. The U.S. extra-territorial tax regime has created an industry of professionals who “feast off the injustice” of the U.S. tax and regulatory regime. U.S. citizenship taxation reinforced by FATCA has truly created for tax, financial planning, and immmigration professionals:

“The gift that just keeps on giving.”

The messaging to Americans abroad includes:

Americans abroad who don’t file U.S. taxes are constantly warned of the consequences of non-compliance.

Americans abroad who DO file U.S. taxes are constantly warned of the consequences of mistakes in their attempts at compliance.

Americans abroad attempting financial and retirement planning outside the United States are constantly on the search for financial products that wont’ conflict with U.S. tax rules.

Americans abroad who want to escape by renouncing U.S. citizenship are constantly being warned of possible tax and immigration consequences associated with renunciation.

(It’s clear that U.S. citizens living outside the United States are being punished for who they are and NOT what they do or don’t do.)

In this context, there continues to be a significant “fear mongering” coming from various players in the U.S. tax compliance industry. I suggest that Americans abroad should exercise caution in how they respond to these messages. In 2013 I wrote a post suggesting eleven principles for how one should respond to the U.S. tax compliance (or noncompliance) problem. This 2023 post is intended to provide an update to the 2013 post. The 2013 post is reproduced as Part C of this update.

This general purpose is to provide suggestions for how to RESPOND rather than REACT to your possible situation as a U.S. citizen living outside the United Staes. My thoughts are organized in the following four parts:

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