The author of the email (“Anon”) is
apparently one of many hapless dual-nationals now caught in the big
FAT(CA) trap. He’s obviously never filed a US tax return, is clueless
about FBARs, SFFA’s reportable on Form 8938, PFICs, CFCs and
all other variations of the US tax alphabet soup. Now, Anon’s local
bank in Saudi Arabia (which is viewed as a “foreign” financial
institution for US tax purposes) is probably asking him for a so-called
“FATCA certification”. In all likelihood, the bank noticed that Anon’s
Saudi passport listed a US birthplace. As part of the FATCA mandate
imposed on this “foreign” bank, Anon must now “certify” his US status or
provide evidence satisfactory to the bank that he is no longer a US
person. Anon has probably done some investigating about FATCA and what
it means to be a US citizen. Anon has just been given the shock of his
life.
Anon may have been born in the US by
happenstance while his parents were studying there and thus, Anon
obtained US citizenship at birth regardless of whether he or his parents
actually wanted it. His US status probably resulted because he was
simply a victim of the US adherence to the common law principle of “jus
soli”, the “law of the soil” under which the place of a person’s birth
determines his citizenship regardless of any other factor. He probably
obtained Saudi nationality because his father was a Saudi national. The
case of this “Accidental American” demonstrates that multiple
citizenship can arise because different countries often have different
rules governing the criteria for citizenship with the result that the
individual may satisfy the citizenship requirements of more than one
nation at the same time.
Multiple Nationalities – Multiple Problems?
Having multiple citizenships can sometimes cause problems since
one country’s laws or policies might conflict with those of the other
country. Some countries prohibit their citizens from holding dual or
multiple citizenships. This prohibition can be enforced by requiring the
individual who applies for naturalization in that country to renounce
all existing citizenships. It can also be enforced by stripping
citizenship from an individual who voluntarily acquires the citizenship
of another nation, or by other means. Many GCC countries do not permit
dual nationality – for example the Kingdom of Saudi Arabia, the United
Arab Emirates, Bahrain, Kuwait. Anon is probably very concerned about
the possible consequences of holding both US and Saudi nationalities.
Hope on the Horizon?
An early December report on tax reform from the staff of the US Senate Committee on Finance shed a much-needed ray of light into the dreary tax world of the US expat community. On page 282, the Republican report stated: “The
United States is the only industrialized country in the world that
imposes citizenship-based taxation. In other words, the United States
taxes its citizens on their worldwide income even if the citizen resides
outside the United States and has no connection to the United
States other than citizenship.”
The report added words that lit up the smiles of US expatriates abroad: “The United States needs to rethink its taxing rules for nonresident U.S. citizens.” The report referenced a proposal from American Citizens Abroad, calling for “residence” based taxation, a model that has garnered applause
from tax professionals and Americans living overseas whose worlds have
been upended because of the US worldwide tax system and the recent
enactment and enforcement of FATCA. Not only are such Americans facing decreased job, banking and investment opportunities abroad, they are seeing their marriages and personal relationships crumble, are having increased concerns with personal security and are facing what feel like insurmountable obstacles in trying to become US tax compliant.
Perhaps the New Year will bring further attention to these matters and see some much needed action take place in Congress.
For the most effective use of this blog and the links, readers must have the background and skills to test the information by further research and analysis before reaching any conclusion as to its usefulness and correctness in actual situations. Legal advice is always individual, considering the unique facts and circumstances of each client and shaping legal advice and strategies for the particular client. That simply cannot happen on this blog.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.