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FATCA and US citizens living abroad
Thread poster: Jonathan MacKerron

Jonathan MacKerron  Identity Verified
Member (2005)
German to English
+ ...
Nov 27, 2014

Hello,
My German bank sent me a letter recently stating that I must divulge my social security number to facilitate their 'mandatory reporting to the IRS', a LAW that has now in force in nearly all countries, and even retroactively to the end of 2013. If I do not provide this number, they will cancel my account for fear of the draconian penalties threatened to foreign banks by US authorities in case of non-compliance.
Beyond the whole big-brother connotations, it is very unclear just what the rules are. Some claim this applies only to accounts containing more than $50k, while others claim it pertains to all accounts.
I would appreciate any light that my esteemed colleagues might be able to shed on this situation.
Here a link with more information:
https://americansabroad.org/issues/fatca/fatca-bad-america/
Thanks,
JM


[Edited at 2014-11-27 09:01 GMT]


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Tom in London
United Kingdom
Local time: 21:44
Member (2008)
Italian to English
What's the problem? Nov 27, 2014

I don't see what the problem is. Why not just send them your social security number? Is there a privacy issue?

[Edited at 2014-11-27 09:07 GMT]


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Jonathan MacKerron  Identity Verified
Member (2005)
German to English
+ ...
TOPIC STARTER
Please see my question Nov 27, 2014

Tom in London wrote:

I don't see what the problem is. Why not just send them your social security number? Is there a privacy issue?

[Edited at 2014-11-27 09:07 GMT]


Of course I have to do it if I do not want to lose my bank account, my question pertains to the specific details - are you a US citizen?


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Tom in London
United Kingdom
Local time: 21:44
Member (2008)
Italian to English
What't the problem? Nov 27, 2014

You didn't say what the problem is.

[Edited at 2014-11-27 09:22 GMT]


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Michael Wetzel  Identity Verified
Germany
Local time: 22:44
German to English
no letter from my banks Nov 27, 2014

I have two checking accounts (one jointly with my German wife) and a business account (all with German banks) and have not received any requests for information. (Or at least not as far as I know: I rarely read the fine print on my bank statements.)
I was rejected for a Riesterrente product several years ago on account of my US citizenship (and had to invest in an inferior Riesterrente product).

I really don't care about the Big Brother aspect, but I would like to know for certain that the IRS isn't going to start demanding money from me on the basis of some bizarre regulations.
Tom, I understand that this sounds like whining, but there really are very bizarre, annoying, limiting and - in this case - worrying US regulations about dual taxation and tax reporting and foreign investments.
And this is also not about Obama (or Bush Jr.): The investment regulations are based on legislation from the 1920s.

[edited to remove some information that I would rather not have online.]

[Edited at 2014-11-27 09:50 GMT]


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Sabine Akabayov, PhD
Israel
Local time: 23:44
Member (2011)
English to German
+ ...
FATCA/FBAR Nov 27, 2014

There are two different forms for reporting foreign assets/accounts.

FinCEN Report 114
If the sum of your foreign accounts is $10,000 or more at any point during the year, you have to file form FinCEN 114 directly to the US Treasury (not the IRS). http://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html


Form 8938
This form is filed together with your annual tax return. Here the limits are different and depend on your marital status and other things (for a single the limit is $50k, if I remember correctly).
http://www.irs.gov/uac/Form-8938,-Statement-of-Foreign-Financial-Assets


The foreign bank would also have to withhold taxes on dividends and interest income from US sources (unless there is an exemption)

I was a little reluctant to provide my SSN to the bank here in Israel as they didn't seem to have any knowledge of US taxes whatsoever and I'm not really trusting them to do it right ( and I will have to fix the mess in the end). But what can you do?

[Edited at 2014-11-27 09:52 GMT]


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Jonathan MacKerron  Identity Verified
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German to English
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@ Michael Nov 27, 2014

Thanks for your input. Well I certainly do care about the Big Brother aspect, but that goes beyond the pale of this discussion.

Your bank may not even know that you are a "US Person", as until about 5 years ago German banks did not, or were not allowed to ask about your nationality at the time of opening a new account. BTW, for IRS tax purposes, a joint account is treated as a personal one.
So you have not been contacted either because they don't know your nationality, or there is indeed a $50k limit on accounts that need to be reported.

@Sabine:
This goes way beyond your usual 1040 reporting and accompanying appendices. This is a new law, also adopted by Israel, whereby the bank accounts of any US citizens must be reported directly by the foreign banks themslves. The information includes account number, end of year balance, highest annual balance, and certain individual transactions.

For non US citizens following this discussion: you need to know that the US is the only country that does not extend ex-pat status to its citizens for tax reasons. This is particularly important since FATCA has taken effect, in that US citizens and green-card holder will now be singled out in their host countries and their bank information automatically transferred to the IRS each year.

