Please Note: The US State Department under John Kerry, who served in Viet Nam, is now charging $2350 to receive any CLN whether one has relinquished or renounced. So if you are coming to this only now, you are SOL when it comes to getting a free CLN.
See also Relinquishing your US citizenship in Germany
Those of us who have participated in the Expat Forum have seen that one of the first things that many many newbies say is, “I am going to renounce my US citizenship as soon as I have my Canadian citizenship.” Now, I want to suggest that one should never renounce their citizenship if they can relinquish it instead. Months ago I wrote a post on this subject, which I provide below.
But first, some explanations: Renouncing is one of seven ways to lose your citizenship. It requires swearing an oath in front of an official of the US government and it now has a $450 fee attached to it. Relinquishing does not require a US government official, for it is one of several acts that a US citizen can perform that can result in a loss of citizenship, provided the person intends to lose it. Then, the former citizen must only inform the State Department, not so as to validate the relinquishing act, but to make sure that the US government understands what your intent was when you performed it.
It has become clear that there are several advantages to relinquishing over renouncing:
(1) Relinquishment takes the act of losing your citizenship out of the hands of the US government. This has two benefits. (a) There should be no fee because it doesn’t require a US government official–it doesn’t take place in a US Consulate–you only go to the consulate to inform them of a fait accompli, and it only takes one visit, unlike renunciation which usually take two visits. (b) This saves you $450, or it should, because you are not requiring the services of the Consulate–you are there only to inform them of your intention when you committed a potentially expatriating act such as making a pledge to a foreign power.
(2) Relinquishment is usually a positive act which cannot be confused with an expatriation to avoid taxes. You do it so that you can take part in foreign government or to vote in the country you live in, not so that you can avoid US taxes.
(3) Relinquishment is not a renunciation of your citizenship, so much as a positive act vis-a-vis your new home and country. It is not a repudiation of your country but an acknowledgement that dual citizenship is an unworkable absurdity. Thus, relinquishment comes with less stigma, potentially.
Finally, a caveat is in order. Don’t do one thing and say another. That is don’t relinquish your citizenship then travel on US passport, pay tax in the US, register your children born abroad as US citizens, or take up a residence or a job in the USA, except as one holding a legitimate permit to reside or work in the US as an alien. If a person does any of these things, the State Department may not accept your relinquishment. Those who desire to lose their citizenship but who have done such things after the relinquishing act, may need to renounce their citizenship after all.
So without further ado, here is my original post, “Renunciation of US citizenship: On avoiding the new $450 renunciation fee (update 2), which explains in greater detail, what would constitute a relinquishing act:
Renunciation of US citizenship: On avoiding the new $450 renunciation fee (update 2)
I’ve been pretty upset that it would cost me $450 to renounce my citizenship now that the US consulate in Toronto has instituted a fee. But today I was looking at the various government websites: Consider this website from the US state department and its explanation of how to renounce US citizenship:
Section 349(a) of the Immigration and Nationality Act (8 U.S.C. 1481) governs how a U.S. citizen shall lose U.S. nationality. Section 349(a) states:
A person who is a national of the United States whether, by birth or naturalization, shall lose his nationality by voluntarily performing any of the following acts with the intention of relinquishing United States nationality:(5) making a formal renunciation of nationality before a diplomatic or consular officer of the United States in a foreign state, in such form as may be prescribed by the Secretary of State; or(6) making in the United States a formal written renunciation of nationality in such form as may be prescribed by, and before such officer as may be designated by, the Attorney General, whenever the United States shall be in a state of war and the Attorney General shall approve such renunciation as not contrary to the interests of national defense.
