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.
*sadiegirl, Petros may be right, but I doubt it. Sadly, I think the mere fact that your mother applied for a US passport is enough, in their eyes, to confirm her as a US citizen and subject her to all the US tax and financial reporting requirements and the US$450 fee if she now wishes to renounce her US citizenship. Still, since your mother was born in Canada she should be ok provided she stays out of the US. Or, if she goes there, on her Canadian passport (of course), she should be all right because her Canadian passport will say she was born in Canada.
The unintended(?) consequences of all this US tax imperialism are astounding, and are gradually coming to light. US lawmakers: Do you know what the h_ll you are doing?
*No she did not know what she was doing. She would gladly pay the 450.oo fee, but we were told she would also be taxed on her total assets including her home. She cannot afford that.She is living on a fixed income. The 450.00 fee should be enough for not being told anything about the consequences of this passport.
sadiegirl
please re read all the replies to your first post…In my opinion for what it’s worth you have only 2 options..1. just ignore the whole issue..or 2. get compliant like I said on my first post to you. and as far as the exit tax goes… that is NO problem for your mother because as a born Canadian she is not a covered individual..so no exit tax! search the Internet all the info you need is there.
Having said all this you have to know that advice you get here from me and other people is not legal advice..we are just speaking from what we think from experience or what we have read.
ALSO with the amnesty that the IRS has announced and with your mothers income you should not be worried about penalties for non compliance.
@Sadiegirl
Listen to oldgringo.
In my opinion, your mother would have to renounce. Should be easy enough to do but will have to be done at a consulate – $450 fee. She will not be a covered expatriate – therefore, no exit taxes to pay. End of story. Other option is to just ignore everything – never use the U.S.passport. From your previous posts on another thread, it does not sound like FATCA will be a problem for your mother as you mentioned she has her OAS, CPP and a small RRIF.
@Sadiegirl, Your mother has not used the US passport, so she has not established herself as someone who intends to retain or claim US citizenship according to the wording of the State Department, where the retention of citizenship requires travelling on the US passport.
Does your mother have a house or other assets in the US? If she has no assets in the United States, then she is safe. The Canadian government will not collect US tax from her or FBAR fines. She can travel to the US with her CDN passport; they will not notice whether she could potentially be a US citizenship because of her CDN birthplace. She has no SSN so she won’t get a bill from the IRS (like I did).
I think she just has to have confidence and stand up for her rights as a Canadian citizen and not give in to any threats in the media. If she likes, she can go to the Consulate and hand in her US passport. But even that calls unnecessary attention to herself. She’s off the radar now; that’s a good place to be. She can live and be free under the protection of the Canadian government.
I don’t think she needs to renounce her citizenship because she wasn’t born in the United States. She will have no problem with her bank because of FATCA either. How would they know she is US? She can simply say she is Canadian and produce her CDN passport or birth certificate.
@sadiegirl,
Further to Oldgringo’s post regarding your mom being exempt from exit tax should she decide to renounce, there is info on the IRS website at this link, at page 2, regarding the exemption for persons born as dual citizens.
http://www.irs.gov/pub/irs-pdf/i8854.pdf
“Dual-citizens … are not subject to the expatriation tax if …Certain dual-citizens. You may qualify for the exception described above if you meet the following requirements.(1) You became at birth a US 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.(2) You were a resident of theUS for not more than 10 years [of the previous 15 years].”
I don’t think, off the top of my head, she could relinquish, except by renouncing, as she has not performed any relinquishing act as set out in Immigration and Nationalities Act, s. 349. However, the only consequence of relinquishing after 1994 would be saving the $450 fee, which as you pointed out is no big deal. (A relinquishment prior to that date would have occurred prior to exit tax laws coming into effect.)
And of course, there are a couple of other options that people have posted here. I’d just like to help put your mind at ease that, should she renounce, it does appear that she would not be subject to exit tax.
You and her should consider all her options, of course. It’s *very* important if you consult with a professional that you do a fair bit of research about the subject, as you are doing, so you can evaluate if the professional is actually knowledgeable enough to give good advice. Though there’s some very good ones out there, many professionals are woefully uninformed in this particular area of law.
