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1040 Abroad

US Tax Experts Highlight FATCA Misconception for Accidental Americans

Mark Allsopp and Michael Lewis of Frank Hirth have explained that some campaigners for Accidental Americans are asking the wrong questions

Published on October 15, 2020

I Am An American Photo: Mick Haupt

During 2019 and 2020, a number of campaigns and advocacy efforts have drawn attention to the complex, difficult financial situations faced by a group of people known as 'Accidental Americans'. These are individuals who are declared US Citizens by virtue of having been born in the United States, or having been born to American parents. Even if those individuals left the US as children, or have barely even set foot on American soil, this automatic US Citizenship means they are liable for financial regulations which affect overseas Americans, including the requirement for annual tax returns.

As awareness has been raised about the situation faced by Accidental Americans, a number of political figures have weighed in to ask questions of governments and to seek solutions. However, two US tax experts from tax firm Frank Hirth, Mark Allsopp and Michael Lewis, have highlighted that some politicians may have misconceptions about the problems faced by Accidental Americans, and are actually asking the wrong questions.

In their article, dated October 7, Allsopp and Lewis note that on October 1, 2019, MP Martyn Day wrote to the Chancellor of the Exchequer and asked "what recent representations he has made to his counterpart in the US Administration on the creation of accidental Americans through the US Foreign Account Tax Compliance Act".

Allsopp and Lewis explain that "FATCA does not cause someone to have a US filing requirement nor does it ‘create’ Accidental Americans but this kind of mistake is all too regularly made, with many commentators getting completely confused between cause and effect."

The article then goes on to explain the key differences between US taxation requirements for Americans living overseas and FATCA, the Foreign Account Tax Compliance Act. Concluding, Allsopp and Lewis write that "The root cause of the tax burden on US Citizens is nothing to do with FATCA but results from both the antiquated US tax rules which impose tax obligations by virtue of citizenship and secondly from the ease with which US citizenship can be acquired (even if not wanted!)"

If you are an 'Accidental American' and would like to share your experiences, please email editor@theamerican.co.uk

The full article from Mark Allsopp and Michael Lewis can be found at www.frankhirth.com/news/taxation-of-accidental-americans-fatca-cause-or-effect




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