Now perhaps it would interest readers to know that this government website is not telling the whole story: The U.S.C. 1481 lists several other ways that a natural born US citizen may lose their citizenship. Here is the full text (emphasis mine):
§ 1481. Loss of nationality by native-born or naturalized citizen; voluntary action; burden of proof; presumptions
(a) A person who is a national of the United States whether by birth or naturalization, shall lose his nationality by voluntarily performing any of the following acts with the intention of relinquishing United States nationality—
(1) obtaining naturalization in a foreign state upon his own application or upon an application filed by a duly authorized agent, after having attained the age of eighteen years; or(2) taking an oath or making an affirmation or other formal declaration of allegiance to a foreign state or a political subdivision thereof, after having attained the age of eighteen years; or(3) entering, or serving in, the armed forces of a foreign state if
(A) such armed forces are engaged in hostilities against the United States, or(B) such persons serve as a commissioned or non-commissioned officer; or(4)
(A) accepting, serving in, or performing the duties of any office, post, or employment under the government of a foreign state or a political subdivision thereof, after attaining the age of eighteen years if he has or acquires the nationality of such foreign state; or(B) accepting, serving in, or performing the duties of any office, post, or employment under the government of a foreign state or a political subdivision thereof, after attaining the age of eighteen years for which office, post, or employment an oath, affirmation, or declaration of allegiance is required; or(5) making a formal renunciation of nationality before a diplomatic or consular officer of the United States in a foreign state, in such form as may be prescribed by the Secretary of State; or(6) making in the United States a formal written renunciation of nationality in such form as may be prescribed by, and before such officer as may be designated by, the Attorney General, whenever the United States shall be in a state of war and the Attorney General shall approve such renunciation as not contrary to the interests of national defense; or(7) committing any act of treason against, or attempting by force to overthrow, or bearing arms against, the United States, violating or conspiring to violate any of the provisions of section 2383 of title 18, or willfully performing any act in violation of section 2385 of title 18, or violating section 2384 of title 18 by engaging in a conspiracy to overthrow, put down, or to destroy by force the Government of the United States, or to levy war against them, if and when he is convicted thereof by a court martial or by a court of competent jurisdiction.(b) Whenever the loss of United States nationality is put in issue in any action or proceeding commenced on or after September 26, 1961 under, or by virtue of, the provisions of this chapter or any other Act, the burden shall be upon the person or party claiming that such loss occurred, to establish such claim by a preponderance of the evidence. Any person who commits or performs, or who has committed or performed, any act of expatriation under the provisions of this chapter or any other Act shall be presumed to have done so voluntarily, but such presumption may be rebutted upon a showing, by a preponderance of the evidence, that the act or acts committed or performed were not done voluntarily.
I swear or affirm that I will be faithful and bear true allegiance to her Majesty Queen of Elizabeth the Second, Queen of Canada, Her Heirs and Successors, and that I will faithfully observe the laws of Canada and fulfill my duties a Canadian Citizen.
An individual who has performed any of the acts made potentially expatriating by statute who wishes to lose U.S. citizenship may do so by affirming in writing to a U.S. consular officer that the act was performed with an intent to relinquish U.S. citizenship. Of course, a person always has the option of seeking to formally renounce U.S. citizenship abroad in accordance with Section 349 (a) (5) INA.
Update 2: Today a consular officer called me from the US consulate in Toronto. She confirmed what I’ve said in this post, that relinquishing US citizenship and renouncing US citizenship are two different processes that are treated in a different manner by the consulate (including the fee structure).
DJ, if you are outside of Canada at the moment, and not in the US, it may be worth considering getting the kids flown in to your location to renounce in a US consulate where you are. Could be much cheaper and faster than going through the process of finding a relinquishing act to perform. As duals, they won’t be covered expats if filing an 8854, and given their ages, if they chose to back file, it should be relatively simple to do on their/your own. I’d leave everything in cash until they relinquish or renounce, for simplicity’s sake.
Thanks Mom. What you’re saying makes a lot of sense. We are in Singapore and the kids are studying in Canada. They will be here over Xmas but I doubt there will be enough time over the holidays to make the two appointments necessary for renunciation. Nevertheless, I was planning to call the embassy in the morning anyway to get more information. Maybe they could do step one in Canada before they leave and then the renunciation ceremony in Singapore. My guess is that there will be less traffic through the Singapore embassy than through the various consulates in Canada, and so might be easier to get an appointment here. That being said I know personally of three other people who renounced here in Singapore, clearly people are renouncing at embassies around the world, and I imagine Canada is the busiest.
This whole situation is really very sad, we thought when the kids were born that they would have all kinds of opportunities with the US nationality, however they will still have lots of opportunities but with Canadian nationality. Those with dual nationality are really very fortunate, there are many others out there who would like to renounce but no other passport to fall back on.
Thanks for your input and suggestions.
DJ
@DJ
Good to hear that your kids haven’t yet invested in PFICs. I’ve been quoted from $325 to $1000 per account, per year of filing for PFICs. I just wanted to emphasize what The Mom said, DON’T invest their money until after they renounce. It’s more than for simplicity!
@ WhatAmI
Thanks for that. Yes I am well aware of the issues with pfics. In order for us to be compliant with the IRS when we abandoned our green cards we had to complete over 40 of these forms and were charged a “discounted” C$ equivalent of $150 per form! This is why I am so concerned that my kids do not invest any money, not even the measly $3000 they have until they renounce their citizenship. Just getting the professional advice to make sure that any investments they make will not be subjected to pfic reporting is an expense that they/we should not need to incur.
