# Accidental American



## crisvic (Jan 25, 2020)

Good morning...Would greatly appreciate your help-suggestios with the following.
A 45 year old lady, born in the U.S. from a u.s. father and spanish mother returned to Spain as a 1 year old baby. Has been living in Spain ever since, and never returned to the U.S. She has a U.S. Social security nbr, as her father claimed her as a dependent. As her spanish Id shwoes her to be born in the U.S. her Spanish bank just asked her for her U.S. Social security nbr. What could happen now?....assuming her bank continues..
to keep her as her client??....will her account be reported to the irs? should she start filing tax returns now, even though she,ll never visit the U.S in the future?....Any suggestions what she should do?....She makes around 20.000euros a year.....Renounce her unwelcome citizenship?...Thanks so very much for any suggestions..
Cris.


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## Bevdeforges (Nov 16, 2007)

Turning over her US SS number as requested will probably have few, if any, noticeable consequences. If her bank has asked for this information, it's pretty much just a matter of their needing to have it "on file" in case the IRS ever decides to audit the bank for compliance with the "financial institution" version of FATCA. But any reporting of bank accounts to the IRS depends on the balances in her accounts, and if reported at all, will only be as part of the massive transfer of information that Spain makes each year of all "US persons" with bank or other financial accounts in Spain who meet the reporting criteria. 

The only time that the IRS ever seems to look at the masses of raw data they receive each year is if there is some "question" with regard to an individual's tax situation suggesting that they might owe significantly more than what they have declared. (And by significant, think something in the area of 5 figures or more in US dollars.)

Her options are, as you say, to start filing now, to just keep on keeping on and do nothing any differently from what she has been doing all this time or, as you also mention, to renounce her US citizenship. Unless she has any plans or thoughts of making use of her US nationality (travel or relocation to the US, for example), sticking to the status quo could be the easiest route until and unless her situation changes. Renunciation costs $2350 and could potentially call attention to her tax situation (though at the moment, there doesn't seem to be any particular effort on the part of the woefully understaffed and underfunded IRS to follow up on renunciation requests). 

In any event, she should not be stampeded into making a hasty decision. It's not really a time-sensitive decision at this point.


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## crisvic (Jan 25, 2020)

Thanks so much......just told me she has had for several years a bank fix term depo of aroun $30000......that will be a problem with FBAR??


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## Bevdeforges (Nov 16, 2007)

Technically, she "should" report it. But it's still not a sum large enough to draw the attention of the IRS.


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## crisvic (Jan 25, 2020)

Bevdeforges said:


> Technically, she "should" report it. But it's still not a sum large enough to draw the attention of the IRS.


Thank you so much


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## Nononymous (Jul 12, 2011)

Where do you find these people? It's just a constant string of confused dual citizens.

So this is your classic Accidental American story. The first thing you need to understand - and I'm surprised you don't know this by now given how often you appear here - is that FATCA is completely separate from US tax and FBAR requirements. These are different problems. 

A financial institution has identified this person as having a US birthplace. This is unfortunate. She could attempt to claim that she's not a US citizen (by insisting that one parent was a diplomat, for example) but this is not likely to succeed. Depending on how strict the bank is, they may threaten to close her account if she does not provide them with her SSN. (Here is where life gets difficult for an Accidental American without an SSN.) If she provides the SSN, she may face two possible consequences: restrictions on the types of investment services offered by the bank; reporting of year-end balance and interest/dividend income to the US government. Although it may vary by country, under FATCA rules financial institutions are generally not required to report accounts with a value under $50,000. However, it's not forbidden either and we know that in some countries banks report low-value accounts to make life simpler for themselves. 

Tax is a separate matter. As a US citizen she should have been filling tax returns and FBARs, according to US law. Of course no sensible person in her situation would do such a thing. She is at no risk by not filing, and there is nothing to be gained by doing it. (Well, not quite, if she'd filed in 2020 she would have received $3200 in stimulus benefits.) The fact that she may be subject to FATCA reporting does not change this.

With FATCA reporting, the US government will receive a tiny amount of information about her bank account, nothing more. Currently the IRS has no ability to use this data and makes no attempt to find non-compliant US citizens abroad. Even if it did find her, she would owe nothing in taxes, and the IRS has no ability to impose and collect penalties from the citizen of another country who has no US assets. She is completely safe, even if she is subject to FATCA reporting.

Going forward, she has a few options:

1. Supply the SSN to her bank so that she is not denied service; ignore the rest of the tax business. This is a reasonable approach to take if she doesn't mind being not quite off the US radar.

2. If the bank still causes difficulties, renounce US citizenship. Given her income, this would be an expensive thing to do, the fee being $2350. There is no requirement for tax compliance prior to renunciation - no need to file anything, ever - but if it were still possible to claim the stimulus benefit, that would offset the fee.

3. Supply the SSN to her bank, begin filing US tax returns and FBARs and continue for the rest of her life. This is a stupid idea, needless to say.


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## crisvic (Jan 25, 2020)

I agree, and will let her know...thanks so much.


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