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Discussion Starter · #1 ·
I recently discovered that I will have to comply with the US IRS tax laws. As a US Citizen with a dual nationality (Dutch- American) at birth, I have always worked in the Netherlands and have always paid my taxes here. I assumed that due to the tax treaty that The Netherlands have with the USA and the fact that I pay taxes here in The Netherlands, I did not have anything to do with any taxes, FBARs or any other forms, so I never filed or reported anything.

Recently I logged in to my securities account here in The Netherlands and a small screen appeared, asking my place of birth. It explained that due to FATCA banking regulations coming into place, they were required to identify 'US persons'. So I surfed the Internet searching for the meaning and implications of FATCA and discovered the whole story.

To make things even worse, I looked up the securities companie's ‘General conditions’ and saw that as soon as they know you’re an ‘US person’ they will terminate your account simply because they don’t want to deal with all the hassle FATCA imposes on them. They probably don't want to become 'FATCA compliant' because of the huge costs.

I too, although for almost my whole life living and working in The Netherlands, will have to comply with the US tax laws and regulations (which I never knew existed) and file my delinquent taxes, and also become compliant with FBAR. There are huge penalties involved for non-compliance.

I have an IT company and am the CEO and owner of a Dutch B.V. and Holding, and I think that for this too I will have to file all kinds of forms.

I did learn about a streamlined filing procedure that started on the 1st of September 2012 that takes into account dual nationality citizens like me who have always worked in their own country and not in the USA. They ‘only’ need to file back 3 years on taxes and 6 years for FBAR. Can I use this?

I understand that it’s better to ‘come to the IRS’ before they ‘come to you’ so I need to start the procedure asap.

What is the first step I should take? Should I call or email the IRS? Will this be seen as a first step in to coming into compliance? Or should I definitively NOT do that yet? I would appreciate your advice.
 

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@jdr99

The streamlined program has conditions which you should examine closely before you apply to the program. Be especially careful with the 20 point Questionaire. You can see analysis of this at:

moodysgartner dot com. Go to the blog. (I need one more post to do URLs).

Good luck!
 

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I would ignore that dialog box for the time being, then slowly research what it would require to become compliant - even things like changing banks - and decide if it's in your interests to do so.

It requires tax compliance and some paperwork, but as a business owner you might find it worthwhile to renounce your US citizenship.

I had the same question from an investment advisor (in Canada) and I refused to answer.

Don't lose sleep about the penalties. Up to know by all accounts theoretical, for regular taxpayers.
 

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As Nononymous says, don't panic. You need to take some time to examine your options.

Frankly, the 3-years-back-taxes and 6-years-back-FBARS thing has been around for a long time now. It has only recently been formalized into the "compliance" program with the questionnaire and all. It sort of depends on your level of income and financial assets whether or not you can get away with what is called "passive compliance" - i.e. just file the back returns and then keep filing going forward. Generally, if you don't owe any taxes on the back filings, they aren't going to bother you.

Finding a smaller bank, without the international ties to the US is another option.

Renunciation is an option if you want to be shed of the whole obligation. Contact your local US Embassy or Consulate for the procedure, though there are laws on the books with some penalties they "may" invoke (but won't necessarily do).

On the other hand, there are lots of "accidental Americans" who have simply not filed for years or decades, whether through ignorance or willful disobedience and so far, the IRS has yet to come after them. So, you play the game and you take your chances that way.
Cheers,
Bev
 

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Discussion Starter · #5 ·
Thanks Nobledreamer. I visited the blog and it indeed has quite detailed feedback on the 20 point Questionaire.


@jdr99

The streamlined program has conditions which you should examine closely before you apply to the program. Be especially careful with the 20 point Questionaire. You can see analysis of this at:

moodysgartner dot com. Go to the blog. (I need one more post to do URLs).

Good luck!
 

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Discussion Starter · #6 · (Edited)
Thanks Bevdeforges. I indeed also considered renunciation as an option. However before I can renounce US citizenship they state I have to become compliant with my delinquent taxes and FBARs for the last 5 years.

You mentioned I could wait and see, however with FATCA all non compliant US citizens with foreign bank accounts will be found sooner or later. That's why they implemented FATCA. The Internet has quite a lot of info and examples of persons that have experienced this already....


As Nononymous says, don't panic. You need to take some time to examine your options.

Frankly, the 3-years-back-taxes and 6-years-back-FBARS thing has been around for a long time now. It has only recently been formalized into the "compliance" program with the questionnaire and all. It sort of depends on your level of income and financial assets whether or not you can get away with what is called "passive compliance" - i.e. just file the back returns and then keep filing going forward. Generally, if you don't owe any taxes on the back filings, they aren't going to bother you.

Finding a smaller bank, without the international ties to the US is another option.

Renunciation is an option if you want to be shed of the whole obligation. Contact your local US Embassy or Consulate for the procedure, though there are laws on the books with some penalties they "may" invoke (but won't necessarily do).