People with gads of money (not my problem) are voting with their feet...

http://www.forbes.com/sites/robertwood/2014/08/07/many-americans-renounce-citizenship-hitting-new-record/


[Edited at 2014-11-27 10:20 GMT]


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Michael Wetzel  Identity Verified
Germany
Local time: 22:44
German to English
another link Nov 27, 2014

The link below provides a general explanation of the overall situation (beyond FATCA) and several additional links to official sources of information (US consulate in Germany and IRS):

http://www.howtogermany.com/pages/ustaxes.html


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Sabine Akabayov, PhD
Israel
Local time: 23:44
Member (2011)
English to German
+ ...
limits Nov 27, 2014

@Jonathan: I was just trying to explain were the limit of $50k comes from (and form 8938 is a direct result of FATCA, the FBAR form existed before). I don't think there is such a limit for reporting bz the bank.

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Jonathan MacKerron  Identity Verified
Member (2005)
German to English
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TOPIC STARTER
Text Nov 27, 2014

Here is the entire agreement:
http://www.treasury.gov/resource-center/tax-policy/treaties/Documents/FATCA-Agreement-Germany-5-31-2013.pdf

Go to page 2 of Annex 1, I understand this to mean there is indeed a limit, under which the bank is not required to report, but would still like to have this confirmed by my German bank:

Accounts Not Required to Be Reviewed, Identified, or Reported.
Unless the Reporting German Financial Institution elects otherwise, where the implementing rules in the Federal Republic of Germany provide for such an election, the following accounts are not required to be reviewed, identified, or reported as U.S. Reportable Accounts:

1. Subject to subparagraph E (2) of this section, Preexisting Individual Accounts with a balance or value that does not exceed $50,000 as of December 31, 2013.

2. Subject to subparagraph E (2) of this section, Preexisting Individual Accounts that are Cash Value Insurance Contracts an d Annuity Contracts with a balance or value of $250,000 or less as of December 31, 2013.

3. Preexisting Individual Accounts that are Cash Value Insurance Contracts or Annuity Contracts, provided the law or regulations of the Federal Republic of Germany or th e United States effectively prevents the sale of Cash Value Insurance Contracts or Annuity Contracts to U.S. residents, such as if the relevant


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Jonathan MacKerron  Identity Verified
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A bit of googling on German sites Nov 27, 2014

shows that German bank associations have recommended that their member banks split existing accounts so as to remain under the dreaded 50k mark, presumabley to obviate them from the obligation of divulging this information.
Some claim that US account holders also must sign a form to release them from German law, which otherwise rightly protects them against such overreach.
As this program took effect last year, the banks have not been very forthcoming in identifying the customers in a timely manner and explaining the alternatives to them.
Moreover, the only information available to US citizens is what they accidentally stumble into on the internet. Despite my annual filings, the IRS has made no mention of this extremely instrusive "instrument" that we are about to face.
As has been pointed out on various ex-pat forums, the risk of mistaken identy or erroneous reporting is quite high, i.e. one could now be stopped at US customs for a mistake their German bank has made.


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Kaiya J. Diannen  Identity Verified
Australia
Member (2008)
German to English
Australia Nov 27, 2014

The agreement with Australia states the same proviso almost word for word.

FYI, here are a couple of links providing anecdotes about how harsh things are getting for U.S. expats because of these laws:

http://online.wsj.com/articles/kuenzi-american-expats-tax-nightmare-1404924705
http://www.theguardian.com/money/2014/sep/24/americans-chased-by-irs-give-up-citizenship-after-being-forced-out-of-bank-accounts

[Edited at 2014-11-28 07:05 GMT]


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RobinB  Identity Verified
Germany
Local time: 22:44
German to English
2013 ATA conference session Nov 27, 2014

There was a session on FATCA and translators with foreign bank accounts at the 2013 ATA conference. I presume it’s available online on the "eConference", which can be bought through the ATA website.

The issue has also been discussed on several occasions on various ATA forums (Yahoo groups), so if you’re an ATA member, you’ll be able to find out more there. I do think that your German bank is in the right, though, and you’re unlikely to persuade them otherwise, as they’ll take the view that, for "US persons", US law overrides German law.

Robin


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Kaiya J. Diannen  Identity Verified
Australia
Member (2008)
German to English
The relevant question Nov 28, 2014

It doesn't seem to me that what is being asked here is a question of which country's law prevails, rather it seems that the OP is looking for information on how foreign banks are supposed to interpret the requirements imposed by this U.S. law and associated treaty - namely, whether all accounts are required to be reported, or just those holding more than $50,000 (equivalent).

It would appear based on the wording that only those accounts holding $50,000 are required to be reported, however the situation the OP describes seems to indicate this particular bank wants to "err on the side of caution" since it is apparently availing itself of the clause "Unless the Reporting German Financial Institution elects otherwise", which I suppose is its right, despite this creating more of a nuisance for everyone involved.



[Edited at 2014-11-29 04:43 GMT]


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Mark Hamlen  Identity Verified
France
Local time: 22:44
Member (2010)
French to English
+ ...
FATCA confusion Nov 28, 2014

My French bank asked me to provide this info, but only for my professional account. Don't understand why that was (they know me as a EU country citizen). US citizens are now required to disclose all foreign accounts. The regulations are confusing and threatening. I have dual US/EU citizenship and I'm seriously considering giving up the US citizenship. It is the only country in the world where you have to declare everything even if you are not a resident and potentially have to pay tax on income earned while residing abroad, despite dual taxation treaties. Even a long-term resident (I haven't lived in the US for 25 years, I have no benefits from being a US citizen, I don't ever travel on the US passport).

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