The downside of maternity tourism: why US citizenship is a burden for 'casual' Americans
Many girls from post-Soviet countries go to the United States with the aim of giving birth to a child there, because a baby born in the States automatically receives American citizenship. Moms think that a US passport is the best birthday present, but often it is a "disservice", and not a ticket to a bright future. Eritrea and the United States are the only two countries in the world that require all their citizens to file tax returns annually, regardless of where they live. And since 2010, when the Foreign Account Tax Compliance Act, or FATCA, came into force in the United States, all world banks have been obliged to keep records of the activities of their clients with American citizenship. Why people born in the USA suffer from this, the publication told T.
This year, the United States began to seriously enforce this law. Although the US Treasury Department temporarily relaxed rules last year, that regulation expired in January when the Treasury Department refused to extend the moratorium on penalizing banks that violate FATCA.
Effective January 1, 2020, the United States has threatened to impose fines on foreign banks that do not release information about their US citizens to the IRS. Since then, these rules have created problems for thousands of people, who are threatened with closing their accounts or denied services by their banks.
“The impact on people's lives was enormous,” says Mark Zell, an American lawyer in Israel. - People can't get mortgages. They cannot get bank loans for business. Moreover, many do not even know that they are Americans. "
Now, lawsuits from around the world should remedy the situation. On December 1, organizations representing Americans in Europe filed complaints against the governments of Luxembourg and Belgium, demanding that they immediately stop transferring personal banking information of European citizens to the United States - which they said violates strict European and national privacy laws.
In early December, Zell sued the US State Department on behalf of 20 "random Americans" whose lives were changed by FATCA. Also, the transfer of information may be a violation of European Union data protection laws, as well as, possibly, a violation of the US Constitution.
Lawyers and groups who have struggled with the fallout of FATCA for years hope that the rise to power in the United States of a new administration will give them a chance to get some changes to the law.
“Under the guise of fighting tax fraud, the US created a monster,” says Fabien Lehagre, founder and president of the Paris Association of Accidental Americans, who was born in California in 1984 and lived there until 18 months.
According to him, FATCA is "a monster that accidentally made Americans outcasts of the international banking system."
"Everybody Thinks We Are Rich Americans"
When President Barack Obama signed FATCA in 2010, his intention seemed reasonable: to catch wealthy Americans hiding their wealth from the IRS in foreign banks. This comes after a whistleblower in the 2000s recounted how Americans hid billions of dollars in tax-free Swiss banks.
But the law acts as a trap with dire, unintended consequences. In several interviews, lawyers and victims describe how ordinary people got caught up in years of trouble when they suddenly learned that they were American.
There is no exact data on the number of "random Americans". Banking organizations estimated their number at more than 110 in Europe back in 000, but this data was collected only from a subset of banks. It is estimated that at least 2016 million Americans live abroad, many of whom have close ties to the United States. However, the law does not distinguish between these people and those who were simply born in the country.
Brower-Hugsteen, a barber from the Netherlands, is an American citizen but has no ties to the United States. She was born in 1967 in Bellflower, California, where her parents were farmers, and when she was 13 months old, the family returned home to the Netherlands, where the woman still lives. She doesn't even speak English.
You may be interested in: top New York news, stories of our immigrants and helpful tips about life in the Big Apple - read it all on ForumDaily New York.
When Dutch bank Rabobank asked for her US social security number in 2018, she "thought it was a mistake." She ended up filling out bank forms for US citizens without providing a taxpayer identification number - an omission that seemed to anger bank executives.
FATCA probably never intended to target foreigners like Brower-Hoogsteen, who have nothing to do with the United States and don't have to pay a cent in taxes.
"There is a problem with Americans who want to use foreign tax havens to hide their income," Zell says. “But they're not expats. They are in the United States. "
Zell's lawsuit against the Department of State, filed on Dec. 9 on behalf of the Paris Association of "Accidental Americans", alleges that the law "affected Americans who have nothing to hide." It argues that FATCA violates the U.S. Constitution by effectively forcing people to remain American citizens against their will - in part because fees for renouncing U.S. citizenship jumped from $ 2014 to $ 450 in 2 - an amount that many cannot afford.
However, more and more people are paying a renunciation fee. In the first three months of this year, 2 people renounced US citizenship, the highest quarterly figure in the history of such statistics. American expat organizations believe the real figure is likely much higher as many names do not appear on the official register and say the increase is partly due to FATCA.
Apart from renouncing citizenship, there is little that Americans can do to avoid risks. Groups pushing for changes to FATCA have not found support in the US. Both Republicans and Democrats have refused to bring the issue up in Congress and the US Treasury Department.