@ Pacifica, thanks for pointing out the exception for certain dual citizens. This means that her mother would not have to file the 8854 and thus no taxes. Still, I think in this case, she is just as well off to ignore any of this stuff is going on a blissfully ignore the IRS. That’s my opinion because I can’t see how presenting herself at the consulate is going to really help. She is already off the radar. Now if we hear later that they are going after all US passport holders–with drones or something–then she may do well to renounce.
Those are good points, Petros, that Sadie’s mom did not use the passport. Also that essentially she did not have full knowledge, which would affect intent in performing the act of applying for the passport. I wonder, though, how that would play out as, although she did not have full knowledge of the consequences of acquiring the passport, she would have been acknowledging the right to a passport, a right accorded only to citizens. That is she’s on the radar with DOS at least as having claimed to be a USC two years ago.
I think she’s actually pretty safe, no matter what, if anything, she decides to do, as Petros has pointed out regarding her assets. But I really feel for your mom, it’s such a completely unforeseen situation and it’s understandably very stressful
@Petros
Belonging to the group of “Certain Dual Citizens” does not mean she doesn’t have to file a 8854. She wont owe anything but she still needs to certify that she has met her tax obligations for the last 5 years.
I speak from experience..if you get compliant and then renounce..you must fill out the 8854 form and send it in to the IRS with your last 1040 tax return and one copy to the State Dept…..THAT IS THE ONLY WAY YOU CAN END YOUR OBLIGATIONS TO THE IRS.
I read things here that in my experience are not 100% correct…I really think there should be a data base of 100% known and true facts about who should get compliant and what is involved with renouncing your citizenship.
@Petros and Sadiegirl, Just read your 11.34 post, Petros. That makes a lot of sense, not to do anything now, there’s no rush, and your mom is pretty much off the radar. I would definitely think things over and do some more research regarding the options before acting in this situation. Things could change (and usually for the worse in this area of US law), but that’s speculation. For now, I’d say mull things over, but relax while doing so, as whatever decision your mom makes it seems that her life savings and house and off-limits to the bad guys.
@ Just Canadian, I reread the 8854 instruction and you appear to be right. That is you still have to file 8854 but you would not be considered a covered expatriate because you meet the qualifications of a dual citizen.
I am not saying that Sadie’s mother can end her obligations by ignoring them, I’m saying she can safely ignore her obligations because the IRS can’t do a damn thing to her, provided she has no assets in the United States.
@ oldgringo, the reason why there is no such database is because we are dealing with US law and how best to protect ourselves from it. In some cases, the best way to protect oneself is to stick out our middle finger to the US and to depend on the protections that we have in other countries.
If I have obligations to the IRS, yet the IRS has no way to make me comply with those obligations, then wouldn’t I be best not to enter the voluntary tax system in the first place?
@Just a Canadian and OldGringo, Absolutely, it says exempt from the exit tax, not exempt from the pesky exit tax filing.
http://www.irs.gov/pub/irs-pdf/i8854.pdf
*Sadie girl. You are obsessing about this for nothing. FORGETABOUTIT. Nothing can possibly happen.
Petros
I know that we are dealing with U.S. law but there are known facts out there that could be verified with some effort …and they could post those 100% known facts in their own thread.
I could not sleep at night with the thought of FATCA exposing me and family members to the IRS . when i first heard about this a year ago i was horrified and in the dark! But i worked on it and now all family members are compliant and either renounced or relinquished with CLN’s in hand to cross the border with our Canadian passports with U.S. birthplaces….I think this was a better option for me than the finger wave and the possibilities of the bridges that it could burn.
I could have just forget about the nightmare we lived through…but I said to myself after receiving help from people on the Internet that i should pass it along….and that is one reason that wrong info upsets me…one of the most knowledgeable persons i dealt with gave me some very very bad advice that i acted on….Thank God it didn’t have any effect on my situation but it sure could have.. it did cost me a lot of money and anguish but it also taught me a few lessons.
