# FATCA options?



## GeneM

I have lived in Africa for almost 40 years and became a local citizen over 25 years ago BUT I'm originally from the US.
A local bank has sent me a letter regarding FATCA compliance. It is from a bank that I do not even bank with but many years ago I had an American Express card from this bank and I guess they have my details. I suspect I may receive letters from banks that I do bank with soon. I’m not familiar with FATCA but I did some searches therefore a vague understanding. 
Anyway I believe I am except since I have less than $400,000 in financial assets (joint filing). I’m reluctant to complete and submit Form 8938 since it may trigger the IRS. I have not filed taxes but I “think” I do not need to due to low earnings particularly in $. I live mainly off of selling listed shares and pay a local capital gains tax of 20%. 
The thought of completing countless, complicated forms each year is very depressing. Also there is no local US tax advice available. 
Anyway my options are:
•	Not to respond to the bank letter since my financial assets are less than $400,000
a.	This will trigger a non-compliance from the bank to the local tax authorities. There are few US citizens here therefore the non-compliance list received by the local tax authorities will be small. Which means their follow up should be easy. Then I explain to them my reasons for not complying. 

•	Respond by competing the bank forms including W-9 form and perhaps others.
a.	Not sure what local authorities will do with information but guess it will be sent to IRS and puts me on the radar. Do not like this option.

•	Maybe there is another option?
Any advice would be appreciated.


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## iota2014

Are you sure you didn't lose your US citizenship when you became a citizen of your country?

If you haven't made use of your US citizenship since then (e.g. by renewing or using a US passport, voting in a US election, etc) you should be able to state reasonably truthfully that you believed you were losing your US citizenship when you became a citizen of the country you live in.

Nowadays, you need to document loss of US citizenship by paying $2350 to the US State Department for a Certificate of Lost Nationality. But twenty-five years ago, this was not required. You might consider swearing an affidavit stating that you relinquished US citizenship in 19--, citing the US law on loss of citizenship, and see if your banks will accept that as evidence that you are no longer a US citizen.


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## GeneM

IOTA,
You make a good point but I did renew my passport.


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## iota2014

GeneM said:


> IOTA,
> You make a good point but I did renew my passport.


Bad luck. You probably would have to renounce US citizenship then. Renunciation involves a visit to a US Consulate to swear an oath; you have to pay the 2350USD upfront. Of course that would mean losing the US passport for good.

My only other suggestion would be to bite the bullet, sign the W-9, file somewhat creatively for a year or three and then drop off again. The IRS probably won't bother you if they don't think it will be worth their time to do so. Just make sure you keep filing the FBARs, which are easy - just bloody annoying.


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## iota2014

Also - if you're keeping your US passport current, you need to be aware of this new provision:

https://www.irs.gov/businesses/smal...l-of-passport-in-case-of-certain-unpaid-taxes

This isn't fully operational yet, and who knows to what extent it will ever be enforced, or could be enforced. But it's one to be aware of.

I take the view that once the FATCA letters start coming, if you can't escape altogether by losing US citizenship, it's better to be on the radar and not of any interest, than to try to stay invisible thus possibly triggering an investigation. But it obviously depends on circumstances.


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## Bevdeforges

The $400,000 threshold is only for filing certain forms along with your US tax returns. It's much, much lower for the banks to have to report on your having an account with them.

However, you do say 


> It is from a bank that I do not even bank with but many years ago I had an American Express card from this bank and I guess they have my details. I suspect I may receive letters from banks that I do bank with soon.


If the letter you received is from a bank where you no longer have an account, feel free to ignore the letter. If you happen to have a forgotten account or something, they may just close the account and send you the money - but that's no problem.

Other banks you deal with may start sending you letters, but all they will be asking for is indication of your US status (i.e. are you or are you not currently a US citizen?) and if you are still a citizen, then your US social security number. Often, what they want is a W-9 form - but understand that the W-9 form stays with the bank. It is not sent to the IRS. The banks may use their own form, usually where they confirm the information they have on file for you already (address, for example) and then ask you to confirm your US "person" status and your US SSN. 

