A “U.S. person” – More than just an American

Who is a “U.S. person?”

Most guess a U.S. citizen. Some of you overachievers might have included “Green Card” holders too. But did you know even foreign nationals in the U.S. temporarily could be classified as U.S. persons (see my detailed post about that here)? What about dual citizens? Many U.S. dual citizens living abroad seem to think their second citizenship somehow negates, modifies, or lessens the tax and legal obligations required under their U.S. citizenship. Sadly, it doesn't.

And let’s not forget about “Accidental Americans.”

Oh you’ve never heard of this them? Basically, there are two types: (1) an individual born abroad to at least one parent with U.S. citizenship or (2) an individual born in the U.S. to foreign nationals during a U.S. visit, but the parents and newborn return to their home country soon after while the individual is still an infant. In both scenarios, the individual is usually raised abroad, continues to live abroad during adolescence and into adulthood, and has much stronger ties to the foreign country than the U.S. Some of said individuals have never voluntarily been to the U.S., not even for a visit. These individuals are called “Accidental Americans” because unbeknownst to them, they are subject to the same U.S. tax, legal, and foreign bank secrecy rules same as any American born in California or New York, and often go decades out of legal compliance before realizing they have serious tax and legal problems with the U.S. Treasury.

And don’t forget about business entities—They’re “U.S. persons” too.

Any entity (like a corporation, partnership, limited liability company etc.) created or organized in the U.S. or under the laws of the U.S. are U.S. persons. The same is true for trusts and estates.

What does this all mean? It means ALL U.S. Persons (whether an individual or entity; or a citizen, permanent resident, or foreign national) are subject to complex (and complicated) U.S. tax, foreign asset reporting, and offshore bank account reporting requirements. Because some of these disclosures are rooted in anti-money laundering and foreign bank secrecy statutes, rather than tax laws, you risk astronomical civil and criminal penalties, not to mention possible jail time.

We specialize in providing U.S. cross-border tax and foreign bank privacy advisory and litigation services to foreign investors around the world and U.S. persons residing or investing abroad.

To learn more about our U.S. cross-border legal services, contact us today.

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