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.
@alex
To confirm what recalcitrant said, Another contributor on the site, rodgrod, who became a Danish citizen last month, recently got the ESTA almost immediately after applying with no issues.
couldnt someone just get the nexis card before renunciation and then renouce to make it easier to travel?
First off, thank you SO much for this site! It’s been a beacon of info for me, who has never received so much as a wave from the US or IRS.
Here is my situation:
1. Born in Canada to US mother and Canadian father in mid 70s.
2. Applied for US citizenship between 1995 & 1998 (passport and SSN). Renewed passport about 4 years ago. I have never traveled on it.
3. Never resided or worked in the US.
4. Always filed returns on time, but only with CRA
5. Married with kid, house mortgage, and the usual investment suspects (RRSP, TFSA, RESP, etc).
In your opinions, what’s the best (cheapest/least risky) way for me to renounce my citizenship? Are there other options?
Also, what would renouncing do to my ability to work in the states in the future (e.g. visa, green card, etc)? Bad things?
Thank you!
@Kickpuncher
Welcome to Isaac Brock Society.
You could always try a ‘full ostrich’ and hope they don’t find you. Sounds like you have never filed a US tax return, never lived or worked in the US so would not be applying for Social Security some time in the future.
If you are not comfortable doing that, I think your only choice would be to book an appointment with a US consulate to renounce and you would have to bring your tax filing up to date at that time ie both 1040 and FBAR for 5 years plus the part of the year you renounce.
@Kickpuncher: although you have US citizenship and passport, so the Department of State (DOS) knows about you, you are not on the IRS radar. DOS will send your ID info to the IRS but that is routine and it won’t be used to chase you for tax returns. The fact you have not filed US taxes by now won’t count against you since some people just never have to file due to income level, so it is unlikely the IRS will come looking for you based on US citizenship alone. So far the DOS and the IRS do not share very much information.
If you decide to keep your US citizenship, you could just do the “full ostrich” (LOVE that phrase, tiger) and probably be fine. When travelling across the border, you could use either US or Canadian passport, and since your place of birth is Canada, likely using the Canadian passport would never raise any questions. The US passport is often handy when there is a line-up at an airport and a separate (shorter faster) line for US citizens, as at Canadian airport customs for flights going to the US.
The only fly in the ointment in the near term is FATCA, because on form 8938 you must list all your bank accounts, and could be matched against the FATCA forms your bank sends the IRS starting in 2013 (unless you have less than $200,000 yourself or $400,000 joint, in which case you don’t have to file it, OR in case FATCA gets changed before 2013). However, your bank has no reason to think you are a US citizen unless you told them, so they will not send your bank account information to the IRS.
If you renounce, as tiger says, you’ll have to be current with US taxes.
@Kickpuncher: If you are a US citizen, you should travel to the US only with a US passport. I don’t think taxes are an issue at the border yet, but traveling on a Canadian passport could be a problem. I crossed the border with my Canadian passport, showing a US birthplace, and it was pointed out that I was a US citizen, and I was allowed to cross. I did not think I was a US citizen at the time, and also did not know of the passport requirement. I was not hiding my US birth because it was printed on my passport, and have always told them I was born in the US if asked years ago before passports were required. I would not however try to cross on a Canadian passport when I both had a US passport and knew it was required to cross. I guess they didn’t tell you about the taxed when applied for US citizenship. If you have a strong desire to live and work in the US I would hang on to the citizenship and get caught up with the taxes. If not I would renounce. As for a green card I would be interested in how they would react. Also depending on your profession there are rules under NAFTA that may let you work there.
@recalcitrantexpat @don pomodoro
thanks for the information.
Kickpuncher –
Foxy said: “The only fly in the ointment in the near term is FATCA.”
Sorry, there are two jaws to the squeezing pair of pliers. The other is passport. See this:
US Passport as Enforcement Tool
And I’m convinced that more is coming. In addition to putting the squeeze on people requesting passports, they could also nab people requesting Green Cards for family, folks registering births abroad and the like. And at some point I have to wonder if they are going to start checking out overseas voter lists…
@foxy – thank you so much for the detailed reply!
@truenorth – I was born in Canada, why would I travel on a US passport to the US when that would only cause questions? Would it not be safer to just appear Canadian?
@Kickpuncher
‘Would it not be safer to just appear Canadian?’
Yes, use your Canadian passport.
For people like myself, born in the U.S., naturalized in Canada, unfortunately, our Canadian passports have a US place of birth. That is what can get us in trouble at the border. Your Canadian passport has a Canadian place of birth – use it. In fact, when your US passport expires, my recommendation would be DO NOT RENEW.
@Kickpuncher –
FWIW my facts are similar to yours (accidental American born in Canada with US passport and SSN). I went through the whole tax rigamarole and renounced, but the full ostrich is a viable strategy too, probably. Either decision is a judgement call made with too little information.
@Kickpuncher
I strongly agree with Tiger’s recommendation, above, if you were born in Canada and have a Canadian passport showing that.
