US persons holding bank accounts outside of the US are ordinarily required to disclose such bank/financial accounts to the Department of treasury on an annual basis. This reporting requirement also includes those who may not feel as if they really are a US person (including those termed as “accidental Americans”).
An accidental American is typically a person residing outside of the US but was either born to a US person or was born in the US but who left the US to move permanently abroad at an early age. Such persons are likely to be regarded as US persons due to being born in the US or from acquiring US citizenship from one or both parents. As US persons, they do have a requirement to file annual US tax returns with the IRS and to disclose their non-US bank accounts to the Department of treasury (FINCEN 114 reporting). Please refer to the link below for a further explanation. This also covers US tax filing requirements for such persons who may not be fully US tax compliant.
The requirement to file US tax returns and to file annual foreign bank reports is being in forced under FACTA (the Foreign Accounting Tax Compliant Act). This was introduced during 2012 and part of this was to instruct overseas banks to report its US customers who, they believe, may not be meeting their US tax filing and foreign bank reporting requirements. More information can be found from the IRS website by following this link.
It has come to our attention that Dutch banks are now starting to report its customers to the IRS who they suspect may not be US tax compliant.
According to recent media reports, both Rabobank and ING have started to block accounts for dozens of its Dutch American account holders who, they believe, are not fulfilling their US tax reporting obligations. This was on the back of the banks not receiving a response to an earlier FATCA disclosure letter that they had sent (and which had asked for them to confirm that they had been meeting their US tax reporting obligations).
Will UK banks soon be following suit???
If you require any help with your US tax affairs, please do contact us.