As I understand it, they report only accounts over $50,000 and then only the year end balance. Some countries agreement with the US stipulate that they do not report certain "tax free" savings accounts (but your individual banks will probably indicate this on whatever letter they send you). This is all a variation of the stuff you are supposed to be reporting on the FBAR filings each year, but unless you have very large holdings, chances are they aren't going to follow up any time soon

The other thing to understand is that, if you don't have a filing obligation (usually because your income is less than the filing threshold for your filing status), then you don't have to file those FATCA forms that are income tax related. There are any number of situations where a person could have $400,000 (or even more) in assets, yet not have enough income to have to file. 
Cheers,
Bev


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## iota2014

> As I understand it, they report only accounts over $50,000...


Beware. In some countries (the UK being one) banks are free to report on low value accounts as well, and as far as I've seen, they all do.


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## Nononymous

My advice would be to take your time, don't assume you need to become compliant with US taxes, but prepare for the possibility.

If the letter from Amex concerns a closed account or dead card, I'd just call them up and ask for it to go away. Then take no further action.

If eventually your bank contacts you, play it slowly. If you dodge FATCA reporting the US continues to not know of your existence. You could tell the bank that you're a South African citizen and leave it at that - see how they react. Do they know of your birthplace? If not, all good. Try to put off being reported as long as possible.

If your accounts are eventually reported, you have options. You can become compliant with US taxes (which may or may not be easy or expensive, depending on your situation - do a trial return to figure it out). You can completely ignore the situation, particularly if you don't have US assets or other ties that you care about maintaining.

One potential concern is that you might lose banking services if you refuse to sign a W9 (or lie and say you've renounced and sign a W9). In the worst case, as seems to be happening to some folks in Europe, is you'd lose banking services anyway simply for being American.


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## Nononymous

Nononymous said:


> ...if you refuse to sign a W9 (or lie and say you've renounced and sign a W9).


I meant to say lie about not having US citizenship and sign a W8, which is the non-citizen version of the W9. 

Note that W9 and W8 forms are really about withholding, but banks use them (improperly in my view) to have customers self-certify US personhood, or lack thereof. The banks don't submit them to the IRS, but keep them on file to show they've made efforts to be FATCA-compliant. That being said, I'd still be a bit nervous about signing something untruthful on a piece of paper with a US government seal on it.


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## iota2014

Model 1 IGAs require the banks to get a W-9 from US citizen accountholders, and keep it on file to show the auditors.


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## Nononymous

iota2014 said:


> Model 1 IGAs require the banks to get a W-9 from US citizen accountholders, and keep it on file to show the auditors.


Do the banks specifically need to have a W9, or is it just their preferred shortcut to have the customer sign off on their US person status? I ask because there are supposedly new CRS forms coming out in Canada, where one lists all of one's tax residencies. There are two versions of the form, one specifically calls out US citizenship, the other does not.


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## Bevdeforges

Nononymous said:


> Do the banks specifically need to have a W9, or is it just their preferred shortcut to have the customer sign off on their US person status? I ask because there are supposedly new CRS forms coming out in Canada, where one lists all of one's tax residencies. There are two versions of the form, one specifically calls out US citizenship, the other does not.


The IGAs do NOT require W9s or W8 Benladens (or whatever they're called). The standard IGAs usually state quite specifically that the banks only need to solicit the information and keep it on file. Using their own form is more than acceptable (and certainly what I've seen here in France).

And, I believe there is an option for those de facto US citizens who don't have SSNs to simply fill in all 0s for their Soc or Taxpayer i.d. number. I wouldn't mess around with this if you do actually have an SSN. But there are still plenty of US citizens (born overseas and never registered, for example) who quite legitimately may not have an SSN.
Cheers,
Bev


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## iota2014

> If the self-certification establishes that the account holder is resident in the United States for tax purposes, the Reporting [FATCA Partner] Financial Institution must treat the account as a U.S. Reportable Account and obtain a self-certification that includes the account holder’s U.S. TIN (which may be an IRS Form W-9 or other similar agreed form).


https://www.treasury.gov/press-center/press-releases/Documents/reciprocal.pdf

So, not an improper use, unfortunately.

(I say "unfortunately" because if it was being used improperly, that might be grounds for contesting it, in some countries. But that does not appear to be the case.)


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## JustLurking

Nononymous said:


> I meant to say lie about not having US citizenship and sign a W8 ... I'd still be a bit nervous about signing something untruthful on a piece of paper with a US government seal on it.


The W-8BEN certifies non-US citizen status and requires signature under the US's wretchedly universal "_penalty of perjury_" jurat(*). Maybe as a last resort then, but perhaps not something a US citizen should contemplate lightly.

