A British pensioner lived her entire life on the right side of the law, but is now being hunted by US tax officers because she was born in New York. MEP Alex Mayer writes.
“Where were you born?” it is a common question and one many of us have asked countless times when we meet new people.
Most of the time, the question elicits a straightforward answer, and occasionally we are surprised to learn a friend was born in some far-flung place.
Whatever the response, one thing is clear; no one has any choice in where they are born.
So let us look at the case of Merryn Grimley, a retired 73 year old grandmother from Cambridge, who recently got the shock of her life when the post arrived. The pensioner had a letter from her bank informing her that she needed to pay US tax on her income. In her own words, leaving her “panicked, isolated and scared.”
So how did this scenario arise? Well, despite Merryn having a British mum and dad, having only gone to school, worked and retired in Britain, only having had a British passport and living in Britain for 72 years, Merryn’s answer to the question, where were you born, is New York.
Through her place of birth, Merryn automatically become an American. She is one of the so called ‘accidental Americans’- a US citizen because of a technicality – her birthplace.
What makes this problematic is that the US taxes people according to citizenship. Only one other nation in the world shares this quirky approach to taxation, Eritrea. The rest of the world taxes citizens in relation to where they live.
In recent years the US has implemented the Foreign Account Tax Compliance Act (FATCA) – which forces banks across the world to report the details of any customers who they think might be American to the US’s tax office.
Given the US’s status as a superpower, foreign banks have complied with this extraterritorial law, fearing if they do not play ball, they will struggle to operate in the United States.
This leaves ‘accidental Americans’, like Ms Grimley who have only ever believed themselves to be British, with a choice: pay up or go through the process of renouncing US citizenship.
Yet, the US charges the world’s highest fee – a whopping $2345, and requires tax return forms and payments for five years – to relinquish citizenship.
Ms Grimley, who lives on her state pension with modest savings from her working life, has so far racked up £9,000 fees on a tax accountant that knows both the UK and US tax systems to sort out her finances, and ensure she is not liable for prosecution or fines for doing it incorrectly.
Quite often in the European Parliament, human rights concerns are raised. We often think of nefarious acts by overreaching governments as something that occurs in some distant land, but for thousands of ‘accidental Americans’ around the world I believe serious violations of their human rights are taking place.
FATCA not only breaches the right to data privacy in the European Convention of Human Rights, but also the financial barriers to renouncing citizenship breach Article 15 of the Universal Declaration of Human Rights.
Due to the threat of action from the US against banks who do not co-operate with FATCA it is also estimated that as many as 1 in 8 ‘Americans’ abroad have been denied a financial service. Banks do not want to risk getting it wrong, nor the wrath of the US.
It is perhaps ironic, that while many people would give their right arm for US citizenship, there are a group of people who just want to renounce it, so I have urged Theresa May to raise the case of Merryn and all accidental Americans on Donald Trump’s forthcoming visit to the UK.
I will be speaking in the European Parliament on 4 July to call for a resolution so UK and other EU citizens, who never wanted to be Americans, can continue life, liberty and the pursuit of happiness in the place they call home – without being chased like common criminals by the US tax authorities.
Alex Mayer is a Member of the European Parliament for Labour and part of the US Delegation of MEPs.
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