“I think the 'casual American' group is too small in their eyes,” says Rob Gerretsen, a former Amsterdam retail manager who was born in 1957 in New York, where his father worked at a bank. They returned home before their second birthday, but at 63, Gerretsen is struggling to keep his bank account in the Netherlands closed due to FATCA.
He says he is very angry at the indifference of American politicians to the plight of "casual Americans" and American expatriates.
"They think we are rich Americans who hide our money," he says.
Problems in the courtroom
Changes may be coming in Washington, but lawyers who have worked for years to amend the FATCA law doubt that the Joe Biden administration will want to do anything in this direction.
“President-elect Biden is from Delaware, which Europe has always pointed to as an example of hypocrisy in the US,” says Filippo Noseda, a London-based tax lawyer, referring to Delaware's tax-free corporate regime. Noseda has fought for years in EU and UK courts on behalf of expats trapped in FATCA.
On the subject: Obtaining US citizenship: answers to the main questions
Noseda believes that Biden will have no desire to change FATCA, as this law was introduced when he was vice president of the United States.
“The only solution is to go to court,” he says.
After all, only the courts can force the US to change course. Several legal claims across Europe are on the verge of being pending in the courts. They argue that FATCA violates data protection laws in the EU, which are much stricter than in the US.
Noseda filed a complaint against the British tax authorities on behalf of an American expatriate named Jenny, who moved to the UK after graduating from college in 1997 and now works at a university.
The complaint alleges that the bank is illegally sharing her personal data with the US in violation of EU privacy rules (which Britain still falls under), including her name, date of birth and the amount of money in the account.
“This is confidential information and we think it is too much,” says Noseda. He calls the exchange of data under the FATCA law "absurd."
Similar efforts are being made in the 27 countries of the European Union that are subject to the EU's General Data Protection Regulation, or GDPR, with its stringent restrictions on information sharing. Two rulings against US internet companies have restricted the transfer of online data from Europeans to the US.
According to lawyers, the same principle may be true for FATCA. The Association of Casual Americans is planning to sue two EU countries, claiming that the agreements that the governments of these countries entered into with the United States to transfer people's financial data were illegal.
“We are convinced that the situation will be in our favor,” says Lehagre, president of the Association, a casual American, non-English speaking Frenchman; he spent years fighting to change FATCA.
The new lawsuits, which he said will be filed by December 31st, are designed to prove FATCA violates European GDPR. If the group wins the case, the decision can be referred to the EU Court of Justice and extended to all Europeans. This would make data-sharing agreements with the United States illegal, "forcing the European Union to renegotiate the terms of negotiations with the United States," Lehagre says.
On the subject: Trump may revoke US citizenship by birth before leaving office
If these lawsuits don't work, people will be forced to keep trying to take matters into their own hands.
Ronald Ayres, 62, a retired KLM pilot from Barchem, The Netherlands, left the United States when he was a few months old, after he was born at a US military base in New Jersey, where his father, a Dutch army officer, was within exchange of experience. In 2018, his Dutch bank, De Volksbank, accused him of document forgery - Aires indicated in bank form that he "had no other tax residency" other than the Netherlands. The bank demanded that he provide a US Social Security number, otherwise his account would be closed. In late November, he sued De Volksbank to keep his bank account open.
Ayres says he is unsure of his victory. And finding another Dutch bank that would accept him as a client turned out to be impossible, since banks usually refuse everyone associated with the United States. His mortgage company warned him that if he didn't manage to resolve the situation, they could strip him of ownership of the house he bought in 2018. He is considering renouncing his US citizenship, but fears that he could be forced to pay taxes to the IRS.
“What world do we live in? He says angrily. "Maybe we can go back to the way my father was paid in a brown paper bag in cash."
He says his battles with FATCA were deeply stressful: "I haven't gotten enough sleep in the last two years."
Read also on ForumDaily:
stdClass Object ([term_id] => 544 [name] => failure [taxonomy] => post_tag [slug] => otkaz)failure
stdClass Object ([term_id] => 13371 [name] => US citizenship [taxonomy] => post_tag [slug] => grazhdanstvo-ssha)US citizenship
stdClass Object ([term_id] => 13992 [name] => Likbez [taxonomy] => category [slug] => poleznaja-informatsija)Educational program
stdClass Object ([term_id] => 26676 [name] => problems [taxonomy] => post_tag [slug] => problemy)problems
Do you want more important and interesting news about life in the USA and immigration to America? Subscribe to our page in Facebook. Choose the "Display Priority" option and read us first. Also, don't forget to subscribe to our РєР ° РЅР ° Р »РІ Telegram - there are many interesting things. And join thousands of readers ForumDaily Woman и ForumDaily New York - there you will find a lot of interesting and positive information.