(*) Because I am a _non-US_ citizen _not_ living in America I have to complete W-8BENs from time to time. I find having to acquiesce to this "_penalty of perjury_" -- in what is to me a _foreign_ country, no less -- to be *particularly* vulgar, distasteful and offensive.


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## Nononymous

iota2014 said:


> https://www.treasury.gov/press-center/press-releases/Documents/reciprocal.pdf
> 
> So, not an improper use, unfortunately.
> 
> (I say "unfortunately" because if it was being used improperly, that might be grounds for contesting it, in some countries. But that does not appear to be the case.)


Fair enough. There it is: "which may be an IRS Form W-9 or other similar agreed form".

Banks may use a W9 (which they keep on file rather than send to the IRS) but they aren't obliged to if there's some other sort of form.


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## Nononymous

JustLurking said:


> The W-8BEN certifies non-US citizen status and requires signature under the US's wretchedly universal "_penalty of perjury_" jurat(*). Maybe as a last resort then, but perhaps not something a US citizen should contemplate lightly.
> 
> (*) Because I am a _non-US_ citizen _not_ living in America I have to complete W-8BENs from time to time. I find having to acquiesce to this "_penalty of perjury_" -- in what is to me a _foreign_ country, no less -- to be *particularly* vulgar, distasteful and offensive.


I hate that too. I threatened to sign a W8, quite perjuriously because I am a US citizen, and the bank backed down and just listed me as Canadian only.


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## iota2014

Nononymous said:


> Fair enough. There it is: "which may be an IRS Form W-9 or other similar agreed form".
> 
> Banks may use a W9 (which they keep on file rather than send to the IRS)


Yes


> ... but they aren't obliged to if there's some other sort of form.


Yes. If. 

In the UK, banks seem to use an all-purpose "Tax Residency Form" for self-certification, and then if the person ticks yes to the USC question, they get asked to sign a W-9. (Or other, similar form, presumably, as per the IGA.)


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## iota2014

JustLurking said:


> (*) Because I am a _non-US_ citizen _not_ living in America I have to complete W-8BENs from time to time. I find having to acquiesce to this "_penalty of perjury_" -- in what is to me a _foreign_ country, no less -- to be *particularly* vulgar, distasteful and offensive.


I've not been asked to sign a W-8BEN, so far. Santander sent me a form of their own devising which was actually a general purpose form confirming non-residency anywhere other than the UK. Not specifically American.

I crossed out their certification statement and wrote my own on the form. They accepted that without demur.

Asking a person who has ticked yes to the USC question to sign a W-9 is of course very different from asking a person who has provided proof of non-US-citizenship to sign a W-8BEN.


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## GeneM

Thanks for your comments. I must have misread the $400,000 exception again demonstrating filing US taxes is not an easy venture.

I need to do an estimate of my situation. I'm reasonably certain that I would not owe money (particularly if I opt to do the Streamline version) since my personal funding is from the sale of shares and therefore capital gains which is 20% locally and this credit would be offset. However, when including capital gain as income then I could exceed the minimum limit for not filing. 

Perhaps I should consider the Streamline option. The upside of getting my taxes up to date is I can safely apply for Social Security. The downside is the complicated annual filing without any local assistance. I will post the Streamline option and ask a few questions to help me in making the discussion. Thanks again for your advice. What a valuable site!

In any event I will precede slowly.


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## Bevdeforges

It sounds like you're on the right path here. Yes, those capital gains do count toward the filing thresholds - but your taxes paid to your local government should wipe out any US tax obligation (unless you have items that are "tax free" in your country of residence). 
Cheers,
Bev


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## iota2014

GeneM said:


> I need to do an estimate of my situation. I'm reasonably certain that I would not owe money (particularly if I opt to do the Streamline version) since my personal funding is from the sale of shares and therefore capital gains which is 20% locally and this credit would be offset. However, when including capital gain as income then I could exceed the minimum limit for not filing.


You could try using one of the free (or free-ish) tax software packages such as Taxact or Turbotax for a trial run, to see how to fill in the forms. Then use the forms created by the software as a model.

Not everyone finds this helpful, as there's an additional learning curve to finding out how to use the software, but you could have a look.

https://www.taxact.com/individual-taxes/online/free



> In any event I will precede slowly.


Good luck.


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