admin
I didn't even know I was American.
When Léa opened a letter from her Zurich bank asking for her U.S. tax identification number, she thought it was a scam. After all, she had never lived in the United States, only visited her grandparents once as a child. But as it turned out, she was an American citizen by birth, and that one detail suddenly made her part of a system she never knew she belonged to.
Stories like Léa's are surprisingly common in Switzerland. Each year, countless individuals discover they are considered U.S. taxpayers because of where they were born, or who their parents are.
For many, it's not about taxes, but rather about identity. They are Swiss in every way that matters, yet they carry an invisible passport with obligations they never chose.
Finding Balance Between Two Worlds
Being an Accidental American can feel like holding two passports to two different systems. One is emotional: your life, language, and home in Switzerland. The other is bureaucratic: the invisible obligations of citizenship you never chose.
But with the right guidance, that second passport doesn't have to feel like a burden.
What Is an Accidental American?
An Accidental American is someone who holds U.S. citizenship by birth or parentage but has little or no connection to the United States.
Many were born in Switzerland to one American parent, moved away as infants, and grew up entirely Swiss. Others might have been born in the U.S. while their parents were working there temporarily, only to return home before kindergarten.
For years, this didn't matter. But when the Foreign Account Tax Compliance Act (FATCA) came into effect, Swiss banks began flagging dual citizens, and suddenly many people learned they were expected to file annual U.S. tax returns and FBAR reports, sometimes stretching back years.
The Real Impact on Your Life
The discovery of accidental American status creates immediate, practical challenges. Here are some examples:
Banking Access: Swiss banks may freeze accounts, refuse mortgages, or require proof of U.S. tax compliance before continuing services. Some banks have closed accounts of known U.S. persons entirely.
Investment Restrictions: Swiss pension accounts (Säule 2 and 3a), along with many Swiss mutual funds, may be classified as Passive Foreign Investment Companies (PFICs) by the IRS, triggering complex reporting and punitive taxation.
Business Complications: If you own a Swiss company or hold shares in a Sàrl or AG, additional reporting requirements apply, including Forms 5471 and 8938.
Inheritance Issues: Passing assets to heirs becomes more complex when U.S. estate tax rules intersect with Swiss inheritance law.
Travel Concerns: U.S. citizens must enter and exit the United States on a U.S. passport, even if they've never had one.
Your Options: Three Paths Forward
If you have just discovered your U.S. tax obligations, you essentially have three options:
1. Come Into Compliance
Use the IRS Streamlined Foreign Offshore Procedures to file past tax returns and maintain ongoing annual filings. This path makes sense if you want to keep your U.S. citizenship, plan to live or work in the U.S., or want to pass citizenship to your children.
2. Renounce U.S. Citizenship
Formally give up your citizenship at a U.S. embassy or consulate. However, renunciation requires proof of tax compliance (typically 5 years of returns) and costs $2,350. Note: You cannot renounce if you are not tax compliant first.
3. Do Nothing (Not Recommended)
While the IRS rarely pursues accidental Americans aggressively, this option carries risks: ongoing banking restrictions, potential penalties if discovered, inability to travel to the U.S. freely, and unresolved compliance status.
For most accidental Americans, option 1 (compliance) followed by option 2 (renunciation if desired) provides the clearest path to resolution.
What the IRS Actually Wants
While the IRS has increased enforcement through FATCA, most cases involving accidental Americans are resolved through voluntary disclosure rather than audits. Recognizing that most of these cases are unintentional, the IRS created a special amnesty program for taxpayers residing outside the United States, called the IRS Streamlined Foreign Offshore Procedures.
This program allows U.S. citizens living abroad who failed to file due to lack of awareness, not intent, to catch up without penalties for those who qualify. Participants typically file three years of tax returns and six years of FBARs, along with a short statement confirming that their non-filing was non-willful. The process is generally straightforward, discreet, and, most importantly, fair.
What Does Compliance Actually Cost?
The financial reality varies significantly. Many accidental Americans discover they owe little to no U.S. tax at all, thanks to the foreign earned income exclusion (up to $130,000 for 2025, adjusted annually) and the foreign tax credit.
The real costs are typically:
- Professional preparation fees (varies by complexity)
- Time invested in gathering bank statements, employment records, and documentation
- Ongoing annual filing obligations (or renunciation fees if you choose that path)
Realistic Timeline: Most streamlined filings take two to four months from gathering documents to IRS submission.
Common Misconceptions
- "I never lived in the U.S., so I don't have to file." False. Citizenship-based taxation applies globally.
- "I'll get fined if I contact the IRS." False. The Streamlined Foreign Offshore Procedure was built for voluntary disclosures by those who were non-willful.
- "It's too late to fix." Not true. As long as you haven't been directly contacted by the IRS about your non-compliance, you can still qualify.
- "Swiss taxes are higher, so I won't owe anything." Usually true for income, but U.S. rules on Swiss pensions, investments, and corporate holdings can create unexpected obligations.
- "I can just file once and be done." False. Coming into compliance means ongoing annual filing obligations unless you renounce citizenship.
A Path to Peace of Mind
For accidental Americans, the Streamlined Foreign Offshore Program is less about taxes and more about closure. It allows them to:
- Avoid severe penalties that normally apply for late filings for eligible taxpayers.
- Keep your Swiss bank accounts open (many banks now require proof of U.S. compliance).
Important reminder: Filing once doesn't end your obligation. You'll need to file annually going forward unless you complete the renunciation process.
How Professional Support Helps
Specialized tax professionals who work with Americans abroad, especially accidental Americans, can help you navigate the streamlined process.
Visit OffshoreRelief.com to learn how the Streamlined Foreign Offshore Procedures can help you file safely and penalty-free, if you qualify. Streamlined. Strategic. Compliant.
Frequently Asked Questions
Disclaimer: This article is for informational purposes only and does not constitute tax, legal, or financial advice. Information was current as of January 2026. Tax laws change frequently, and readers should consult a qualified tax professional regarding their specific circumstances.
About the Author: Nicole Green, EA, MST, is a U.S. Tax Advisor specializing in cross-border compliance and tax strategy for Americans abroad.
Dimitri Burkhard
Add comment