With this little bit of money they have they really want to start investing it however they are faced with 4 choices:
1) put it under their mattress
2) use a friends address in the US and lie that it is their address so that financial institution in the United States will except them as a client
3) try to open an account with a Canadian institution and risk pfic reporting and possible tax consequences.
4) give up their American nationality
None of these are good choice and it is crazy that these are the only options open to an American living abroad with no US address. I really hope that the IRS will come to their senses and see how ludicrous the new laws that they are implementing are.
@DJ
John Richardson and other accounts/lawyers have laid out in detail how it is just not feasible for American citizens living outside the US to lead a normal (long-term) financial life including planning for retirement and eventually living off retirement funds. In all seriousness, your list is reduced to just two choices (at least in Canada):
1) give up US citizenship
2) move back to the US
The punitive handling of PFICs came about from the US financial lobby pushing so that Americans would not invest outside the US. Due to (if I remember correctly) the PATRIOT act, Americans outside of the US cannot hold investments with US homeland financial institutions. When my father moved from the US back to Canada, Wachovia made him take his savings with him and cited the PATRIOT act. Of course, this was at a time just _after_ the Canadian dollar went from $0.66 to near par. Ouch.
@WhatAmI
You’re right. it really does come down to those two choices, even for my kids as young adults, with little or no income.
My recollection is the same as yours regarding the Patriot Act. We have an account with Fidelity in the US, which they “restricted” a few years ago. We can sell holdings, but cannot buy anything new and cannot transfer cash into it. This to me seems really stupid, wouldn’t it be in the US’s best interests for us to invest in Fidelity (or another US brokerage)? That way they would be able to follow the money trail, if they so desired.
We also have an account with HSBC in the US, and they told us that we can hold the account as long as we live in Singapore. As soon as we move to Canada, we will need to close the account. I don’t understand this, as I thought that Canada and the US had such a great relationship and they have a tax treaty.
We were cited the Patriot Act in both cases. I’m so sorry about your father, I just can’t imagine what kind of a hit that would have been.
DJ
This is not a reply–I can’t find how to post a new message. I recall that somewhere on this site is a table of how long it took people to receive their CLNs. I wanted to let the members know that I just received a message that my CLN was approved by the state department, 20 months after I renounced! (At the time I did not know about “relinquishing.”)
I live in Panama, and renounced in Paraguay on April 12, 2013. Part of the problem with the delay was the fault of the embassy in Paraguay. They don’t do many renouncement and I discovered much later that they did not send a copy to the US of my renouncement signed by the then-consul. FORTUNATELY, I asked for and received a copy at the time I renounced. Otherwise who knows what would have happened. However, the Paraguayan who worked there at the time and still does was very helpful. She speaks excellent English. I would choose to renounce there again.
During the 20 months it took, I was in limbo. I had no US passport (nor did I want one or ever intend to use one again). But it pissed me off that they had my money for 20 months while doing nothing.
Thankfully, I renounced while the fee was $450, not the $2,350 it is now.
The CLN list along with reports by renunciants is at http://isaacbrocksociety.ca/consulate2/
The actual report is at:
http://isaacbrocksociety.ca/wp-content/uploads/2014/10/consulate-report-directory-2014.10c2.pdf
I called the embassy in Singapore today and they are booked through until the end of December for renunciations. I guess that is still a lot faster than what appears to be the waiting time at US consulates in Canada. In case anyone happens to be in Asia and is considering coming to Singapore to do the renunciation, the embassy here told me that they will only provide this service for residents of Singapore, not for tourists or for somebody that does not have a residency status here.
It shouldn’t be surprising, that many Americans in Singapore are renouncing their nationality given Singapore has a significantly lower tax rate than the United States. What we pay in low taxes though, is quickly made up in living expenses given that Singapore is regularly rated one of the most expensive places in the world to live.
I have been remiss in posting my Consulate Report for my renunciation with the US Embassy in Abu Dhabi, UAE, completed in February 2012. I plan to do so but in case anyone is shopping for a place to do it, consider visiting the UAE.
If you are prepared with all the forms filled out, plus notify the consular staff that you are sure of the action and its consequences and want to complete it quickly, you might be able to have it done in the UAE in just a few days while visiting. Note: US citizens are granted a 30-day visitor visa on arrival (no application or fee involved). The main embassy is in Abu Dhabi, and there is a consultate in Dubai. Both cities are modern with plenty of western name brand hotels, restaurants and shopping. There are direct flights from most major cities within 8,000 miles.