On the other hand, there are lots of "accidental Americans" who have simply not filed for years or decades, whether through ignorance or willful disobedience and so far, the IRS has yet to come after them. So, you play the game and you take your chances that way.
Cheers,
Bev
 

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You mentioned I could wait and see, however with FATCA all non compliant US citizens with foreign bank accounts will be found sooner or later. That's why they implemented FATCA. The Internet has quite a lot of info and examples of persons that have experienced this already....
Just out of curiosity, where have you found all these examples of persons that have "experienced this already"? FATCA doesn't take full effect until next year - and honestly, the focus of the legislation is on US residents with overseas bank accounts and investments. Some banks are taking a "pro-active" stance by attempting to weed out "American persons" from their customer base - primarily to avoid having to deal with the IRS themselves - but I haven't heard yet of anyone living overseas who has been "found out" or hit with penalties for harboring unreported bank accounts overseas, particularly the stock standard types of bank accounts that are regularly reported on in their country of residence.
Cheers,
Bev
 

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@ JDR 99

It should be noted that it is NOT necessary to be IRS compliant to renounce or relinquish your US citizenship. Most Consulate staff make no reference to one's tax situation. They really don't care and it isn't their department. Also, it's none of their business.

The five year compliance requirement is in regard to the filing of Form 8854 which is the way by which one logs out of the US tax system forever. If one can't swear compliance for the current year and the previous five years, one becomes a "covered" expatriate and is subject to the exit tax procedure. My sense of your situation is that it would be a good idea to not be a covered expatriate.

Curiously, Form 8854 makes no reference to the dreaded FBAR, so presumably one can file 8854 and escape the US system without ever filing an FBAR.

I'm curious, do you have a Social Security Number? If you don't, the IRS doesn't even know you exist and it might be better to let sleeping dogs lie.
 

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I'm curious, do you have a Social Security Number? If you don't, the IRS doesn't even know you exist....
That might be a bit of an overstatement. One reason is that many "latent" U.S. citizens actually do have Social Security numbers but don't know they do. For at least several decades parents have been able to get Social Security numbers for their newborns, and newborns don't typically remember much until they get older. ;)

The other reason is that IRS hasn't found incorrect or missing Social Security numbers to be much of an impediment to tax enforcement.

I get your point, though.
 

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@jdr99

You can renounce before getting up to date with taxes. You have until June 15th of the year following your renunciation to certify that you have been tax compliant for the five years previous to your renunciation. This certification is a yes/no question on the exit tax form (8854), which reads: “ Do you certify under penalties of perjury that you have complied with all of your tax obligations for the 5 preceding tax years?”

So, to wrap things up with IRS, if you renounced on, say, 23 January 2014, you’d have to have filed the following with IRS by June 15th, 2015 (when I write 1040s, I mean any other forms required with it as well):

(1) 1040s for 2009-2013,
(2) a partial year 1040 for all income to 1 Jan - 22 Jan 2014;
(3) if you have US source income, a partial year 1040-NR for 23 Jan – 31 Dec 2014 for your US source income only.
(4) 8854.

If a person does not do this, it does not affect their citizenship status – they remain a non-US citizen as of the day of their renunciation, but it results in IRS considering them a covered expatriate.
 

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@ jdr99,

Dept of State deals with the citizenship itself, and citizenship or lack of it is not dependent on one's tax status. As Maz57 pointed out, they don’t care and don’t get involved in tax matters -- not their department.

Dept of State’s only involvement/connection with tax is the following:

(1) At the consulate the person signs DS-4081, Statement of Understanding of Consequences, One of the 12 items is Item 10, that renouncing “… may not exempt me from US tax income taxation [etc] …”

(2) Dept of State is to provide IRS with a copy of each CLN they issue as per DoS Interagency Coordination and Reporting Requirements.
 

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Discussion Starter · #12 ·
I sent in a reply on Sunday with url's but it's gone now. Very strange. Also a reply from ndralam is 'gone' (received notification). What could have gone wrong?
 

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I sent in a reply on Sunday with url's but it's gone now. Very strange. Also a reply from ndralam is 'gone' (received notification). What could have gone wrong?
Messages 5 and 6 in this thread. Not gone at all. As to the response you received, it wasn't a response at all and was removed. That's what we mods do.
Cheers,
Bev
 

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Discussion Starter · #14 ·
@Bevdeforges
After those 2 messages (5 & 6) I posted a new message, with more info and an answer to your question where I had found these postings about expats and FATCA / FBARs.
 

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Occasionally a message gets "lost" if you don't hit the right button or if your system fails just as you are trying to post it. As far as I can tell, no message of yours has been deleted or moved out of site - certainly not by any of the moderators here.
Cheers,
Bev
 

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Discussion Starter · #16 ·
Ok, thanks. I'll post a new message with links.

Occasionally a message gets "lost" if you don't hit the right button or if your system fails just as you are trying to post it. As far as I can tell, no message of yours has been deleted or moved out of site - certainly not by any of the moderators here.
Cheers,
Bev
 
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