A dilemma, alerting the ‘accidental American’

In truth, I don't think the US govt cares either way about low to moderate income overseas Americans. Certainly not enough to go chasing after them. However, I think it's wrong to have something like the FBAR law which ordinary expats can easily get wrong. The penalties are draconian and non-discretionary (i.e. no honest mistakes allowed). There should be a way for the subject of the original poster to get this sorted out without taking a big hit.

Amen to that, but I can see why they say what they say, otherwise everyone would plead ignorance. But I do, also, think there should be a time limit. So, if you're absent or whatever for 10 years or something, then you're considered free from obligation (but also give up any rights to your pension or SS or whatever).

Amen to that, but I can see why they say what they say, otherwise everyone would plead ignorance. But I do, also, think there should be a time limit. So, if you're absent or whatever for 10 years or something, then you're considered free from obligation (but also give up any rights to your pension or SS or whatever).

I think the best solution would be to stop taxing on the basis of citizenship. I wish the US would do what the UK does and tax on the basis of residency - it would solve the problems of the "Accidental US citizen" and make expat's lives so much easier. It would also go a long way to solving the issues with PFICs for US citizens wanting to invest some money in local mutual funds. Nobody has mentioned the tax issues an accidental American might have with the IRS if they have been investing in foreign (local to them) mutual funds.

Here is a sad tale of an accidental American over on the Britishexpats forum.

http://britishexpats.com/forum/showthread.php?t=690216

That's horrifying! I would take it up with my MP, personally (and throw back my citizenship). If this is happening to lots of people, the British government might be able to do something.

Maybe it's a ploy to stop "accidentals" from ever applying for passports?


Aren't the UK doing something similar now, though, to deal with Brits living in tax exiles or something?

I think we would all agree that we wish the US gov't taxed based on residency. 

How exactly do you think the UK government could do anything about it though? 

If it is to stop people getting a passport it is a terrible way to do it since:

1. No one knows about it
2. Even if you don't have a passport you are still a citizen

That's horrifying! I would take it up with my MP, personally (and throw back my citizenship). If this is happening to lots of people, the British government might be able to do something.

Maybe it's a ploy to stop "accidentals" from ever applying for passports?


Aren't the UK doing something similar now, though, to deal with Brits living in tax exiles or something?

I am not sure what influence you think a British MP has on the process. And the British government (i.e. HMRC) know about this issue.  They don't care.

Considering that the "accidental American" is also British and a British citizen is being treated pretty badly by another country? I dunno, it was just a suggestion. You'd be amazed at what your MP can do, if you ask them.

Considering that people only get slammed/threatened by the IRS when they start applying for things like SSN and passports, yeah I think it would stop people.

I'm a little sensitive to this as I'm an "accidental Canadian", due to their new citizenship laws, so am still investigating what my responsibilities are there, too.

Could you imagine the uproar if the American government "suggested" that the UK change its tax code because it didn't like the way Americans were treated? 

The only way your MP could help is if your MP could get Parliament to take up the issue and Parliament managed to convince the US government to change the law. 

But most people don't know about until after they have applied and the IRS knows that.  So it won't stop people from applying, but it might stop people from visiting.

They don't care.

Quite true. Nor should the British public be concerned in any way. It is not their issue.

As for the American public, I’m afraid there is little sympathy also. Many conclude that all US Citizens should pay US taxes. Form 2555 is seen by some in Congress as tempting ‘low hanging fruit’, and in the recent past, have put forward Bills which would have it eliminated. They, wrongly, believe tax revenue would increase. Form 1116 would remain, since it is required for those living in the US with foreign income sources.

A percentage of Americans abroad are on 1 to 5 year assignments from a US firm. Many have ‘equalisation’ packages which cover tax reporting. For them, it may be a side issue and not a major concern. That leaves an isolated group of ‘US Persons’ who have made the decision to reside abroad permanently. They do not have one voice in Congress, and whilst they may appeal to the President (in writing), their voices to Congress are split into 50 different States. Their plight becomes significantly watered down amongst all the many other local issues confronting their Congresspersons and Senators. Nonetheless, if enough overseas Americans wrote their representatives, the issue might demand some notice.

Most of us are aware of the 3 organisations attempting to represent Americans abroad in these issues. I’m sure they would appreciate any support offered by Americans abroad subjected to these issues.

Even if those Brits could be "accidentals" themselves? I actually think the British public would be outraged to think the (much maligned) US trying to take money from British taxpayers. How is it not their issue?


Bookgrl, I certainly know the uproar that's caused by the apparent unjust treatment of Americans by non-Americans, sure.

But then, I also know many Americans also turn a blind eye to abuses against non-Americans BY Americans. But, I'm fairly sure that's not the point you're trying to make, is it.


But, I guess you're right, why bother complaining to anyone, right? Awesome.

Could you imagine the uproar if the American government "suggested" that the UK change its tax code because it didn't like the way Americans were treated? 

Actually they do complain. They've complained about the £30k non-dom fee because in some circumstances this ends up being a transfer from the US treasury to the UK treasury because of tax credits. A recent article in the Sunday Times indicates that they are campaigning against an extension of this fee.

Most of us are aware of the 3 organisations attempting to represent Americans abroad in these issues. I’m sure they would appreciate any support offered by Americans abroad subjected to these issues.

For those that may not be aware (not sure I am) what would they be? Do you mean like Democrats Abroad?

That leaves an isolated group of ‘US Persons’ who have made the decision to reside abroad permanently. They do not have one voice in Congress, and whilst they may appeal to the President (in writing), their voices to Congress are split into 50 different States. Their plight becomes significantly watered down amongst all the many other local issues confronting their Congresspersons and Senators. Nonetheless, if enough overseas Americans wrote their representatives, the issue might demand some notice.

I'm not sure I'd want to write to the President or my Congressman and call attention to my situation. I would certainly want to maintain a very low profile (if I were even inadvertently ignoring my tax obligations)

For those that may not be aware (not sure I am) what would they be? Do you mean like Democrats Abroad?

ACA (American Citizens Abroad)
http://www.aca.ch/joomla/index.php

AARO (The Association of Americans Resident Overseas)
http://www.aaro.org/

FAWCO (Federation of Americans Women’s Clubs Overseas)
http://www.fawco.org/

I am not sure what influence you think a British MP has on the process. And the British government (i.e. HMRC) know about this issue.  They don't care.

Issues like this should be addressed in the UK/US tax treaty. Both HMRC and IRS care about international tax compliance, but the treaty and rules often ignore the individual tax payer as we don't have a big lobby. So we should all lobby our MPs/congress people with these issues. I recently wrote to my Senators about FATCA.

In fact pensions and retirement accounts are well dealt with in the UK/US tax treaty, but lobbying form the US and UK investment industry keeps cross boarder mutual fund
investing difficult. I'm not suggesting that a US resident should be able to buy UK based funds, however, a US citizen resident in the UK should be able to invest in UK based funds without onerous US tax consequences.

Once again I get back to my point that tax should be based on residency. A UK citizen resident in the US has no UK tax responsibility for US income or investments. I simply don't know how expat Americans manage to invest in a sensible manner.

Thank you for those links TheOAP.  I do notice that they all charge a membership fee though.  Don't fancy having to pay to have my voice represented re: taxation, think I'll stick with DA.