It is my understanding that State Department now requires everyone who renews a US passport to sign a statement on the application form verifying the applicant is current with the US tax filing and tax paying requirements. If you don’t verify that, they can deny the application (and you’re probably on someone’s radar at this point); if you do say that and it’s not true, you’ve “uttered a false document” which is a criminal offense (and I understand is also extraditable under the Canada-US extradition treaty). If you don’t renew (and it sounds like you don’t need to), you avoid all of the above.
Background:
I live in France and had dual U.S./Belgian nationality (born in U.S. and Belgian by act of marriage to a Belgian national in 1981). I recently renounced my U.S. citizenship (on January 6, 2012).
For me the determining factor has little or nothing to do with paying taxes, per se. I learned in 2011 that I have been infringing the law by not making annual tax declarations. I did not file because the U.S. Embassy tax consultant in Milan told me in 1982 that it was “…too much trouble and too expensive to mail the tax declaration package to someone in the Italian pre-Alpina who did not even owe any taxes….” He more or less exonerated me from the need to declare, unless I owed taxes, on the basis that this saved the resident American taxpayers the expense of processing my useless declarations. I have since back filed through 2005, but the far greater problem is the distressingly invasive position of the IRS regarding my husband’s finances. He is a Belgian national who has never even aspired to live or work in the United States. He has never had a U.S. passport, green or library card. He has conscientiously worked and paid taxes on his income and now his pension in our various countries of residence all his life. He does not understand why at 78 years of age he should start sharing his personal financial information with any United States government agency just because they are curious about how his wife manages to put bread in her mouth. This morbid curiosity is even more perplexing to him since I have paid U.S. taxes on my income earned in the U.S. between 1963 and 1973 and filed returns for my income earned in Belgium between 1973 and 1981 (upon which I never owed any taxes). Nonetheless, according to the Social Security Administration, I am not nor will I ever be eligible for any form of retirement compensation, medical coverage or any other social security payment. I have not even had the occasion to benefit from unemployment benefits when I was living in the U.S. I simply paid my taxes like any other good American. In his estimation and in my own, he is taking better care of me than the U.S. government ever will, and the authorities should be delighted that he is keeping me off the sidewalks.
Finally, to calm the waters, I decided that the best course of action would be to expatriate since I have lived more than half my life abroad (38 years) and I no longer have any immediate family alive in the U.S. Therefore, I initially requested documentation on the procedure to follow from the Consulate in Marseille, which I eventually received in the mail. I filled out all the forms and mailed them in, but had an interminable wait before the Consul accorded me an appointment. I had hoped to complete the procedure before the end of 2011, but finally had to wait to January 6, 2012.
I have tried to cross all the ‘t’s and dot all the ‘i’s (as much as a clueless layman can), so I socked out €1,000 to a Paris based tax consultancy, and followed their instructions regarding filing back tax returns through 2005. I understand my name will be published in the Federal Register, and I will be issued a Certificate of Loss of Nationality (CLN). I have tried to check the Federal Register to confirm my loss of nationality, but so far have not been able to figure out how to access it, or at least the part that pertains to renunciation of nationality, nor have I received my CLN. Since I relinquished my passport at the Embassy in Marseille on January 6, I have been using my Belgian passport and declaring myself Belgian; however, I am perhaps being a little precipitous, given that I only have a signed and sealed “Oath/Affirmation of Renunciation of Nationality of United States” signed by the Consul in Marseille.
The reason I renounced was anguish and frustration with the complexity of the filing process for taxes and the difficulties associated with the I.R.S.’s invasive position regarding my Belgian husband’s financial accounts, not to mention the complexity of the paperwork that would fall to my non-American survivors should I pre-decease my husband. Since I have not owed any taxes, as far as I can tell since my parents died and left me a small inheritance, I have naively assumed that it would be of little or no interest to the U.S. government if I remained a citizen. Over the last three months, however, my situation has received a bit of publicity, and I realize that I may have stepped in way over my head. All I wanted was for the I.R.S. to leave my husband alone. He is an innocent by-stander and does not deserve to have the last years of his life poisoned by unreasonable demands for financial disclosure from a country to which he has no allegiance. To complicate matters further, our surviving child (my step-daughter) and the grandchildren are Italian nationals and have no desire to be embroiled in masses of bureaucratic paperwork in order to receive their modest inheritances from me.
I hope I am mistaken, but it appears I may be subject to draconian penalties simply for having made an error on my tax declarations. Since there is no one more clueless than I, I am sure that if the I.R.S. is going to look for errors so they can slap a fine on me, they will surely find something, with the result that even without ever owing taxes, I can end up owing a $50,000 fine. This in turn means that should I enter the U.S. to visit the vestiges of family that are still left, my passport can be confiscated at the airport, and I would not be able to leave the U.S. to return home.
My question:
I realize that the U.S. government is not necessarily targeting little me…I am just collateral damage, but just exactly how much trouble am I in?
Thanks everyone for the wonderful replies!
