Daan Durlacher: I experience this as an incredible injustice

The United States is the only developed country in the world that imposes a tax obligation on its citizens, regardless of where they live and work. Expert Daan Durlacher shares his experience.

Accidental American

Born and raised in the Netherlands, Durlacher discovered that he was also an American by accident, as he was born to an American mother and therefore had to fulfill tax obligations in America.

Durlacher: “I discovered about 5 or 6 years ago that I was American. I am still American. I found out in two ways, fairly parallel to each other.

I was asked by the bank, the Dutch bank, whether I had American citizenship. I answered no, not knowing better than someone born in the Netherlands. And I met a young man, Michael Littaur, who was also born in Amsterdam and had an American mother. And he told me that he was in serious trouble.

He had sold his business, and questions were raised about his American citizenship. He investigated and found out that not only was he American through his mother, but he also had tax obligations, and the sale of that business had caused significant problems for him. So those two things happening simultaneously alarmed me.

He was confronted with it because, I believe, he sold his business to an American company. That was standard procedure, but it only became clear later in the final stages of the sale when the new American owner asked if he could prove he was tax-compliant. That was a standard question that you could check off with a cross. But it made him vigilant, and rightly so, because that question meant: have you fulfilled your tax obligations in America? Well, of course, he hadn’t, because he didn’t know.

His experience and the questions the bank asked me all happened within one month, and then you start googling. And we are talking over five years ago. There was no such thing as Americans Overseas back then, and you ended up on very complex websites of the IRS, which is the American tax authority, and it was not only in English but also in very complex American tax language. But I quickly understood that what I heard was true, with all the consequences that entailed.

Denial of the Problem

My first reaction was to literally and figuratively banish Michael, who told me this story. So I said, “Well, Michael, I don’t want to know any of this. I don’t want to talk to you anymore.”

He did invite me and said, “Well, I recognize this behavior in myself. Once you’re ready, I’m here.” And I believe it was three months later before I had a cup of coffee with him again. So first came denial and not wanting to know, but meanwhile, I was having restless nights and looking for information.

And it made me paranoid. When I googled about this subject, I preferred to do it in a hotel lobby. So on a stranger’s computer, because I was simply scared. Yes, the IRS can see that I am searching. Then they trace you. So those two things, paranoia and denial.

American Accountants

Okay, and at a certain point, the cup of coffee with Michael. I then continued talking to him; he was already much further along; he had already spoken to several accountants. I went along with that flow, and then, tax returns. At some point, you come out of denial and say, okay, it is what it is, despite the fact that there is still a lot of emotion involved.

He indeed referred me to one of the accountants he had used to file tax returns. I had a conversation with them, maybe two, but I still didn’t completely trust it.

So I may have called five or six accountants in America. That in itself was already a dramatic experience. Because you have to imagine, and it varies per accountant, but look, accountants didn’t become accountants because they are the most empathetic psychologists. Often they are somewhat technical numbers people, to put it politely. So those conversations were generally businesslike and harsh.

Yes, sir, that’s your duty as an American. Or yes sir, you should also be proud to be American and therefore pay taxes. So you heard things you absolutely did not want to hear. So it took quite a few months before I eventually chose the same accountant that Michael had because he was strict with me when informing me, but that gave me the most confidence.

I ultimately accepted it. Well, I stopped working. I had recently started a business, and I couldn’t commit to it anymore. All of this gave me the feeling of, yes, what am I doing this for? Fortunately, I had my son, then thirty or twenty-eight, already in my business. He couldn’t find a job at the time and was helping me. And I really told him, do it on your own; I’m quitting. You really have to imagine that I ended up in a kind of vacuum of anger and crisis.

Injustice

And the biggest feeling, actually to this day, is injustice. I find this incredible injustice. What I did notice is that once I accepted it, a piece of calm returned to me. Why? Because I regained control.

