As published on international-adviser.com, Friday January 31, 2020.
American citizens living in the UK have criticised Goldman Sachs for rejecting their applications for an online savings account.
The reason cited was the firm’s inability to comply with the Foreign Account Tax Compliance Act (Fatca).
Those affected took to Twitter after being turned down by the US bank’s platform Marcus by Goldman Sachs.
The rejection message stated: “Unfortunately, Marcus UK is not able to offer accounts to all applicants, including in cases where an individual’s circumstances would require us to put in place additional infrastructure or systems, to process additional information or to incur additional regulatory obligations in order to service that account.
“For example, if you are currently required to file a US tax return or if you are a US resident alien, we are unable to open an account for you.
“This is because, at this time, Marcus UK is unable to support customers subject to Fatca information reporting or to provide the required 1099 statements due to the additional infrastructure required to comply with these tax regulations.”
A spokesperson for Marcus UK told International Adviser: “As a US affiliated bank, Marcus by Goldman Sachs is subject to Fatca.
“At present, we do not have infrastructure to support compliance with Fatca for people who are subject to or potentially subject to US tax rules.”
US citizens living abroad must comply with the regulation and report any foreign income or account to the Internal Revenue Service (IRS).
This is because the US has a citizenship-based taxation model, rather than a residency one.
Foreign financial institutions are also bound to report any information regarding American citizens and green card holders who have accounts with them.
Anyone with foreign financial assets of at least $50,000 (£38,306, €45,359) is obliged to report them to the IRS through their annual tax returns.
If they live abroad, however, the threshold rises to $200,000, and if taxpayers file a joint tax return with their spouse the limit doubles.
Some people have discovered they are subject to Fatca despite never having lived in the US.
These people are known as ‘accidental Americans’; meaning they either acquired citizenship through their parents or were born in the country but moved shortly after.
Many have challenged the legality of the US regulation, with cases in Canada and the UK, while an activist group called ‘Accidental Americans’ is taking their fight against France all the way to the European Commission.
Subsequently, the EU has sent a letter to US secretary to the Treasury Steven Mnuchin urging the country to fix and clarify what Fatca requires and how it is supposed to be implemented; considering that many EU citizens have claimed it breaches European privacy and data protection laws.