Britain is the latest country to become embroiled in a data protection legal challenge aimed at thwarting US tax laws that raise money from ‘accidental Americans’.
The notorious US Foreign Account Tax Compliance Act (FATCA) demands foreign banks and other financial institutions must hand personal and financial details of their American customers to the Internal Revenue Service (IRS) in Washington.
The law is entangling tens of thousands of accidental Americans, who were born or lived in the US for a short time as a child but now live overseas with no intention of returning.
US tax laws deem any American living overseas must declare their assets to the IRS and file tax returns, .
Threat of frozen bank accounts
British banks are contacting customers with American links and threatening to freeze their money if they do not comply with FATCA by updating their personal data.
However, taxpayer based in Britain has launched a legal challenge against FATCA, claiming any personal information transfer to the US without his permission breaches data protection laws and his human rights.
A similar case is expected to go before the courts in France, while protesters in Canada failed to win on the same grounds last year.
“Our client has no problem with measures to fight crime and tax evasion,” said a legal spokesman for the anonymous woman.
Fear of hacks and identity fraud
“Her issues are with the disproportionality of these measures and the breach of various fundamental data protection principles, which expose her to potential hacks and identity fraud.”
The client, now in her early 40s, married in Britain after finishing college and moving to the UK in 2000. In 2016, she received a letter from her bank warning she may owe US tax and that her data would be sent to the Internal Revenue Service via HMRC.
Not all accidental Americans have to pay the IRS. Those earning less than £85,000 a year are exempt, while the tax authority is offering to waive tax bills of less than $25,000 for people with assets totalling no more than £1.6 million if they opt to rip up their passports and renounce US citizenship.
For U.S. Persons resident overseas FATCA is part of U.S. over-regulation.
U.S. tax and compliance laws apply Kafkaesque double taxation on U.S. persons tax resident overseas.
There are extra U.S. penalties, tax, and disincentives for money, accounts, pensions, and investments in countries other than the US; even if you live permanently overseas, your accounts are local to you, and you already pay a fair share of tax to the country you live in, at equal of higher rates than U.S. taxes as with ~92.5% of the U.S. persons overseas.
In an increasingly global and mobile world the US should not punish US persons living, working overseas, and expanding US influence and trade overseas.
Once resident overseas the U.S. provides ZERO resident services to its citizens, ZERO local protection of property, and ZERO protection of local individual rights in exchange for: the double taxation + extra reporting + extra penalties. Thus the one-way double tax claim is unjust, is un-American, and has been called Tributary Slavery. It represents tax cheating by the U.S. Government.
Based on the numbers of 9 million U.S. persons resident overseas and U.S. federal spend per U.S. resident, the U.S. should pay $113 billion in resident services each year to overseas Americans. NOT ZERO!