Today’s New York Times article re the very innocent and appropriately named “Accidental Americans”

Many Americans Abroad Surprised by Tax Code's Nasty Bite

Here is a well-researched and presented article by Brian Knowlton of the New York Times. It is journalism like this that tells our real story and the often tragic consequences for children born to US parents living in another country or those born in the US to parents from another country. None of these accidental Americans asked to be US citizens and somehow are not given a choice in the matter. Being born by this accident of birth, wouldn’t it be fair if there were a choice for them to accept or not that US citizenship at some point? A choice should be theirs, not that of the US!

It starts,

“As Americans abroad chafe under sharply increased U.S. pressure to declare foreign holdings and catch up on back tax filings, one group with tenuous ties to America and the benefits of citizenship is feeling particular pain and unease.

They might be called “accidental” Americans, born during their foreign parents’ brief stay on U.S. soil, or born abroad to American parents who long ago settled elsewhere…”

Thank you Brian for telling this aspect of the consequences of US citizenship-based taxation and reporting.

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28 thoughts on “Today’s New York Times article re the very innocent and appropriately named “Accidental Americans”

  1. Two hours ago, I sent an op-ed piece in to the NYT, and this story today gives me some hope that they’ll run it. It’s long — and I’ve offered to cut it back severely if they are interested (spent many many years as both a reporter and a copy editor.) I took a rather unique angle on this that I’m hoping will win the day. I’ve done this for a living, although that’s sure no guarantee.

    I’m not going to post it here until it has been published, because to do otherwise would jeopardize their exclusivity requirements. Once I’ve got this piece published somewhere, I’ll share it. It will run under my own name, so I’ve decided to come out of the closet.

    Tried to keep up with IBS while in Australia but web connections were not simple (spent a lot of time camping).

    It has now been nearly two months since my wife fronted up at the Vancouver consulate, and there has been no communication around that 2nd interview. I’m not sure what that means, but if I haven’t heard anything by the end of next week I’ll start making phone calls.

  2. That’s great, Arrow. Why don’t you send this NYT journalist an email ( knowlton@nytimes.com ) and let him know you have done so. I’m sure he would be interested in what you’ve written and might be able to help.

    Glad you having some camping time in Australia. And, glad you’re checking in from time to time. Safe journeys!

    PS – Keep us updated on the Vancouver Consulate second appointment for relinquishment, indeed another Consulate discrepancy from one to another! Others, of course, have had one appointment only.

  3. Finally! We are finally getting the real story after that Reuters article last month. This one here highlights the greatest injustice of all though – The US demanding tax from people with almost no connection to the US. Its outrageous.

    I just wish that the NYT would allow people to comment on these articles and not have to wait for the second posting on rendezvous. I hope that somebody posts the link to that when/if this goes live so that we can contribute, since I fall into this category of “accidental” as well!

  4. Good article. I recognize a couple of people. Don’t worry. I won’t squeal

    I was searching for somewhere to comment, but Don has pointed out it’s not possible on NYT website. Too bad.

  5. @I think I recognize at least two Brockers in this article. Congratulations to those who contributed and made the effort in getting our stories heard. I just wish Mr Knowlton had put a little more emphasis on the injustice of making taxpayers out of non-US born citizens, people who want nothing to do with the US and whose numbers could actually be in the hundreds of thousands (only saying “it’s impossible to estimate”). I suppose it will come to a shock to a lot of readers that people can inherit citizenship, and thus the obligations of that citizenship, and in that and other regards it’s valuable. Just didn’t convey the nature of the injustice, but perhaps he’s leaving that up to the reader to feel for themselves. But then I’m overly sensitive.

  6. The term “accidental American” is misleading.

    I was born in America to American parents. I didn’t choose where I was born nor did I choose my parents. As far as I am concerned, I was accidentally born as an American.

    What I did choose however, was to emigrate out of America many years ago.

    Therefore, why should I be treated any different than Americans who were born in America to non-American parents or born outside America to American parents?

    The fact of the matter is, citizenship-based taxation is a human rights abuse if the citizen lives elsewhere and has no representation in government and receives no services from that government — full stop!

  7. @Calgary411, thanks for posting this. And I echo the thanks and congrats to the Brockers who contributed. It was very temperate in tone, which, perhaps, is what is needed to get people to read it and listen? Although, I feel very much like FromTheWilderness, I don’t think our viewpoint gets much traction, while the ones born in the US who and only lived there a few months, I htink, garners more sympathy and understanding. It was great to have the issue published of parents being unable to renounce on behalf disabled children raised, that concept was new to me, and I’m sure it will be new and shocking to many readers.