@brokenman – I would love to know…how much did it cost you to get compliant? Forms, etc? Did you have any problems in explaining why you were unaware of the requirements to file?
I want to get clear of this as it feels like an anchor around my family’s neck…but not if it’s going to cost me tens of thousands of dollars and potentially enormous fines! 🙁
Schubert said: “It is my understanding that State Department now requires everyone who renews a US passport to sign a statement on the application form verifying the applicant is current with the US tax filing and tax paying requirements. ”
No you do not specifically have to sign off on that statement. Here is the link to the renewal form: http://www.state.gov/documents/organization/79960.pdf
However in the instructions they do say that DOS will supply your SSN to Treasury for whatever uses it wants, including “debt collection” and determining whether you are ineliglible for a passport. No mention at all of tax status.
I just renewed my US passport with no hassle. I am not sure what if anything the IRS has on me but there was no delay. The fact that the IRS may be able to do something doesn’t mean it will, and in any case I don’t think they can deny you a passport unless you are in an actual dispute with the IRS, ie they have served notice you are in arrears or something.
@ kcnileg
Welcome to this site. You will soon find answers here and it should already be obvious that we all commiserate with you.
@Kickpuncher:
Expenses:
– Renunciation, US$450
– 4x (basic) returns, + FBARs: C$650. This was a ‘friends + family’ rate, and we didn’t get into PFIC reporting or any of that nonsense. Accountant trying to retire, not taking new clients. Her experience is that the IRS has limited interest in bona fide residents abroad with no US income who fall below the FEIE – they’re focused on actual revenue.
– 1x return, partial year return, 8854, etc: still to be filed.
Income:
– Stimulus cheque for 2007: US$300. This arrived with no context or covering letter, and caused some puzzlement. As many people have pointed out, Canadians are used to more feedback on tax matters, for better or worse, than the IRS provides.
I sent in the package before the ‘reasonable cause’ statement came out in (IIRC) December, so didn’t attach one. Recently the FBAR processing centre rejected one of my FBARs (the form I used was submitted in the fall, and the one they want was published in January 2012, but never mind) and they also wanted a reasonable cause letter, which is fine – they’re easy enough to write.
Having said all that, the ostrich position is a reasonable alternative. I just wanted to end a stressful situation in a reasonable way – and, I have to say, the renunciation felt kind of empowering.
kcnileg You’re not in any trouble at all. You have renounced, you are no longer American, you are not a ‘covered expatriate’, you travel on your belgian passport. The US cannot confiscate your Belgian passport unless you commit a crime while there ( a la DSK) Relacher.
@kcnileg: Welcome. First of all, take a deep breath and relax. You are among friends here.
You will find this site a wealth of information and personal support. We have all been in the panic mindset which you are currently in and have helped each other through it.
You have already taken the steps to renounce. In Canada, receiving a CLN can take a year or longer. Some countries seem to process them faster than that. Do we have anyone in France who has already renounced or relinquished who could advise what the waiting period there usually is.
In terms of draconian penalties, I would be surprised if IRS pursues you even if you did make a mistake. But, they have done some thing which have surprised all of us. Even if they did level draconian penalties against you, how are they going to collect them?
I hope you did not go into OVDP, but rather just filed back returns. A couple of people on here who filed back returns actually got a refund for the stimulus package from 2008.
I hope finding this site and connecting with us will help to relieve your anxiety. You are correct–your husband’s accounts are absolutely no business of a foreign government. Your information should also not be any of their business–but the US is famous for sticking its nose in where it doesn’t belong.
@brokenman – Awesome, that’s so much cheaper than I have been led to believe…even at twice the cost! I’ll have to do some exploring here. I thought the PFIC stuff was required.
My income is very slightly above the FEIE so I don’t know what that’ll mean. Other than that I’ll owe money to the IRS, I guess.
I don’t think ostrich will work for me in the long run…like you I want to be clear of this issue…and going forward things will likely get worse. The only long shot with ostrich mode is the possibility of an amnesty program or taxation ruling for Canadian-born dual citizens. Sadly I’ve seen nothing to suggest that is coming short of the coming wave of outrage that will surge when FATCA goes live.
@broken man: Interesting that you did hear from the FBAR folks who wanted a reasonable cause letter. I plan to submit my FBAR for 2011 this year as my first, and would then comply going forward (I am not renouncing). I thought about not filing back ones. Perhaps I should re-think this and submit several years back. Bugger.
FWIW I think the reasonable cause announcement was as close to an amnesty as they’re likely to get. Basically they solved an important part of the problem while pretending there hadn’t been a change in policy.
see http://www.irs.gov/newsroom/article/0,,id=250788,00.html
“My income is very slightly above the FEIE so I don’t know what that’ll mean. ”
You can also offset Canadian taxes under the treaty. We zeroed all four of my returns using offsets without having to refer to the FEIE.
@broken man
Sweet music to my ears. I will need to find a good cross-border tax person who can help me out without destroying my emergency savings account.