The CLN was approved in about six weeks, delayed slightly because the consular clerk used an outdated form for the oath part, and it had to be redone. I insisted the new form be back-dated to the original date as this was not my fault, and the staff was successful in having the Dept of State do that.
All in all, a pretty smooth process, and done in three days. Oh, and to the question of “why do you want to do this?” I replied: because it is my right to do so. Period. No further discussion or questions.
@WhatAmI, “For Canadian citizens, oaths of allegiance are not required for government employment or military service to be an expatriating act. ”
Absolute dittos…….
Code section states…..
“(4) (A) accepting, serving in, or performing the duties of any office, post, or employment under the government of a foreign state or a political subdivision thereof, after attaining the age of eighteen years if he has or acquires the nationality of such foreign state; or ”
The KEY…..is any employment….including under a political subdivision.
“any office, post, or employment under the government of a foreign state or a political subdivision thereof,”
If someone wants to relinquish you need ANY government job. The Consulate might night like someone relinquishing because they took the job of rubbish person for a week and then quit but the law is the law and its very clear.
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Hello,
I had posted this in another thread and someone suggested I try this one too.
I am just in the process of renouncing my US citizenship. I have asked for a interview with the Vancouver Consulate but had not heard back from them yet.(30 days) I have filed my tax returns for the last 5 years (2009-2013) in preparation of this process. I have the necessary forms filled out ( Loss of Nationality Questionnaire, DS4079, DS4080) but not the Form 8854. Do I need this one when I have my interview or can it be completed at a later date?
Also, in form 8854 where they ask in Part IV, question #1 regarding “US income tax liability for the 5 tax years ending before the date of expatriation”. What exactly are they asking here? Are they talking about total tax paid in Canada or just what I had to pay in the US? Within the 5 year period (2009-2013) I had to pay a total of 84.00 in taxes to them. ???
I would appreciate any help you could give.
Also, I read someones comment stating that there are 7 ways one can lose their US citizenship, does this mean It may not be necessary to go through all this to renounce my US citizenship or is there an cheaper/easier way?
Thanks
PL
I answered these the last time you posted them.
Hi PL,
No, you don’t need the 8854 for your interview at the Consulate. You file that with IRS along with/at the time the rest of your final returns are due.
They are asking if you have taken care of all required US tax/info filings for the five years prior to the date you renounce. And paid, if necessary.Sounds like you have taken care of it. I am presuming you are familiar with FBAR/FIN CEN 114? There are other possibilities as well, depending upon your types of income, accounts.
No, it doesn’t mean there is a cheaper or easier way (necessarily). These are the 7 ways:
http://travel.state.gov/content/travel/english/legal-considerations/us-citizenship-laws-policies/citizenship-and-dual-nationality.html
*obtaining naturalization in a foreign state upon one’s own application after the age of 18
(Sec. 349 (a)(1)INA);
*taking an oath, affirmation or other formal declaration of allegiance to a foreign state or its political subdivisions after the age of 18 (Sec. 349 (a) (2) INA);
*entering or serving in the armed forces of a foreign state engaged in hostilities against the United States or serving as a commissioned or non-commissioned officer in the armed forces of a foreign state (Sec. 349 (a) (3) INA);
*accepting employment with a foreign government after the age of 18 if (a) one has the nationality of that foreign state or (b) an oath or declaration of allegiance is required in accepting the position
(Sec. 349 (a)(4) INA);
*formally renouncing U.S. nationality before a U.S. diplomatic or consular officer outside the United States (sec. 349 (a) (5) INA);
*formally renouncing U.S. nationality within the United States (The Department of Homeland Security is responsible for implementing this section of the law) (Sec. 349 (a) (6) INA);
*conviction for an act of treason against the Government of the United States or for attempting to force to overthrow the Government of the United States (Sec. 349 (a) (7) INA).
Thanks for the replies, I appreciate the time you all take to assist others in their time of frustration in going through this renouncing process. It looks like it will not happen until next year now – which means more cost for getting another US tax return and FBAR done. This is all somewhat frustrating considering I never worked in the US (moved to Canada at age 9),and then couldn’t file my 5 tax returns because I didn’t have a SSC.(until August of this year – had to apply in person in Washington for a SSC) All this just to turn around and renounce my US citizenship.
Considering I will never move or work in the US, is there any benefit to keeping my US citizenship?
Thanks again everyone,
PL
@PL
“Considering I will never move or work in the US, is there any benefit to keeping my US citizenship?”
