Ask your questions about Renunciation and Relinquishment of United States Citizenship and Certificates of Loss of Nationality.
Please note that the guidelines for this discussion are published here.
Ask your questions about Renunciation and Relinquishment of United States Citizenship and Certificates of Loss of Nationality.
Please note that the guidelines for this discussion are published here.
@Expat4ever I agree with Just Me – great article at Daily Kos. The author has a blog that is one of my favorites called Overseas Exile. http://overseas-exile.blogspot.fr/ Will go over and comment.
schubert1975 – Further speculations and sidelights on the strange case of the missing contemporary CLN in Canada. (1) Memory says we’ve had two separate reports of consulate visitors being told staff was being increased to deal with the increase – one recent from Bruce Newman, other fuzzy. (2) Vague rumors of further “news” or “policy” for Canada may relate? (3) Footnote 5 in this article documents acceleration as of Fall 2011. (4) Backroom bureaucratic dumbbunnies are hopping around in wild circles and still trying to figure out what to do.
hey all, have we heard of any experiences where someone has renucuiated and then banned from the US because it was believed they did it for tax purposes. One lawyer i spoke with mentioned that he has seen a few situations.
@Mike
It would be useful for that lawyer to cite those cases. Here are two links saying otherwise (and so did the lawyer that I have, also in Calgary — not to say it could NOT be used in the future):
http://renunciationguide.com/Rights-After-Expatriation.html
http://en.wikipedia.org/wiki/Renunciation_of_citizenship
Renunciation of citizenship is also the only way to eliminate the lifetime tax obligation of several countries which tax their nationals based on citizenship rather than residency. Currently, the United States is the only major country which taxes based on citizenship rather than residency. A 1995 study by the U.S. Congress found that at the time only the U.S., the Philippines, and Eritrea tax based on citizenship rather than residency. The Philippines switched to a residency-based system in 1997, thereby not taxing its citizens on worldwide income.[5]
In 1996, the U.S. changed its immigration law to include a provision to “name and shame” renunciants.[6] The Department of the Treasury became obligated to publish quarterly in the Federal Register the names of those citizens who renounce their citizenship. Only the names are published, but by counting the number of names in each list, media organizations are able to infer the number of renunciants each quarter. According to the New York Times, there were 235 renunciants in 2008, and 743 in 2009.[7] However, the lists published in the Federal Register have been found to have numerous errors including missing names, exact same names repeated two or three times in the same list or across multiple lists, and the same name published multiple times with different spelling or punctuation. Accounting for the errors, a more accurate total of renunciants is 226 in 2008, 731 in 2009, and 1485 in 2010.[8]
The same 1996 law included a provision to bar entry to any individual “who officially renounces United States citizenship and who is determined by the Attorney General to have renounced United States citizenship for the purpose of avoiding taxation by the United States”.[6] There is no known case of this provision, known as the Reed Amendment, having ever been enforced. In 2008 Congress enacted the Heroes Earnings Assistance and Relief Act that imposes a penalty, often called an “exit tax,” on certain persons who give up their U.S. citizenship or long-term permanent residence.[9]
Really, most of us are not renouncing our US citizenship because of taxes, only tax-related because we no longer want the administrative stress and expense we are required to endure year after year after year, for usually $0.00 owing to the US. This citizenship-based taxation is Insanity. Most of us would like better use of our time.
thanks calgary 411, i appreciate the feedback. I am one of those canadian us dual citizens that was only born in the us bc my canadian parents were working there during the time i was born. I was in canada when i was three and received my canadina citizenship when i was four. not knowing my filing obligations until last year, i reluctantly went in the ovdi prgram and had to pay several thousand in fbar related penalties and small amount of income tax. i am married to a canadian citizen have canadian children, and have been a proud canadian for 40 years. my issue is that i have accumulated some wealth through time and still travel to the USA a dozen times a year. I own no assets in the us and have never worked there but need to travel there from time to time for my business, just like many other canadians. i am afraid that is I renounce and they for whatever reason think its related to taxation, that i might get banned from travel to the USA. when I read all the stories about renunciation meetings on this website, i maybe am not looking in the right place, but most stories seem to be about the first meeting. I am wondering what the second meetings are like and when the US sends over the final letter after several months if there are any horror stories. Thanks again
those links you posted were very helpful. thanks you
@Mike,
Note: That all of the recent renunciations that we know about at the US Consulate in Calgary required only one appointment — $450 paid at the time and done (when it makes sense that the person well knows that he or she is making the correct choice). We are tracking experiences at different Consulates as we feel the procedures at Consulates vary significantly. (Check the statistics we have at http://isaacbrocksociety.com/2012/03/14/draft-pdf-compilation-of-relinquishment-and-renunciation-data-as-reported-on-isaac-brock/.
Waiting for the important Certificate of Loss of Nationality is estimated to take about a year, give or take.
Would you be renouncing to make your life easier, administration wise, etc.? It sounds like you feel YOU ARE CANADIAN and you don’t want to serve two masters!
Would you be deemed a “covered expatriate” for the Exit Tax with your Net Worth over $2 million (not hard to do in Calgary where real estate values are so much higher than many places!), Form 8854? To really know how it all affects you, you may need proper US tax legal advice.
Read, read, read here the many posts, going back into December to decide what is your best course of action. No one answer for everyone.