When you’re just searching, I think it’s a bit like getting a diagnosis from a doctor that you are sick, seriously sick. The last thing you should do is google for a long time because it only gets worse. Address it, do something about it. And whether you do that through alternative medicine or something else, but the fact that you take control of what is happening solves something, and makes you calmer.

And I filed taxes with the full conviction that I no longer wanted to be an American in the future. The rules are that you must file tax returns in America for at least five years and then you may renounce your citizenship.

But I still have doubts. Yes, it’s a bit pragmatic. I have now had to do a lot to have that citizenship; it has cost me money and a lot of stress. And it would cost me even more money to renounce it because you have to pay an extra fee.

Regaining Control

The ship had sailed, so the tax filing in America had begun.

What I found interesting, looking back, is how important it is to feel a sense of control. American accountants file taxes according to American rules because that is their experience. And then it turns out that if you keep thinking for yourself and also take a bit of the lead, instead of being passive and thinking, “Here are the papers, handle it,” you can still influence quite a lot of things.

There were pieces of advice and ideas exchanged to limit the damage of paying taxes in America. Actually, the idea of doing something about it started with these two things.

On the one hand, there was the feeling of injustice and the question of why this was necessary.

How is it that when I ask my Dutch accountant, he says there is a treaty to prevent double taxation and that I don’t need to do anything in America as long as I pay taxes and file returns in the Netherlands? But that turns out not to be true; it’s only part of the story. So I got angry.

I also noticed that when I was at a birthday party and someone asked how I was doing, I only talked about this topic. People looked at me as if I were paranoid. There was always someone in that group who had the same reaction I once saw in myself: becoming silent.

Americans Overseas

This gave us the motivation to help the world, to make people aware that this problem exists, and to inform politics. We needed to find ways for people, with the help of affordable accountants, because I don’t even know what Michael paid, but he had to take various routes and he greatly helped me by sharing his discoveries with me. All of this led us to decide to do something about it.

We then created a website together, came up with the name, and filled this website with the help of accountants. We wanted to make the information understandable, in simple terms.

Then we got an interview by chance in De Financiële Telegraaf, and that’s when it started. The phone rang fifty or sixty times, people said: “I have this problem too, tell me more.”

We listened, shared information, and tried to reassure people. Then came the next question: “How can I file my taxes? Please help me.”

Of course, we couldn’t do this ourselves. It made little sense to send them to expensive accountants like the ones Michael and I had gone to. So the need arose to set up a network of affordable accountants, preferably in the Netherlands. These accountants were scarce at that time. The goal was to find those who could do this for a relatively affordable price. And that’s how it all started.

The Goal of Americans Overseas

The goal of Americans Overseas is to make the public, those who are potentially affected, aware that this problem exists. We want to provide them with tools and information about what this entails so that they can decide for themselves what they want to do. This is our first mission.

Our second mission is to help those who want to get rid of this problem with the procedures.

The third mission is to inform Dutch and European politics that the agreements made, such as FATCA (Foreign Account Tax Compliance Act), unintentionally affect a group of Americans born abroad or, like in our case, those with an American parent. This was not the intention and needs to be corrected.

These are our three objectives: informing, helping with procedures, and trying to stop this issue. Then we can dissolve ourselves.

It would be great if our services were no longer needed. The tax obligation aspect will continue to exist, that we are sure of. America will not drastically change its tax system. But we would be happy if we could be there for the people who want to remain American and fulfill their obligations like I do now. It is now more or less business as usual for me. I send the necessary documents, and yes, it costs me some money, but it doesn’t keep me awake at night anymore. So if we can be there for those people, that is fine.

But for those who do not know what to do or for those who want to stop being American, we want to be there to help them correctly handle this, so they don’t encounter problems after five years.

Get informed at Americans Overseas

We, the founders of Americans Overseas, were born in the Netherlands and obtained our American nationality through our (American) mother.

When we heard about the US tax system 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 fined 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 the 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 about the US tax system 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 American tax obligations.

Contact us for more information