@oldgringo, if you could please go into more details about the wrong advice you were given, I’d be grateful.
The details that we have regarding Sadiegirl’s mother: (1) she is Canadian citizen born in Canada. (2) she probably has no assets in the US–(still to verify this); (3) she is on fixed income and not rich; (4) she unwisely obtained a US passport that she has never used; (5) she has never filed taxes and has no SSN.
What advice would she get from a cross border lawyer or accountant? Possibly to throw herself to the lions (enter OVDI, or go-forward disclosure and tax returns, blah blah blah). This will cost some money: at very least 1000 per tax return for 5 years.
If she does nothing at it should cost her how much? The IRS can get nothing because (1) she and her assets are in Canada; (2) she is still unknown to the IRS with no SSN; (3) even if the IRS knew about her, they have no information about her income or assets; (4) no CDN bank is going to rat on her because she is not obviously an American with her CDN birthplace. If she does nothing, she will not pay (1) lawyers; (2) accountants; (3) IRS; (4) the $450 renunciation fee.
In your view, what could go wrong? Jim Flaherty made his anouncement to Canadians that the CRA would not collect taxes from them for the IRS and Canada would not collect FBAR fines for one reason: He wants to protect Canadians from themselves by encouraging them not to volunteer money to the United States Treasury.
If later the IRS goes after her, we will make her the poster-child of the Isaac Brock Society, “The IRS made an example of a 77 year old grandmother who thought it would be “fun” to get US passport.” Meanwhile Ambassador Jacobson said that they were reasonable and they weren’t after grandma’s accounts. Sit tight he said. Sadie’s grandmother should take the Ambassador’s advice.
And by the way, as long as she travels on the CDN passport, she can call on the diplomatic protection of Canada for what it is worth. She should never use that US passport to travel to the US.
I agree with you on Sadiegirl and have said as much.She has 2 options and she has to do what she can live with..but my situation was much different and my bad advice did not come from here…the advice was that because i didn’t get a CLN when I relinquished my Citizenship in 1971 and I was still a U.S. citizen…I don’t want to go into the details of what i did…But the State Dept. gave me my CLN when i Applied for it..so the advice was wrong.
I got our returns done for $100 last year and $130 this year. look for a person who does U.S. tax returns even check your local H and R block ..no lawyers no expensive tax guys…it’s not that hard..just take one step at a time…and with the new amnesty people don’t have to worry about the terrible penalties that we were opening ourselves up to when we did it!
This about all the advice i can give…so the oldgringo is checking out of here…Good Luck All! and Via con Dios with your journey.
*Thank you for all the comments. My mother has no assets in the USA, and does not want to file anything to do with her bank accounts (FBAR). She is the Trustee for my disabled sister and my sisters bank accounts are none of their business, just because she is a second signature on the account. What about the Canadian privacy laws for my sisters bank information. My sister is not American in any way. I don’t think she would have a problem filing the 1040 forms as she would not owe them any tax. She pays very little in Canada as her income is so low. She does not want to get a SSN number which I think she would need to file a 1040? I am glad to hear her total assets including her home would not be taxed to renounce. That was a major concern as her home has nothing to do with the USA in anyway shape or form. She may want to travel to the USA again at some point and time and maybe not. I just want to make sure they would not hassle a senior citizen at the border. Can she travel to the USA using her Canadian passport? Does it not show at the border that she would have a USA passport and then they could refuse her entry? She does not want to be doing anything she should not be and just would like to try and get rid of the passport if she can without having to provide a bunch of bank information which is none of their business.
*@ sadie, I am no legal expert, but if she has any signing authority on any financial account , I believe she has to report it. If your sister has an account of $1000 and your mother has a personal bank account of $9000 and another of $1, I believe she has to report it all because the aggregate value is >10k for all accounts (the threshold for reporting FBARs). Big or small, even the $1 account needs to be reported. If the aggregate value is under 10k on all financial accounts, none have to be reported. In your mother’s case, I wouldn’t file taxes or do any FBARS. In her situation, Uncle Sam only knows what he can find. I am curious how she got a passport in the first place… the passport application FAQ says it requires you to state your country of residence and SSN so they may forward it to the IRS. If you don’t have a SSN, you are supposed to get one. Penalties apply if not done.
