Expats File American Taxes Lawsuit
A group of Americans in France, known as the “accidental Americans,” is taking legal action. The lawsuit is filed against foreign banks which uphold FATCA. The expat subset argues that supporting FATCA is a form of discrimination. Many expats around the world disagree with the citizenship-based American taxes need.
Who are the Accidental Americans?
Accidental Americans are those people who live in foreign countries and are not aware that they are considered U.S. citizens. Throughout their life, accidental Americans have the responsibility to fulfill their tax-filing obligations. They can only get away with such duties once they give up their American citizenship.
These are individuals who can be considered as accidental Americans:
- An individual born of American parents while they were living abroad.
- An individual born on U.S. soil. The parents were foreign citizens living in the U.S. The family returned to their home country where the individual was raised.
- An expat who has become a naturalized resident of a foreign country and thought that his U.S. citizenship has discontinued.
These scenarios can cause someone to become an accidental American. To the IRS, the condition of how you became a U.S. citizen does not matter. IRS requires tax-filing and sometimes tax payment. When an expat is not fulfilling these tax duties, strict penalties are imposed. More than 300,000 people can be categorized as accidental Americans. This is according to the European Banking Federation. The number is for those who are presently living in the European Union.
What are the bases for their lawsuit?
According to the New York Times, the 300 accidental Americans living in France filed a class action or a discrimination lawsuit. Due to the FATCA, some of these citizens complained of the inability to find loans or to open bank accounts. The legal action was against any financial institutions that uphold the FATCA regulations. Through these regulations, a type of discrimination is evident. This is according to the accidental Americans.
How are the expats affected by this lawsuit?
If the FATCA is indeed discriminatory, expats would be significantly affected by this lawsuit. The legal action was to pressure the United States. There is a call to change to residence-based taxation. Accidental Americans also want to remove FATCA. They also ask the government to allow accidental Americans to abandon their U. S. citizenship for free. The first two goals alone can already ease the burdens among expats. These financial challenges from the current banking can be lessened. There should be a positive response to the legal action.
Expats have also stood affirmed against other tax issues. Recently, Congressman George Holding initiated the Tax Fairness for Americans Abroad Act of 2018. The bill aims to remove American taxes on foreign income. It also means that only the U.S. income would be taxed. Stories like how the accidental Americans filed a lawsuit gives hope to many expats. The expats had been struggling with these issues. Having politicians who will speak up for them is a great relief among the expats.
Expats all hope for a continuous political and legal right on these issues. American politicians know the challenges that the expats face. The taxation system is a burden to the expats. They have to choose between giving up their citizenship or facing lifelong taxation. The taxes will be paid to the country in which they consider themselves foreign. Surrendering one’s nationality is an expensive and permanent process for many expats.
