The laws of each state determine who is a citizen and therefore, who it will protect. The Michigan Law Review 83 (1984) deals with the problem of dual nationality and how Iran-United States Claims Tribunal (1981) arbitrated claims by dual Iranian-Americans citizens, in their attempt to recover lost property. Iran claimed the duals as Iranian and therefore, under the doctrine of state nonresponsibility, as having no right to reparations, i.e., no right to the protection of the United States.
State nonresponsibility was described by the International Court of Justice as the “ordinary practice whereby a State does not exercise protection on behalf of one of its nationals against a State which regards him as its own national.” Reparation for Injuries Suffered in the Service of the United Nations, 1949 I.C.J. 174, 186 (Advisory Opinion of Apr. 11). [n. 9]
But the Tribunal, ruling against Iran, asserted the doctrine of dominant nationality, allowing individuals of dominant US nationality to present their claims against Iran.
The Michigan Law Review article claims that one problem with the doctrine of state nonresponsibility is that it doesn’t take into consideration the right of an individual to expatriate (604-605):
Specifically, some countries do not allow an individual to expatriate himself, even upon naturalization in another country. For instance, an Iranian citizen can renounce after obtaining permission from the Council of Ministers. Such unbridled control over an individual’s nationality is inconsistent with international expressions such as the Universal Declaration of Human Rights that assert the right to change nationality. If that right is to have any significance, it must encompass the liberty to forsake as well as to acquire a nationality. The extension by a state of its municipal laws to prevent an individual from renouncing his nationality is one of the least defensible expressions of sovereignty.
So the Michigan Law Review directly criticizes an archaic policy of Iran restricting expatriation. Today, such a criticism applies to the United States too, which has applied filing requirements and an exit tax on individuals, barring them from expatriation without first getting the permission of the IRS. The United States is also actively repatriating citizens of Canada against their will. This is a patent violation of international law and the doctrine of dominant nationality. Remember the border guard: “You are a U.S. citizen until we tell you you’re not.” Welcome to the Middle Ages.
In my opinion, the doctrine of dominant nationality should absolve dual citizens, who have dominant nationality in another country, from the extraordinary overreach of the United States. As we have seen elsewhere, the United States may target citizens for assassination; these citizens no longer enjoy the constitutional right to due process. How then can the United States prevent dual citizens from claiming the protection of the nation of their dominant nationality or from refraining from filing requirements of a government with which they have no substantial connections?
Dear United States: please join the modern world. If you would at least join the 20th century, you would then only be one century behind the times.
SOURCE: “Claims of Dual Nationals in the Modern Era: The Iran-United
States Claims Tribunal”, Michigan Law Review, 83 (1984) 597-624.
Good research Petros! Unfortunately, I think the US is always going to say “We are dominant!” – no matter what.
Another thing is that I’m shocked that no US-residents with foreign accounts, who earned all the money overseas, and paid taxes overseas, haven’t sued the US Government. Like I said in another comment, it’s not like immigration is going to give you a pamphlet that tells you it’s in your best interest to declare your bank accounts right away.
Seeing the US Gov. do this to innocent people has angered me even much more than me not being able to open a bank account.
I like history a lot, and I really thought we had come a long way as humanity goes, so I thought those old stories of the kings confiscating wealth were just a thing of the past, or only something that would happen in an African kleptocracy, but that’s exactly what the US is doing. Amazing! Shocking! Depressing! A lot of bad feelings at all the same time. So shocking, in fact, I doubt many US Resident-Citizens would even believe it.
The US government cannot prevent you from asking your country of dominant nationality for help. It is up to that country to decide if and how it will protect you. But any country is also limited in what it can do. The US cannot tell Canada what to do, but neither can Canada tell the US what to do. That’s what’s called sovereignty.
What it seems the US is doing is making life as difficult as possible to force foreign citizens, companies, banks, etc to voluntarily do what the IRS wants. And because the US has a lot of economic power, it may succeed somewhat, though possibly with much unintended consequence for the US itself, as well as the rest of the world.
“Sueing” the government, or the IRS, would not be an easy task. It would take years and lots of money, and i expect the IRS would fight to the very top, the the supreme court. And i can’t imagine any one would do that because of the inconvenience and annoyance. I can only see it happening if LOTS of people suffer real harm (big penalties) for minor non-compliance (ie not filling out the right form) and some US law firm is prepared to fight a class action suit on their behalf. But it would have to be financially worth their while. Hopefully it will never get that far, but who knows where this is going.
Too true. I had a long chat with my mother and even she now doesn’t blame me if I decided to renounce. I feel so angry and frightened about what’s happening.
I’ve also learned today that many accountants in the UK are going to add a surcharge of two hundred pounds per 8938 as a standard charge. People would probably be able to negotiate this down, but it’s inevitably going to become even more expensive to stay compliant going forward…this whole situation is an utter nightmare :'(
And that’s two hundred per account that needs to be reported on the 8938 from what I can gather
Even going before the European Court of Justice would be a long and painful process.