Anyway, your sister is not US so she should have no problems. No need for her to file.
I travel exclusively on my Canadian passport, and the US never has given me a hassle. They may know I have 2 passports (even though the US one expired), but it would be hard to detect with a Canadian birth place. I have no idea of knowing what they know about me but the worst they could say is “No”, you can’t come into the Excited States today. I would suggest she travel as usual.
Sadie, She should travel on her CDN passport only. Will they know at the border that she has a US passport? Not likely. Is her name common enough? Then how would the border guard even know she is a citizen.
@ Newbie, the question here about her disabled sister’s account is not whether the mother is required by US law to report it to the US. The US can pass any sort of law requiring that Canadians reveal accounts of other Canadians. That doesn’t make them morally correct or enforceable. It would be morally wrong in my view for Sadie’s mother to reveal these accounts. There is no advantage to anyone, including the US government. Her mother has a moral responsibility to protect the financial privacy of her Canadian daughter. Thus, the US law would force her to do something which plainly wrong, and she knows it, and that is why she doesn’t want to do it. I say bravo. Take the moral high ground, and refuse to comply with the invasive unconstitutional FBAR law that the United States has unjustly foisted upon its expats.
In the Roman Empire it was illegal to be a Christian. Does this mean that it was right to denounce people as Christians or even give oneself up for martyrdom?
*Thank you Petros, I also agree with my mother to not disclose her bank accounts to the IRS. These accounts have always been in Canada earned in Canadian money by a person who was born and lived in Canada for 100% of her life and never had a USA bank account or investments. It certainly is no business of theirs to know her daughters (my sister) bank accounts where they are and the balances in them, just because my mother is her legal trustee. Re: NEWB my mother applied for this passport at our local US consulate, they said nothing of requiring a SSN number, so if there are any penalties which you refer to they are not her fault. She was born before 1935 and a whole different set of rules apply to anyone born before 1935. You don’t have to ever have been in the USA for any reason to qualify for the passport, you only needed 1 parent to be an American to qualify for dual citizenship.
*@ Petros… completely agreed. US morality and its laws are things of the past. I would morally not feel compelled to comply with the law in the situation Sadie has described for her family. As was said during the War, “Keep Calm and Carry On”.
After all, these FBARs are only in place to provide more $ to feed US debt and maybe catch the few bad people abroad who are diligent to still file their US taxes and report their banking info. I’d imagine there are more residents living in the US with dodgier banking records (e.g., drug dealers, bookies, etc.) than there are bad people outside the US (claiming US citizenship and filing their taxes). If all citizens in the US are equal (again, this exists in morality and theory), everyone should supply their banking info, or none of us should do it. In practise, its only the people that can’t vote and aren’t allowed to use the servcies the taxes pay for who have to comply.
*@Arrow
I have had almost exactly the same timeline as your wife (including the letter re second appt. at the beginning of June to which I replied the day I received it). Today I received a call from a very nice woman at the Vancouver consulate providing some options for second appointment dates. The earliest I could get is about 2 1/2 weeks away. I hope that your wife has also received a call by now. I know she is relinquishing and I am renouncing – don’t know if that makes any difference in their pre-appointment documentation on us. Will report further after appointment.
@ladybug
Thanks for that info. No, she hasn’t had a phone call yet. But if your experience is any indication it should come in a few days. I hope she gets it before we leave on July 7th.
DW
@ladybug
The Consulate do work in mysterious ways. I sent your comments to my wife, and while she was reading them, the phone rang. Guess who? Her appointment is for August 16th. They offered August 10th, but that’s the day we get back from Spain. This is interesting — she was told to bring again all the documentation she brought the first time, and was told about the $450 renunciation fee. That’s just in case they decide she can’t relinquish, they’ll let her renounce on the spot. That really shouldn’t be necessary because there’s absolutely nothing in the last 38 years that would indicate any intention of retaining US citizenship. I’ll post again after the big day.
DW