'Accidental Americans' fight to stop double taxation

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PARIS — Tom Wallis was born here and has spent his entire life in France, but it turns out that the 40-year-old entrepreneur from Grenoble owes tens of thousands of dollars in taxes to the United States.

Wallis’ mother was French, but he holds U.S. citizenship through his American father. He had previously visited his father’s family in the U.S., but other than that he says he has no real connection to the country.

But three years ago, Wallis found out he was still subject to U.S. tax law.

He is one of potentially thousands of “accidental Americans” around the world — U.S. citizens who neither live in the country nor have any real ties to the United States.

Under a citizenship-based taxation system in place in the United States, people like Wallis are subject to U.S. taxes on their global income, no matter where they live.

Wallis hired lawyers to fill out the necessary paperwork to try to comply with the U.S. tax authority, but when his legal fees reached over $61,000 (50,000 euros), he says he had to stop the process. “It was too much,” he said.

His lawyers told him he would owe $115,000 in U.S. taxes after he sold his business in 2013, even though he had paid a tax on the sale in France. He says he won’t pay even though the U.S. has not explicitly asked him for any money yet.

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“There is no way,” Wallis said, adding it’s money he could invest in France, where his family lives. “I am OK to pay what I owe in France, but to the U.S. — I can’t accept it … I think it’s a robbery.”

He says he doesn’t know what will happen next, but he won’t be hiding from the authorities, because he feels that he has done nothing wrong.

“I won’t pay. Even if I have to go to jail, I won’t pay it for sure because it’s too unfair.”

There has been a growing movement by “accidental Americans,” particularly in France, to try to get U.S. authorities to realize the burden their American citizenship is adding to their lives. Many are hoping that French President Emmanuel Macron will raise the issue during his state visit to the U.S. next week.

Unlike other advanced nations, the U.S. enforces a tax system based on citizenship rather than residency. In 2010, Congress enacted the Foreign Account Tax Compliance Act, also known as FATCA, to crack down on tax evasion by Americans with financial assets abroad after a Swiss bank scandal showed U.S. taxpayers hid millions of dollars overseas. The law requires foreign banks to report about financial accounts held by U.S. citizens to the Internal Revenue Service (IRS) in the U.S.

As a result, many “accidental Americans” learned they may owe taxes in the U.S. after getting contacted by the banks in their home countries.

Fabien Lehagre, 33, a commercial manager, found himself in that exact situation.

Born in Mountain View, California, in 1984 to a French father and a Singaporean-American mother, Lehagre was 2 when his parents divorced and he and his father moved to France.

He grew up and studied there, and now works in Paris.

In 2014, while he was working in Austria, his French bank contacted him asking for his U.S. tax identification number. Thinking it was a mistake, Lehagre ignored the request despite repeated warnings. He moved back to France, but the requests didn’t stop.

Image: Fabien Lehagre

Thirty-three-year-old Fabien Lehagre, president of Accidental Americans Association, hopes French President Emmanuel Macron will raise the issue of “Accidental Americans” with U.S. officials on his visit to the country next week.