Say a French citizen is caught in France by the IRS and told to pay up. That citizen would probably take it before a French court which may have to rule that, because of the US/French tax treaties, the person must pay. Once it has wound its way through the national courts THEN it goes to the EU. That is my understanding anyway. This will take time and money. I think the real hope for that person will come from all the publicity that would arise around this kind of case – from the reactions of my French friends and family I am sure that the French nation would go ballistic. That would be something to see. Have I ever mentioned how much I love this wonderful tribe? 🙂
I’m so glad that you are seeing things a bit differently now, Mona, but not what is happening to effect that change. I hope you can make good decisions based on what is best for you.
Trust in our birth country has been destroyed for many of us.
If you make the decision to go through with renouncing, which wasn’t an easy one for me, I suggest you have a look at renunciationguide.com
Whoever made that website put a lot of work into it and did a very nice job in providing a clear picture of the entire process as it is at this time.
Due to FATCA, I suspect that the number of renunciations will increase exponentially in the coming year, which may make getting renunciation appointments more difficult. Moreover, once the numbers increase, the USG will inevitably try to put some more obstacles in the way to slow down the exodus of expats.
Good luck and best wishes!
Hi boiled frog: renunciationguide.com was an indispensable site for my relinquishment of citizenship. I am very grateful for their contribution. But it was inadequate in two areas: first, they do not make a distinction between relinquishment and renunciation. Second, they do not seems to understand the constitution rights involved in relinquishing citizenship. I have addressed these issues both here and in my personal blog. I think it is a great place to start. My aim, however, is to arm people with their rights, so that they are not defenceless before an American president who has no regard for the rule of law.
Why sue the IRS? Have you given them any money that you have to sue to get back? What if, supposing you are a dual citizen, you just ignore them. The Canadian government has said it will not taxes collect for the IRS from citizens, and it will not collect FBAR penalties from anyone. They are saying, we are the persons dominant nationality if they live in Canada. So just listen to what your government has told you and ignore the IRS.
Hi Petros!
Perhaps renunciationguide.com is willing to update their site to include your insights/findings or perhaps somebody else will have the time, expertise and energy to create another site which organizes information about renouncing in a user friendly way as renunciationguide had done.
In any case, I think renunciationguide is a great starting point for anyone seriously contemplating renunciation. Beats the heck out of hiring an expensive emigration lawyer.
Petros, and regarding a president who has no regard for rule of law, his administration perverts the law so bad that they have even managed to convince Congress that bombing Libya was not an act of war but only “kinetic military action.”
This is a guy who won the Nobel Peace Prize just for showing up, then went on to expand the wars in Afghanistan, Pakistan, Libya, Yemen and who knows where else. At the same time, he jokes about using predator drones to protect his daughters from unsavory future boyfriends.
Constitutional rights? Since when do any of these administrations give a darn about the Constitution? The Patriot Act, which was actually prepared under Clinton, essentially wiped out the Bill of Rights.
Please forgive my ranting and raving, but renouncing citizenship is about more than predatory taxation. Its about refusing to be part of an increasingly aggressive empire.
I truly appreciate all the contributions you are making to the help the American expat community and hope you have the energy to continue.
I think people are good if they read renunciationguide and supplement with information other sources. Apart from the two weaknesses I identify, it is a great source. We would do well, especially from a Canadian perspective to take heart in what the Canadian government has already told us. Now I wonder, if 1 million Canadian-Americans just gave the IRS the finger and ignored them. Do you think there would be mass arrests at the border as the Canucks cross the border to buy gas and beer, or do you think they will just come up with another OVDP with the threat of increased fines to lure more folks into a bait and switch program? (Oh, wait, they just did that today–my bad).
I think the worries that most of us are going through is for nothing. The US has neither the resources nor sufficient good will of the people to arrest every other Canadian as they cross the border. Once they start that, then it will send a chill across the border, and shut down hundreds of businesses that depend on cross border traffic. If you have assets in the States get them out now.
Time and money that the IRS doesn’t have. That’s why they want us to volunteer for the OVDI/P. That’s the low hanging fruit, the folks who say, here’s my neck, please slit it.
Thanks for those kind words. I am unable to just drop this issue and watch my fellow Canadians have their pockets picked. We can save our compatriots millions of dollars if we just stand up for our rights that our dominant nationality gives us.
The only thing is that I believe the US will insist that it’s the dominant nationality of any dual citizen and thus twist this to their advantage regarding their right to continue taxing its citizens living abroad.
In the UK, they have a notion not only of tax residence but also tax domicile. The UK would continue to consider me US tax domiciled in spite of having lived in auk for over twenty years. I thus doubt if they will offer me any protection from US taxes or even fbar/fatca fines.
From that perspective, I feel that dual citizens in Canada have more protection than duals in the UK.
I often wonder what Boris Johnson would make of all this though!
The United States cannot do as you suggest under international law but despite international law. I can speak to the rules in UK. Undoubtedly our government is very concerned about these issues, much more than countries further away, who have fewer people affected by them.
Petros, I agree with you completely about the low-hanging fruit! I think I read it somewhere on Swissnews or a similar site “A couple who had been living abroad for many years just looked at the potential penalties and renounced. She didn’t volunteer anything, or pay anything. She just renounced and now the couple is free.”
