15 thoughts on “The Little Red #FATCA Book – (Review, Identify and Report on “U.S. Persons”) – How FATCA affects the non-U.S. World”

1. Gary Post authorApril 5, 2017 at 4:48 pm

   FATCA reporting requirements are not mandated just by birth in the United States but are also required and mandated from day one of birth of your child (if one of the parents is unfortunately a US Citizen when your poor child is borne anywhere OUTSIDE the USA. I have watched in HORROR has 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. I am watching my older children one-by-one renounce their USA Citizenship after obtaining a foreign Citizenship in their new home (a better) Country that respects its Citizens as human beings and not cattle to be sheared. I am soon to follow in their path of renouncing.

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2. Trish Moon Post authorApril 7, 2017 at 12:06 am

   @Gary
   It is incredible to me that the US Embassy forced your grandchildren to register. I am not 100% sure but this may be the first time I have heard of it being forced in such a way.This is one of those areas where I think the U.S. MUST be challenged. US law belongs in the US. I expect this will become a point of contention more and more; many are already NOT registering their kids.
   “…. after obtaining a foreign Citizenship in their new home (a better) Country that respects its Citizens as human beings and not cattle to be sheared. I am soon to follow in their path of renouncing.”
   The numbers continue to rise-You are not alone!

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   1. Gary Post authorApril 7, 2017 at 2:37 am

      Trish
      My four grandchildren were born in the Republic of Panama to the Panamanian wife’s of my two sons (of US Citizenship). All four grandchildren obtained their Panamanian Passports and through their parents requested US Tourist Visas so that they could travel with their parents for a Christmas Trip to visit relatives. The Embassy first issued one child a US VISA but later canceled it upon knowledge the father was a US Citizen and all of the grandchildren were reused US Visas in their Panamanian Passports because the Embassy stated they were denied travel to the USA unless it was a travel on a USA Passport and then stated the foreign births of the four children MUST be registered in the US Embassy in Panama and USA Passport issued to travel on which were forced upon the children and their parents. This poor children are now subject to FATCA and all the other reporting requirement with NO option except at age 18 to renounce their unwanted USA Citizenship.

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      1. Fred (B) Post authorApril 7, 2017 at 1:30 pm

         Each family is different. However I will share 2 things I have done with my kids, non-US born, but with US citizenship.
         A child, citizen of X (not the US), born in X to a mother from X, should get a bank account in his name, under his mother’s authority, in a new bank, which need not know anything else. It need not know about US implications, or the US father. The kids are just like any other of their local peers.
         I chose a bank that had nothing to do with me. My wife opened accounts for my boys, without me. They are local, as as far as the bank is concerned, pure 100% EU. There is no reason for these accounts to ever show up anywhere, except in the country where they are 100% legal and local.
         Few kids have $10000 anyway so there is no reason to start filing forms for the children, if these accounts are safe and local. When the kids are adults, they will decide what to do. If they choose to stay US citizens, they will at least be able to act proactively and avoid trouble. If they renounce I will help them with the cost.
         Another remark is that I had to prove that I was in the US enough time (childhood and adulthood) to make my children US citizens. I documented all this precisely and was actually a bit short before the birth so I went to the US an extra week. My point is maybe your sons don’t have enough time on US soil (or cannot prove that they do, hint, hint) so your grandchildren might not “qualify” for US citizenship! I.e. apply for it and have it refused…
         Good luck.

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         1. Trish Moon Post authorApril 8, 2017 at 12:59 am

            Fred (B)
            I think Gary mentioned that the over $10k accounts for education have already been established. I don’t know if it is possible to somehow move them into a new bank in the way you describe. But new accounts, for sure!

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            1. Gary Post authorApril 8, 2017 at 1:28 am

               Trish
               As a result of being forced to register the foreign births of these children in the Embassy and USA Passports being issued their parents went the extra step to get social security numbers issued and established accounts in the USA moved the funds to the USA and now no more FATCA reporting requirements for the children.
      2. Trish Moon Post authorApril 8, 2017 at 1:21 am

         @Gary,
         I understand the frustration at having to wait. Perhaps there are some ways to avoid prompting US interference…
         You sound well-informed. Perhaps you already know this but just in case:
         http://www.citizenshipsolutions.ca/2016/02/29/the-s-877a-dual-citizen-exemption-must-certify-tax-compliance-for-the-five-years-prior-to-relinquishment/
         7. The S. 877A “Dual Citizen” exemption: “MUST certify tax compliance for the five years prior to relinquishment”

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3. Nononymous Post authorApril 9, 2017 at 4:39 pm