No, absolutely not.
PL, am I reading it right that you applied for a social security card in the US in order to renounce?
That’s confusing, because none of the US state department documents I filled out to renounce asked for my SS number.
@PL “Considering I will never move or work in the US, is there any benefit to keeping my US citizenship?”
I just had the expression of a madman giggling and rolling on the floor.
Get out, get out, get out while you can…..
Sad that you were unable to relinquish….
Dottie, but to file all of your required compliance US tax documents to confirm with final timely filing of IRS Form 8854 (the year following your actual renunciation) that you have fulfilled your US tax compliance and will not be deemed a “covered expatriate”, you will require a US SSN (Social Security Number) or a TIN (Taxpayer Identification Number). If you are a US citizen, you are to use a SSN rather than a TIN for those returns.
PL said “…then couldn’t file my 5 tax returns because I didn’t have a SSC”. I did have to provide a SSN in the documentation that I presented at the Calgary Consulate for my renunciation. Not all US consulates practice the exact procedures. I think a logical explanation for renunciation purposes, though, has previously been accepted like “I have never had a US Social Security Number”.
Of course, yours might be the choice to disregard your filings, given your circumstances and due diligence. We each have to make those decisions based on our facts and whether we ever want to again cross the US border, etc.
Ah, that’s right concerning Form 8854. I did file it, although it basically had all zeros on it. And I didn’t receive my CLN until well after a year of the filing.
I would have thought that all documents by the state department for renunciation would be identical. Apparently not. None of the documents I filled out asked for a SS number.
Dottie . Calgary411 has it right.
In theory, the consulate are not supposed to concern themselves with tax matters when discussing renouncing. In practice, they tell everyone to contact the IRS. This means filing a form 8854- a rather complex and intrusive bit of business. To file a 8854, they assume you have been a taxpayer and have a SS number and that you will file 5 yrs. of back taxes
For those who never had one , one option is to ignore that requirement. We have very little info. on what happens to those who choose to ignore. They might get a letter saying pls. file one. Perhaps that would be followed with a nastier letter threatening dire things. Who knows? We do know that Canada will not help them any so called fines owing.
Yes, form 8854 is a VERY complex and intrusive six pages and I think it’s none of their business! That’s why I left most of it blank. I had already been gone from the US for over 10 years and did not have any property or investments there. I read that if they decide you renounced “for tax reasons” that you wouldn’t be allowed back into the US. And that’s a “punishment?” Not in my book. I never had any intention of returning to that fascist, corrupt country.
I agree with you, Dottie — Form 8854 (http://www.irs.gov/pub/irs-pdf/i8854.pdf) is very complex and intrusive and I also think it is none of their business.
I did file that form to confirm that my net worth is less than USD 2 million, my yearly U.S. income tax liability would never have approached the figure to be deemed a US ‘covered expatriate’ and I could certify on Form 8854 that I had complied with all of my federal tax obligations [at great cost from my ALL-CANADIAN earned retirement savings to US tax law, accounting and immigration nationality professionals] for the 5 tax years preceding the date of my expatriation. I also recognized that if I did not file this last document, I would be then be deemed a ‘covered expatriate’ since I was NOT born a dual US / Canadian (or other country) citizen (as those *born dual* will not be deemed “covered expatriates” if they file Form 8854 on time the year after their expatriation). I feel I have (under duress) done everything I have to do to finally be free (although I thought that when I became a Canadian citizen in 1975 and was warned then that I would be losing my US citizenship).
I am in this fight for all “Accidental Americans”, especially my son and others like him, entrapped into a US-defined supposed US citizenship because of birth abroad (such as in Canada where my son has lived all of his life) and unable to renounce for any amount of money such a US-deemed US citizenship because they do not have ‘requisite mental capacity’ to understand what that means and nor may a parent, a guardian or a trustee act on such a person’s behalf, even with a court order.
If there is such a monstrosity as US citizenship-based taxation, that country’s law should NEVER entrap anyone into a citizenship with such consequences and continuing cost to maintain. To do so by any country, not just the USA, is beyond immoral and exceptional. Such a US citizenship certainly further discriminates against such persons with ‘mental incapacity’ in the countries in which they live, all thanks to the IGAs signed with the US to implement US extra-territorial law here in Canada and other countries around the world to override our own laws, including in Canada the Charter of Rights and Freedoms.
I hope you and all others reading here will join with us in raising the needed funds for the Canadian litigation at the non-profit organization, Alliance for the Defence of Canadian Sovereignty, http://www.adcs-adsc.ca/. Thanks!