On reliquishment:
But as I said before, I wouldn’t count on the relinqument: reference the comment that I replied to this morning about a non-American was denied accounts in the UK. The same thing would most likely happen to anyone who “relinquished” but doen’t have a document (CLN) to show that the ties have been cut. And I would not be surprised if account application forms start including check boxes asking people if they:
1) were born in the US
2) have at least one US citizen parent
3) have ever lived in the US
And if anyone checks a box, they will most likely have to show PROOF (CLN) that they do not have a connection. IF you are able to get a CLN with relinquishment, then reliquishment would be an even better option because there is no fee.
Fascinating. Of course, the US has always had a double standard.
When renouncing….would one have to file the FBARS as well as file five years of tax returns.
Sorry, I may have asked this before but have not noted any response.
Tks
That is debatable. Even I was able to produce FBARs for myself and my husband (without professional assistance). It will take a bit of time (LCU = life credit units) to gather all the bank and investment statement / financial account information, but is not a task that I felt I had to pay to have someone do for me — pretty straight forward. All the information required is available from your financial institutions (or in your own “well-kept” records on file).
Nothing about FBARs as part of COMPLIANCE that you certify with Form 8854:
Perhaps others will want to comment on this as well.
PS:
Here is the TD F 90-22.1, Foreign Bank Account Report (FBAR) form, and instructions: http://www.irs.gov/pub/irs-pdf/f90221.pdf
and further IRS information regarding FBARs: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Report-of-Foreign-Bank-and-Financial-Accounts-%28FBAR%29
@ Petros
“Do you think there would be mass arrests at the border as the Canucks cross the border to buy gas and beer …”
I don’t drink beer but I somehow have the impression it is better on this side of the border. Could we make that “gas and beans” instead? 😉 Actually I’m not crossing the border for anything. My money is staying right here in Canada and if my credit union gives me grief then I’ll take my deposit and say so long. Meanwhile I’ve attempted a quiet self-extraction from the US tax tyranny system. I am AWOL and NFA (Not Filing Anything). However, that doesn’t mean I don’t have some anxiety about the outcome. I’ve also been looking into Islamic banking and I rather like the concept. (I know it would not suit you, Petros.) If the IRS doesn’t steal what I’ve got then I’ve got enough to maintain my minimalist lifestyle for many years. That’s all I want. I don’t want to play a complex game of form jeopardy with a foreign government which thinks it has dibs on my legally acquired, post (Canadian) taxed bank account.
“Islamic finance covers everything from the issuance of bonds to home loans. Products comply with shariah law, which means there must be no interest paid, and there must be no investment in pornography or alcohol, for example. Investments must also be relatively low-risk because gambling is not permitted.”
http://www.financialpost.com/story.html?id=fb6699bc-72ea-46c5-ba60-03d2b63dbf35
http://www.thespec.com/news-story/2878770-muslim-banking-in-canada-a-paradigm-shift/
@Tortured, Any requirement that a person would file FBARs before being able to expatriate would be incompatible with US law and the Universal Declaration of Human Rights. In fact, the law is of questionable application to dual citizens who are of non-US dominant nationality. Why should any Canadian citizen resident in Canada, for example, have to report his or her bank Canadian bank accounts? So let me just dispel this notion altogether. You don’t have to file FBARs or back file FBARs that are delinquent in order to expatriate from the United States. Period. I never did, and I am a proud owner of CLN. I have never filed a single FuBAR in my entire life.
It seems to me completely unlikely that the US Justice Department would expend its resources to go after a former American who renounced but never filed FBARs–if that former American has lived in Canada or some other nation for many years, not having lived in the United States for a long time.
There are a lot of people who believe that it is necessary to file to IRS and to file FBARs in order to renounce. That is simply not true. You renounce first, receive the CLN, then decide what you want or must file. If you have been a Canadian for the last 5 years before renouncing, and you had not been filing your US taxes and never filed an FBAR, if you have no assets in the United States, if you want to get a CLN just to get your bank to shut up about your US birthplace, then just renounce or relinquish, and forget about the filing of FBARs and the five 1040 forms. Forget it. What can the US do to you? Not a damn thing.
Do we have any data, or reporting, of anyone receiving anything from the IRS if:
-they were never in the IRS system
-received a CLN from renouncing
-did not file 8854
?
@Mom, The short answer: no.
The long answer: I think that we’d have heard something. What can the IRS do? If a person renounces, they can’t collect exit taxes from them if they live in another country and have their assets outside the United States. I recently spoke with someone who had major investments in the United States, but was going to relinquish. He has no choice but to comply. But many of us here are fretting about what the US can do to them, while they have been long time residents abroad, and they have the citizenship of another country, which is the best protection that anyone could have from the IRS.
That said, Tim has mentioned a few cases where the IRS has tried to collect in Canada in the Canadian courts–it doesn’t seem that it has ever gone well for them. And why should it? The US is one of the biggest bank secrecy countries in the world, but they want everyone else to be transparent. They are just hypocrites.