EU to push 'for a more permanent solution' to accidental American issues at meeting with U.S. this week

Andrea Liesenfeld, deputy head of retail financial services at the European Commission, the EU's executive body, said that EU officials also intend to ask why a recently-published IRS notice that grants relief to foreign financial institutions with respect to the FATCA requirement that they obtain the Tax Identification Number of all of their "U.S. person" clients and account-holders is only "temporary" rather than permanent – and why it only applies to accounts that already existed in 2014 or earlier.

This "of course doesn't fully solve the problem," Liesenfeld noted.

Liesenfeld, pictured left, made her comments during an EU Parliament's Petition's Committee (PETI) hearing in Brussels on Jan. 25. She said she was referring to the next scheduled meeting of the EU-US Joint Financial Regulatory Forum, which is scheduled to take place on Feb. 7 and 8 (this coming Tuesday and Wednesday). 

The IRS notice she was referring to was published on the next-to-last day of 2022, and as reported, was contained in a 12-page statement that was aimed at giving "temporary U.S. Taxpayer Identification Number (TIN) relief" to non-U.S. banks and other foreign financial institutions (FFIs), many of which report that their apparently-accidental American citizen account-holders say they're unable to provide them with such TINs (normally an individual's Social Security number).

Accidental Americans often don't have such TINs, because they're essentially citizens of other countries who happened to have been born in the U.S. but spent all of the rest of their lives in the country or countries of their parents. Often these "accidentals" only discovered that they were considered to be Americans recently, when their banks told them, as these banks began preparing to comply with FATCA.

Since FATCA was introduced almost 13 years ago, banks and others familiar with the situation have reported that many such accidentals are extremely reluctant to enter the U.S. tax compliance system in order to obtain a TIN, even when told they must if they wish to keep their financial and bank accounts, and the issue has persisted in spite of periodic but ultimately temporary and inadequate tweaks and assurances. 

A major PETI committee hearing on the matter took place in November, 2019, and since then, numerous other hearings have taken place across Europe. Last September, a delegation of EU parliamentarians met with U.S. officials in Washington to discuss the problems FATCA is continuing to cause their citizens.

EU Commission declines to confirm meeting details

Efforts to confirm that the next EU-US Financial Regulatory Forum will take place this week, and that FATCA and its effects on Europe's accidental Americans are expected to be discussed – which were also reported by Bloomberg Tax last month – were unsuccessful. A spokesperson for the European Commission's press office, who requested anonymity, would say only that the next EU-US Financial Regulatory Forum would "take place [in] early February" but declined to confirm the reported dates of  Feb. 7 and 8. 

"As previously, we will publish a short statement after the meeting takes place," the spokesperson went on, adding that there would also be a statement via the European Commission's Twitter account.

The EU spokesperson ended their emailed response by providing a link to a page of the European Commission's website where all of the statements following previous EU-US Financial Regulatory Forum meetings have been posted, and may still be viewed. 

Here, the three-page report issued after the last EU-US Financial Regulatory Forum, which took place in July of last year, mentions the word "FATCA" just once, noting that the event's participants "also discussed issues relating to the Foreign Account Tax Compliance Act (FATCA) relevant to citizens and financial firms," among other topics. 

Post-July delegation optimism
seen to have 'faded'

The Bloomberg Tax article ends with comments attributed to two members of the EU Parliament's Petitions Committee (PETI): Kosma Zlotowski, a Polish member, and Yana Toom, of Estonia, both of whom had  Toom had attended last September's PETI visit to Washington.

As reported at that time, they and their fellow delegates released a brief (800 words) statement afterwards, in which they said they had come away with a view that "efforts are underway to correct [the] injustices" that accidental Americans living in Europe are struggling with, and have been since 2010. 

That optimism seems to have faded, however, the Bloomberg Tax article suggested, as it reported that the Petitions Committee lawmakers working on FATCA-related issues had told it that they now feel they have made "little progress" in their push for legal changes aimed at reducing the burden on Europe's accidentals.

"The US authorities we met have told us there is no problem because it has nothing to do with their electorate, but with ours,” Zlotowski is quoted by Bloomberg Tax as saying, while Toom notes that the 2024 European Parliament and U.S. presidential elections could result in any action that might be under consideration being delayed.

“Next year [2024], in January, everybody will be campaigning,” Toom is quoted as adding.  

“If we do not act now, I mean tomorrow, then this will delay for three more years.”

Last month, the seven PETI delegates to Washington published a 19-page "Draft Mission Report" on their trip, in which there was also little evidence of optimism. Instead, it included eleven recommendations aimed at European lawmakers with respect to FATCA, and how they should go about fixing the problems.

As reported, their general finding was that much needs to be done by the U.S. to address FATCA, including the establishing of "an EU-U.S. working group on FATCA compliance" – suggesting that they believe the problems were unlikely to be easily be resolved by a few regulatory tweaks. 

Also testifying at last month's PETI hearing was Fabien Lehagre, founder and president of the Paris-based Association of Accidental Americans. Lehagre, himself a California-born "accidental," echoed Liesenfeld's observation that the IRS's adoption of certain "temporary measures" to improve the situation for Europe's accidental Americans fell short of a lasting solution, which he said continued to be needed, and also highlighted certain ways that FATCA is seen to violate Europe's GDPR (General Data Protection Regulation), which he noted that the U.S. will also need to address. 

To view last month's PETI hearing, at which Liesenfeld, Zlotowski, Toom and other PETI Committee members also spoke, click here.

Editor's note: This story has been updated, to add information obtained from the YouTube video of last month's hearing
 

 Above, a photo taken from an S&D Group Tweet, which shows last July's PETI delegation: left to right, Marc Angel, of Luxembourg; Kosma Zlotowski, Poland; Yana Toom, Estonia; Ulrike Müller,Germany; Alexander Bernhuber, Austria; Mario Furore, Italy; and Cristina Maestre, Spain.