# SA and USA citizen FATCA



## jennlynnmorton (Dec 11, 2018)

Hi I am a US and SA citizen; only recently became aware of FATCA when my bank made contact and requested completion of FATCA forms. I have also just become aware that I may also need to file US income tax forms. I have a few questions:

1. If / when I complete the FATCA forms must I also file income tax forms? I have been working for over 10 years now does this mean 10 years of tax filings? 
2. Should I ignore the bank's request and NOT complete FATCA?
3. What are my income tax options? Stay under the radar or is that too late now? File the Streamlined version? 
4. I'm certain I do not owe any money but it is just the burden and cost of compliance when no one in this country can really assist. 

Aprecaite any advise or help. 

Thanks


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## Nononymous (Jul 12, 2011)

Quick answers then a longer statement:

1. No. Or, rather, NO!!!

2. Depends. Your bank might not care, might report you anyway as a "recalcitrant" account, or might close or freeze your accounts. How does the bank know that you are a US citizen? Do you have a US birthplace on your ID? I'm not familiar with the situation in South Africa, and how strict the banks are. You might be able to walk into another bank and open accounts without reporting (i.e. denying or lying about) US citizenship, and that solves the problem.

3. You can remain non-compliant. Even if the IRS receives some limited financial data (year-end account balances, total interest paid) so that you're faintly on the radar, they know nothing else about employment income, and more importantly, have no ability to penalize you if you don't have US assets.

4. Correct. But also there are situations where you can end up owing money due to differences in the tax systems (e.g. sale of a primary residence with big capital gains, or the transition tax mess for small business owners or even consultants who incorporate). Were that to happen in the future, you are far better off to never have begun filing. 

My standard boilerplate statement for Accidental Americans, which may not entirely apply to you depending on how you acquired both citizenships:

If you are an "Accidental American" - a dual citizen who has lived all or most of your life outside of the US, with no US financial ties - and you discover that you have US tax filing obligations, the absolute WORST thing you can do is rush off to a CPA and begin preparing US tax returns. 

Stop, slow down, do some research. If the IRS hasn't found you yet, they aren't going to find you anytime soon. Furthermore, if you are a citizen in your country of residence, and have no US assets or income, the IRS has absolutely no ability to penalize you in any way, shape or form. 

The most likely trigger for Accidentals discovering their filing obligations is a FATCA/CRS letter or question from their bank. The best response is to simply answer "no" to any questions about US citizenship or tax residency. In come countries (e.g. Canada) simple self-certification is all that is required, one small lie and the problem is solved. In other countries (e.g. Switzerland) enforcement is taken more seriously and there are significant restrictions on the services available to US citizens. If you are born outside the US, it is easy to conceal US citizenship and continue with life undisturbed. If however you have a US birthplace on your national ID, life can be quite difficult and often the only option is to renounce US citizenship at a cost of $2350. (Note that you do NOT need to become tax compliant to renounce, nor do you need to pay any exit tax the US might think it has a right to collect.)

Even if you are subject to FATCA reporting, that does not mean the IRS will come after you, as they would have no ability to collect penalties. Whether you renounce or not, there is no reason to become tax compliant. Accidental Americans who discover these obligations should NOT enter the US tax system.


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## Bevdeforges (Nov 16, 2007)

Basically what Nononymous said. Let me just add a couple things, though.



> 1. If / when I complete the FATCA forms must I also file income tax forms? I have been working for over 10 years now does this mean 10 years of tax filings?


FATCA and income tax are two separate and distinct things. It's perfectly fine (and normal) to file FATCA stuff without having any obligation to file US tax returns. And unless you have really significant account balances, it's also not that unusual to file tax returns but no FATCA filings.


> 2. Should I ignore the bank's request and NOT complete FATCA?


As Nononymous said, the big risk is that the bank will close your accounts. They are basically covering their own butts with the requirement that you give them your US SSN. If they don't get that information from you and they get audited, they could have their right to do business in the US or with the US cut off. That's their main concern.


> 3. What are my income tax options? Stay under the radar or is that too late now? File the Streamlined version?


If you want (or feel the need) to get compliant, the streamlined program will let you get away with filing just 4 years (current year plus 3 back) plus 6 years of FATCA filings. Depends what you want to do. 

Staying under the radar may be your best option, as long as your foreign accounts aren't too significant and you don't have any financial assets in the US. 


> 4. I'm certain I do not owe any money but it is just the burden and cost of compliance when no one in this country can really assist.


As long as you don't owe anything and don't have any exposure (US assets, frequent and regular travel to the US, desire to move to the US at some point, etc.) it's not really necessary to get into compliance, nor is it all that necessary to renounce. But you need to assess your own risk level based on your personal situation and goals.


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## Nononymous (Jul 12, 2011)

Bevdeforges said:


> FATCA and income tax are two separate and distinct things. It's perfectly fine (and normal) to file FATCA stuff without having any obligation to file US tax returns. And unless you have really significant account balances, it's also not that unusual to file tax returns but no FATCA filings.


I think you might be mixing up FATCA with FBAR filings. FATCA is the bank reporting you; FBAR is you reporting yourself. 



> As Nononymous said, the big risk is that the bank will close your accounts. They are basically covering their own butts with the requirement that you give them your US SSN. If they don't get that information from you and they get audited, they could have their right to do business in the US or with the US cut off. That's their main concern.


Actually the punishment isn't quite that severe. A bank deemed non-compliant with FATCA is subject to 30% withholding of some types of payments from the US. Bad enough. But South Africa has a Model 1 IGA, which means that SA banks report US-person account info to the SA tax authority, which then reports the info to the IRS. So the banks are insulated from direct dealings with the US government, and would not themselves be subject to IRS audit (on that last point I am not absolutely certain. but fairly confident).



> If you want (or feel the need) to get compliant, the streamlined program will let you get away with filing just 4 years (current year plus 3 back) plus 6 years of FATCA filings. Depends what you want to do.


FBAR filings, not FATCA filings (technically FBAR is now called FinCEN filings). There is apparently also some sort of FATCA form that you file yourself but it only if large sums are involved. FBAR kicks in at US$10k.



> Staying under the radar may be your best option, as long as your foreign accounts aren't too significant and you don't have any financial assets in the US.
> 
> As long as you don't owe anything and don't have any exposure (US assets, frequent and regular travel to the US, desire to move to the US at some point, etc.) it's not really necessary to get into compliance, nor is it all that necessary to renounce. But you need to assess your own risk level based on your personal situation and goals.


Generally the biggest argument for renunciation is to regain normal bank and investment service access, if one doesn't have US financial exposure.


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## Bevdeforges (Nov 16, 2007)

To a certain extent, giving the banks the FATCA information (basically just your US SSN and admitting you're a US person) does make you somewhat more exposed to the FBAR filing requirements. But, the "FATCA forms" - whether a W9, W8BEN or a bank-developed form asking for your US SSN - aren't actually submitted to the IRS. It's basically just that SSN they're after. 

Read through all the details of the bilateral agreements, and it's somewhat fuzzy what information the banks actually submit to the national bank, and what the national bank does or doesn't submit to the IRS. 

The tax return "FATCA forms" kick in for certain types of investment accounts but only if your balances exceed something like $200,000 (for an individual) or $400,000 for joint filers. Those are part of your tax return filings - but there is the loophole that, if you don't need to file a tax return, you don't file the "FATCA forms" on their own. The terminology is very confusing, especially to someone not familiar with US tax filings.


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