Brits who were born in the USA but left when they were toddlers are being hounded by their banks for a US tax ID they do not have.
Following intense pressure by US tax authorities on UK banks, The Guardian reports that tens of thousands of British citizens who were born in the US but left when they were very young, some just a few months old, risk having their assets frozen.
America is one of two countries in the world, alongside Eritrea, that requires its citizens to pay tax on worldwide income no matter where they reside/ no matter where they are domiciled.
The Guardian reports the case of a 74-year-old person living in Cambridge who has consistently been receiving urgent letters from Barclays demanding her tax identification number. The report goes on to say that the pensioner left the USA in 1947 when she was just 18 months old and assumed her US citizenship had lapsed.
British banks are reportedly highly concerned about massive fines they would be liable to pay to US regulators should they continue to serve US citizens without sharing information with the Inland Revenue Service, the country’s tax authority.
For British citizens in this situation, there does not appear to be a straightforward solution at this stage. Those born prior to 1986 were never allocated a tax identification number or a social security number, neither were they warned that they would be liable for US taxes for the rest of their lives.
Back in 2010, the Foreign Account Tax Compliance Act (FATCA) was passed into law requiring foreign financial firms with operations in the US, including the UK, to report and share information regarding US taxpayers to the IRS.
Such financial firms have until the end of 2019 to share any and all information regarding dual citizens who have American citizenship, until which a grace period expires.
The European Banking Federation estimates that there are roughly 300,000 ‘accidental Americans’ in the EU.
Since 2010, media reports have emerged regarding cases around Europe where a person, unbeknownst to them, hold American citizenship have received requests for a significant amount in back taxes, or on the sale of an asset.
Worse still, should a person holding dual citizenship wish to renounce their American citizenship, they have to endure a cumbersome process costing upwards of €2,000.