You’ve received a HSBC FATCA letter, now what?

By 16 July 2020News

hsbc fatca letter reveived

You’ve received a HSBC FATCA letter, now what? Are you a British citizen with American background and did you recently receive a letter from HSBC UK about FATCA? You are advised not to ignore this letter. These are the most important points you have to know about the FATCA HSBC UK letter.

The HSBC FATCA letter is meant for UK citizens with an American background (i.e. a person with US persons as parents, or a British citizen born in US/US person by birth), ‘accidental’ American citizens and Green Card holders. Following new American tax regulation, UK banks including HSBC Bank are required to share the names and account details of these people with the American tax office IRS.

The obligation for banks to share data is based on the Foreign Assets Tax Compliance Act (FATCA). FATCA is an agreement between the American and UK governments signed in 2013. With this bill, the US seeks to increase its oversight on accounts held by UK Americans. Despite the fact that they live and work outside of the States, this group of individuals still has a duty to file American taxes.

Under FATCA, UK banks are required to determine whether a customer falls under this American regulation and must in that case annually provide information to the UK’s tax, payments and customs authority HMRC. This requirement applies both for new and existing customers, hence you may have received a letter from HSBC bank concerning FATCA.

1. What does this FATCA HSBC letter mean for you?

What do you have to do when you have received this HSBC Bank letter on FATCA, if you are an American-UK national? First of all, it is important that you do not ignore the letter. The letter may have arrived together with a CRS & FATCA Individual Form.

Some banks send a FATCA form with these tax forms to confirm whether the customer is an American taxpayer and thus also falls within the jurisdiction of FATCA.

UK American people are supposed to fill in all forms and send them back to their bank within the indicated time frame. Below, we illustrate three possible scenarios for handling HSBC FATCA letter:

2.What are the consequences of not sending back the HSBC CRS & FATCA Individual Form?

In case of not receiving the filled-in HSBC CRS & FATCA Individual Form, the bank will always share your information with the American tax authorities IRS. Depending on which country you live in and what bank you make use of, your accounts may be adjusted or closed. This especially applies to bank accounts used for investments.

Some banks have even decided to bar all potential American clients from their services. Americans Overseas advises you to contact your bank to ask them about their policy towards American clients before you return the tax form, thus giving you time to move your account if your bank requires you to do so.

3. Return the HSBC FATCA form indicating you are not American

Many Anglo Americans find the law unreasonable. They might have been born in the States and emigrated to the United Kingdom at a young age or obtained the American citizenship through their parents. Although you might not feel American in these cases, you, unfortunately, remain a taxable US citizen according to US tax law.

Incorrectly indicating that you are not American in the HSBC FATCA form can lead to sanctions from American tax authorities. The IRS denies taxable individuals all amnesty programs if they uncover cases of tax evasion themselves.

Furthermore, the bank can ask you to prove that you are not American by requiring you to show a certificate of ‘loss of nationality’ or show other evidence from which they can verify that you have never been an American citizen.

4. Received a HSBC FATCA letter but you have never filed an American tax return. What do you have to do?

The American tax authorities have an amnesty procedure, the so-called ‘Streamlined Foreign Offshore Procedure’, which allows American taxable persons to file a late tax declaration without fines if they were not aware of their tax duties.

This procedure also applies if you have filed taxes in the past while living in the United States and then moved to another country – never realizing that you had to continue reporting to the American tax authorities. The amnesty procedure will most likely be terminated sometime in the future, though, since the IRS may assume that you are already aware of your American tax return obligations under the global US tax regime.

The bottom line is that it’s wise to be aware of your American tax obligations and undertake steps to file the necessary tax returns: Americans Overseas can assist you in these matters free of charge and without obligations.

Do you have more questions about the HSBC FATCA letter and American tax obligations?

We, the founders of Americans Overseas, were born in the Netherlands and obtained our American nationality through our (American) mother. When we heard about this for the first time around 2013, we were in total disbelief (it can’t be true!), anger (how can they do this?), fear (am I going to get fines or pick up other problems?), and panic (what should I do?). 

It is (unfortunately) true that there is an additional American tax levy. But there’s no information from local government, and when approached, the consulate referred us to the IRS, and the IRS was impenetrable.

That’s why we started this initiative to help people from all over the world by providing proper information to avoid unnecessary panic, and offering help free of obligation and free of charge. If needed, we have a network of affordable professionals (accountants) who can help you with your tax obligations.

If you have more questions about the FATCA form HSBC or the American tax obligation you can contact us at Americans Overseas.

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Source: FATCA HSBC