   The situation sucks, but let’s be clear, the families were only forced to register the births and obtain passports and all that because they wanted to visit the US. Had they opted not to take the trip, they could have walked back out of the embassy and done nothing further, and the children would have remained off the US radar. (It’s possible that the kids might have been able to obtain visas if the applications were made solely by the mothers, but this could have caused problems on entry to the US if accompanied by the fathers with US passports.)
   Indeed, many expats are not registering the birth of children abroad to avoid the taint of unwanted US citizenship, but the price of this strategy is taking risks when traveling back to the US with the children. I’ve been lucky with my daughter the few times we’ve crossed the border but I’ve used a Canadian passport with US birthplace and the uniforms haven’t noticed or asked questions about my citizenship; it’s not something I’d care to try with a US passport. We don’t require visas so no need to endure extra scrutiny of an embassy visit.
   Really the safest strategy for dealing with unwanted US citizenship is to avoid the US altogether. I don’t see how moving the savings accounts to the US improves the situation – it avoids FATCA but of course puts the children on the IRS radar because interest income is reported. Instead, they could have set up accounts in Panama independent of the US citizen parent, as they don’t have a US birthplace to identify them for FATCA reporting. Although they have now been dragged into the US system, all is not necessarily lost, they could take this approach going forward, provided they have no plans for future dealings with the US.

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   1. Gary Post authorApril 9, 2017 at 6:14 pm

      Bank interest income received in Panama is tax exempt in Panama but for USA citizens all forms of foreign passive income including interest, rents etc are required to be reported and are subject to USA taxation just the same as the interest received on the USA bank accounts.

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      1. Nononymous Post authorApril 9, 2017 at 8:21 pm

         Right, but if accounts had been opened for the children as Panamanian citizens only, there would be no FATCA reporting and no need for US tax compliance. Without a US birthplace the children can easily remain off the US radar.
         This approach isn’t recommended if they plan to later work or study in the US or otherwise utilize their citizenship, but if they want to avoid the place forever, they can do so.

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         1. Gary Post authorApril 9, 2017 at 10:47 pm

            You are correct in that if a foreign born persons birth outside the USA where one parent is a USA citizen and their parents choose not to register the birth and never travel to the USA necessitating the registration and USA passport, it’s possible to stay under the radar but NOT office of the screen of risk. The unregistered person is still a USA citizen under USA law and subject to all reporting requirements and/or subject to USA criminal laws for failure to file and/or comply to all the laws and regulations governing every USA citizen living in a foreign country. He or she is a dual citizen whether registered or not. It caught my attention about four years ago when I was given a first hand account of a Swiss Citizen that was terminated from a large Swiss Bank because the compliance department of the bank had discovered (after a 20 year career at the bank) that he was a unregistered USA citizen which arose from the fact that his birth mother was a USA Citizen at the time of his birth in Switzerland and she had renounced her USA citizenship 3 months after his birth and because a naturialized Swiss Citizen as the same as her husbands nationality. This person had never traveled to the USA and had no idea that he was considered a USA citizen. The Swiss Bank gave him two choices ti either renounce his USA Citizenship and/or face termination. After a trip to the US Embassy and being told it would require 20 years of tax returns and other requirements he then returned to the Bank and choose termination. The Swiss Bank closed all USA citizen bank accounts and then terminated all USA Citizens in their employment leaving “no stone unturned” in their effort to purge everything USA from their bank as they checked everyone heritage and linage and cleaned house. This occurred sometime back after the USA actions against various Swiss Banks. I certainly don’t want to witness my children and grandchildren being subject to FINCEN reporting requirements or trying to fly under their radar in violation of the USA laws.

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            1. Trish Moon Post authorApril 9, 2017 at 11:26 pm

               20 years of tax returns? What year was this?
4. Gary Post authorApril 9, 2017 at 11:39 pm

   Approximately 2014 that the story was conveyed to me. I know the current requirement for a USA Citizen renouncing is the prior five years of tax returns and six years of FATCA reports but I assume this individual might have been treated differently because he was not registered as a foreign birth in the US Embassy in Switzerland and they had no record of him (as he was off the radar). He was not a low level bank employee and it was a big shock at the time to his coworkers.

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   1. Nononymous Post authorApril 10, 2017 at 12:09 am

      Actually there’s no tax compliance requirement for renunciation – you simply renounce and a few months later your CLN arrives in the mail. The tax returns and FBARs are necessary if you want to make a clean exit from the US tax system. Those who don’t care, don’t bother.

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      1. Gary Post authorApril 10, 2017 at 12:54 am

         I just assisted one of my children through the renunciation process and I found it interesting that their last USA IRS 1040 filing requirement date was the date the US Embassy received is renunciation form and oath and not the later date that it was accepted and approved by the US Secretary of State office in their CLN. When the 1040 was filed along with all the other required forms and disclosures along with notice of final return it was only thought the end date of taking and filing the oath. It would appear that the CLN is just another formality but not the official date of the end of filing requirements as the earlier date of completion of the applicants acts seems to be govern the ending date.

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