  8. Thank you Cargary411, that is one of the best articles to date.

    @FromTheWilderness, you are 100% correct, no child gets to pick their citizenship. If you are not asking for the rights of citizenship as an adult, you should have none of the obligations.

  9. For the more patriotic reader, it will come to a shock to them that anyone would consider themselves to be an “accidental American”, like accidentally catching a disease, when so many are complaining about anchor babies.

  10. You’re right, FromTheWilderness, the problem is in citizenship-based taxation. If it weren’t for that, these abuses from the USA we don’t live in would not be the problem that it is — whether “accidental” or otherwise.

    And, that a parent / Guardian / Trustee cannot renounce on behalf of our adult children without capacity to do so just compounds the injustice of citizenship-based taxation.

    Layer upon layer of citizenship and taxation / reporting laws not based on common sense and, in fact, out and out discrimination.

  11. @Calgary411. From what you say, when laws that make other laws that are perhaps there to protect people end up injuring people, they are surely laws that have not been properly thought out for their unintended consequences. Bad law not only begets bad law. Bad law renders good laws bad!

  12. @Calgary

    For me at least, finding out that I was a US citizen at 14 was a shock. My parents and I were horrified because we thought it would mean that I would lose my Belgian nationality, since at my time of birth and up until three years ago Belgium did not allow dual nationality in most circumstances and they made it hard to keep it in most cases. From the beginning I had absolutely no desire to be a US citizen and did not appreciate being scared for months on end that I would lose my native citizenship due to a foreign country giving me citizenship without my consent or my parents’ consent.

    There are still some nationalities that do allow under any circumstances for somebody to hold another citizenship: China, India, Japan (must choose at age 22 or something). Sure, lots of the parents of these children want to actually immigrate to the US, but the few whose parents were there like mine on a student visa or whatnot and never had any intention of staying, wouldn’t you find it cruel that these children wouldn’t be able to obtain their parents’ nationality until reaching the age of majority and being able to renounce the US one? I read that Jackie Chan’s son was under this category.

    If the US is going to insist on retaining its archaic jus soli citizenship laws it should at least make it so that citizenship is only granting to the children of permanent residents or citizens. Being born in every single EU country does not grant citizenship, but if the person is still resident in the same country at the age of 18 most of the time they can register as a citizen through a simplified process. That seems fair to me and doesn’t cheapen citizenship the way that the US does!

  13. Congratulations to the Brockers in the article!!

    The most sickening aspect of this article is the number of international IRS agents now compared to years before. Think about it: The IRS makes absurd demands combined with vague instructions. Then they assign more agents to collect money from *many* people who really don’t owe the US Government any money. What kind of *example* is that? How is this “ethical”? It seeps with deceit and dishonest behavior. Even here, in this very corrupt country, if an individual does this, it’s called “estelianato” (conning, swidling, etc..)

    US Expats are US Government piggy banks.

  14. For those of us who are law abiding, tax paying persons in our own countries, one word to describe it the unethical ways of the US — Entrapment.

  15. @Don Pomodoro,

    You show another of the many thoughtless aspects of becoming an “Accidental American”. You’re right — US citizenship has indeed been cheapened.

  16. Peter Spiro just posted about the NYT article over at Opinio Juris
    http://opiniojuris.org/2012/05/11/more-from-nyt-on-us-overseas-tax-reach-will-fatca-fly-maybe/

    Dueling takeaways: More AmCits abroad are complying with related disclosure requirements (almost doubled in the last three years), so it is sticking. Or, the numbers of Americans abroad who are looking to renounce their citizenship is skyrocketing (one accountant says that her Middle-Eastern clients are “lining up to get rid of the US passport), so it’s bound to fail.
    I suspect that there’s a hidden third group, one that would be understandably shy with NYT reporters: those who are non-compliant but holding on to their US citizenship, giving rise to a new class of “secret Americans.”

    And regarding the U.S. refusal to let guardians of developmentally-delayed adults renounce citizenship, he says

    Doesn’t sound very fair, does it? Might even violate international law, insofar as states can’t arbitrarily obstruct expatriation.

  17. Thanks, Eric, for finding this at Opinio Juris. We can also make comments there which could not be done at the New York Times.

    also in this article, another category,the Secret American, one still in denial of the consequences of CITIZENSHIP-based taxation and reporting:

    “I suspect that there’s a hidden third group, one that would be understandably shy with NYT reporters: those who are non-compliant but holding on to their US citizenship, giving rise to a new class of “secret Americans.”

  18. @Eric

    Thanks for posting the Peter Spiro piece. Interesting. One observation on his “duelling takeaways” — more citizens may be complying for now, but I suspect that for some, perhaps many, this is a stopgap measure until they renounce. So I don’t think FATCA is “sticking” to the degree that Spiro suggests.