@ mike Your US citizenship is a millstone tied around your neck. I am really sorry that you entered OVDI. We created this website, in part, to stop Canadians from entering OVDI and handing over money to the villains in the United States.
i agree Petros, I only found this website today when i have been trying to gather information on renunciation. I fell into the trap and in cost me a lot of anxiety, time and money. my penalty was at the lower end at 5% given my circumstances. i guess on a positive note, now my taxes are currrent so I can renounce if that is the route I go. If you have any insights on my questions above that would be greatly appreciated. Thank you.
Hey Calgary411, currently i would be over the $2mm threshold, but i have not utilized any of the available $5mm gift exemption. I believe my asset base can be brought down below $2mm if I set up an irrevocable trust for my children and wife. Otherwise I will be over the $2MM. I believe if I am, i will be paying an exit tax because of my rrsps.
and yes, I would be renouncing because I am a proud canadian and do not want to serve two masters, especially one that has rules that make no sense to me. Tax is not a real issue because as you mentioned, it is usually close to zero. I cant believe they are forcing banks in canada to share info on us citizens to the us.
@mike
You may be dual since birth and exempt from exit tax even if your net worth is over 2million and your tax liability was over the threshold to exempt you otherwise.
I too was born to Canadian parents in the US. I moved back to Canada as a kid and had to immigrate into the country. When I was 32, I got my Canadian citizenship. Recently, I made a request to Canadian Citizenship and Immigration to get my citizenship record. Last week I found out that they gave me my citizenship retroactively to birth even though my citizenship card has 1990 on it. You should request your record. It takes about 4 months. Here’s the application info and form:
http://www.cic.gc.ca/english/information/applications/search.asp
very cool iamquincy. why would dual citizenship from birth help the situation? thanks
@mike
Iamquincy, I believe, it accurate. If you were dual at birth then you should not fall into the ‘covered expatriate’ category. Worth checking it out.
@Mike, you might want to check out a provision in the US tax code regarding the exception for “Certain Minors.” 26 USC 877(C)(3)
http://www.law.cornell.edu/uscode/text/26/877
thanks a lot everyone. I think having a canadian parent i may automatically be canadian citizen from birth but i will have to check it out.
Mike. You are not subject to the exit tax. You were Canadian at birth. All you have to do is state that you are compliant for the 5 years before you renounce. The following is from the instructions for the exit regime form 8854. Google IRS 8854 instructions.
“Exception for dual-citizens and certain minors. Dual-citizens and certain minors (defined next) are not subject to the expatriation tax even if they meet (1) or (2), earlier. However, they still must provide the certification required in (3), earlier.
Certain dual-citizens. You may qualify for the exception described above if you meet the following requirements.
• You became at birth a U.S. citizen and a citizen of another country and you continue to be a citizen of, and are taxed as a resident of, that other country.
• You were a resident of the United States for not more than 10 years during the 15-tax-year period ending with the tax year during which the expatriation occurred. For the purpose of determining U.S. residency, use the substantial presence test described in chapter 1 of Pub. 519.”
i checked out the provisions. I unfortuntaly have a us passport so even if I was canadian at birth, doesnt look like I meet the rule.
(c) Exceptions
(1) In general
Subparagraphs (A) and (B) of subsection (a)(2) shall not apply to an individual described in paragraph (2) or (3).
(2) Dual citizens
(A) In general
An individual is described in this paragraph if—
(i)the individual became at birth a citizen of the United States and a citizen of another country and continues to be a citizen of such other country, and
(ii)the individual has had no substantial contacts with the United States.
(B) Substantial contacts
An individual shall be treated as having no substantial contacts with the United States only if the individual—
(i)was never a resident of the United States (as defined in section 7701(b)),
(ii)has never held a United States passport, and
(iii)was not present in the United States for more than 30 days during any calendar year which is 1 of the 10 calendar years preceding the individual’s loss of United States citizenship.
P.S. After you renounce, you have the same right to visit the USA as any other Canadian. You are not renouncing for tax purposes. Form 8854 makes that clear. If you were, they would call you a ‘covered expatriate’
chester 12, I saw your post after looking into pacifica 777. I’ll look into what you are refering to. thanks a lot everyone.
@mike- you are indeed exempt from the exti tax because you were born a citizen of Canada. My children are in the exact same position as you. Form 8854 will present you with no problems since all that you have to do is to certify that you were born a citizen of Canada and that after your renunciation you will be taxed by Canada. You will not face any exit taxes.
@Mike, scroll down a bit more on USC 877 to sub (C) Certain Minors, that sub doesn’t mention passports.
Hi again, Mike. What “recalcitrant” and “iamquincy” and “Pacifica” say is very correct. You will be clear — no Net Worth consequence for you, as for either of my children. One did take advantage of US citizenship and lived and worked in Seattle for over seven years but is back in Canada. She will be OK too when she renounces later this year. My son was born in Canada, raised in Canada, never lived in the States or had benefit from the States. He cannot renounce because he has a developmental disability and the US will not let me renounce on his behalf “even with a court order”. I’m so glad that you WILL be OK!!
Mike, the exemption for you makes no mention of ‘substantial contacts’
thanks everyone. So just to clarify, if I was born in the US (close to the canadian border I must add), my father was a canadian citizen, moved back to canada when I was 3, got me my canadian citizenship card when I was 4, the canadian citizenship is retroactive to birth (the part I am unclear about) and so i meet the “certain dual citizens” exceptions in IRS form 8854?
I am so sorry to hear about some of the challenges people are facing on this site. i only hope the best for everyone. The US is putting stress on thousands of hard working canadians.