  19. Hey guys, this is Brian Knowlton again. Like I said on another thread, he and David Jolly at the NYTs are Expat friends. I always email him when he puts up positive and correct perspectives on these issues, and I did again on this one. I hope others follow.

  20. I suspect some “SECRET AMERICANS” are still trying to get another citizenship (which can take time) and also trying to figure out how to deal with all the various obstacles placed in front of EXPATRIATING such as the EXIT TAX.

    Others are going “FULL-OSTRICH” hoping nobody notices them.

  21. @Arrow

    Welcome back. Sorry to have missed you in Sydney. I hope your piece will get published at the NYTs. Roger has been successful with the WSJ, so why not? You know how the game works, and that is good.

    BTW, I got an email back from the Daily Caller on a message I sent them, suggesting that they might be interested in an Opt Ed piece on the subject. The Daily Caller is the conservative answer to theDaily Beast. Those are two web sites, along with Huffington post that are widely read, so if the NYTs does not publish, you might try those too..

  22. “People need to come in and get right with us before we find you,” Doug Shulman, the I.R.S. commissioner, said in January. “We are following more leads, and the risk for people who do not come in continues to increase.”

    Let me see if I understand Mr. Shulman. You all please correct me if I am wrong. I assume that he knows that Americans Abroad have an Earned Income Exclusion of around 90,000.00 dollars. So he must be talking of people who earn more than that and even if they do they will have a Tax Credit for the taxes they pay where they reside, I guess he also knows that if they have savings and investments, whatever they earn they will pay taxes to the country where they reside, And the IRS will give them Tax Credit for this. So, up to now no tax liability to the USA.

    But let’s then figure what Mr. Shulman is after, An American living in Colombia for the past ten years who just learned about the FBARs. He never heard about it before. In his country of residency there is not one IRS representative, No CPAs who work with Americans Abroad. He learned about this recently when visiting people in the USA.

    Well, Mr. Shulman knows that for the past eight years this person in Colombia would not really owe any USA taxes for the reasons above. But now comes the catch: he did not file the FBARs for eight years. Well, Mr. Shulman will receive a correction filing of eight years of FBARs but… it will be up to him to decide if he will accept or not the explanation for not filing. Let’s say that this American has a life savings of US$200.000.

    If Mr. Shulman does not feel that the explanation was reasonable he may charge criminal charges and of course will collect money: 10,000 a year for 8 FBARs will be US$80,000.00, plus 27.5% of the highest investment. That is US$55,000.00. Total: US$135,000.00 not of taxes owed but of stiff penalties for not filing the FBARs..

    Since the great majority of Americans Living Abroad ( and dual citizens and green carders) still don’t know about FBARs, Mr. Shulman then will make a lot of money. Can you imagin?. Anyone can understand that it is not in the best interest of Mr. Shulman to let Americans Abroad know about FBARs. This is why, of course, he has not made any effort in this direction.

    This is also why the IRS Tax Advisor is questioning him without receiving an answer.

    Please correct me.

  23. @thatisme…

    You analysis of the penalty inside the OVDI program is not correct.

    It is NOT an “in lieu of” penalty of 27.5% plus $10K a year for 8 years. It is ONLY the “in lieu of penalty” of 27.5% . Now that only is still a lot, but it is not double enmity. Hope that clarifies for you.

    You are definitely right, however, that the penalty is not associated with the taxes owed, and therein is one of the many faults with the entire stupid process.

  24. @Thatisme, it’s naive to think that few Americans abroad owe no tax to the IRS…after all, many will have mutual funds and personal pension plans that entail the awful PFIC taxation (which I was hit with for thousands, in spite of foreign tax credits.) Also, many could have tax-free or tax-deferred investments that thus be open to US taxation. Plus capital gains taxes on the sale of their homes.

    I suspect that a lot more will face US taxation than they realize which is all the more why Shulman is waving his club.

  25. I meant ‘it’s naive to think that few Americans abroad owe ANY tax to the IRS’.

    I essentially think that the US government are becoming a bunch of thugs. I’m not personally prepared to stick my head out, especially when my disclosure was somewhat messy and that I face several years of statutes of limitations, etc. I resent that I am forced to abandon my ideals because I live in fear.

    But I admire people who are prepared to risk everything to stand up for their principles, whereas I’m more pragmatic, perhaps because I still have so many ties to the US due to family. Everyone I know over there is sympathetic to my plight but also of the opinion that as I chose to come to Britain, I’ve just got to take the rough with the smooth. ‘Sure, double taxation and compliance costs suck but don’t forget who you are’, etc.

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