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.
*Feeling deluged and overwhelmed I hope.
*I often wonder when the government and general public become fully aware of the surge in expatriations whether they’ll finally listen to expats and make major reform. However, I could see it going the other way with even more draconian measures…
They’d have to still allow people to give up their U.S. citizenship (for whatever reason) but could try to amend the rules so that it would become impossible to shed U.S. personhood for tax purposes. Even worse, I could even see them trying to make such a change of law retroactive. It would certainly result in a marked reduction in renunciations.
Posting here as well:
Veterans Today: “American Patriots Escape and Renounce Citizenship”
http://www.veteranstoday.com/2013/01/26/american-patriots-escape-and-renounce-citizenship/
From the article:
“Should you leave the U.S. and renounce your citizenship? Many Americans ponder this question as the benefits begin to outweigh the costs. Some of the those benefits are lower taxes, lower administrative costs, and even getting away from bad governance and cultural stresses.”
@John, I am utterly convinced that Schumer and Casey will try to get Congress to pass a retroactive law that could make those who renounce still liable for U.S. income tax on worldwide income for life. They could make it impossible to shed U.S. personhood even after expatriation. I certainly wouldn’t put it past them to try!!
Mark my words. This is why I believe that renouncing is still a huge gamble but have concluded that it’s becoming almost impossible for many to afford the compliance costs and burdens…but were not going to find much sympathy.
However, I can understand though why Americans are offended about the super rich renouncing because, let’s face it, if I had 200 million, I could easily afford to pay an accountant and pay a bit of double tax. I honestly think some of the uber wealthy are actually greedy, though can understand that it’s the principle. But what pisses me off so much is that these articles always focus on the rich and overlook ordinary middle class or working class expats.
In their case, it’s not so much the potential double taxation as it is the burdensome and expensive ongoing compliance costs. It particularly rankles me that truly accidental Americans like Canadians who have inherited citizenship from a U.S. parent or in Calgary’s disabled son’s case, who’ve never even set a foot inside America! 🙁
It’s not patriotism; it’s blind nationalism. Plus we have virtually no representation. It’s exactly what our forefathers fought against. I abhor the hypocrisy.
The reason I ask about what IRS is doing with all those copies of CLNs is I’m worried, as an old relinquisher (1979) , if a CLN will put me on an IRS list that I might otherwise avoid as being too poor to trigger a FATCA search at my bank.
And if the upcoming intergovernmental agreement means that the CRA is going to ask our banks to collect birth place info to transmit to IRS, will they really send that info just for those accounts over the FATCA $50,000 limit?
‘m trying to come up with a decision tree. Until I found out about the CLN copy sent to IRS ( Thanks for the DOS manual, Pacifica), I thought that getting a CLN would give me closure.
Now I wonder.
@ Old&Simple
I don’t want to add gnarly branches to that decision tree of yours but it’s my understanding that when you have a CLN the banks cannot forward information to the IRS. You are NOT a US person at that point. As for thresholds, well who knows? It’s $50K right now but the IRS seems to work with a constantly sliding scale and it is most likely NOT going to go up. I know it appears that Brock is all about advocating for relinquishments but it really does seem to be, in many cases, the solution which has the best a$$ coverage attached. So I guess what I’m saying is that even if the bank does tell the IRS you were born in the USA it really doesn’t matter after you have a CLN … at least I don’t think it does. BTW, my husband and I are old and simple too so we really do relate to the “decision tree” dilemma.
* O&S.. I’m going to change your name to Old Worrier. (Perhaps you would prefer Old Warrior.)
The banks are not going to ask for your birthplace. If you doubt that statement, go to the proposed regs published by the UK gov’t under their IGA. They ask citizenship or ‘are you a so called US person?’ You are Canadian only. In any case you are under the limit.
However, that wasn’t really your question. This time you fret that the IRS will get a copy of your CLN and decide to pursue you. Trust us. They will be overwhelmed and understaffed and will not bother you. They will have much better things to do with limited resources.
OK. Everynow and again someone is hit by lightening twice in a year. So the computer sends you a letter after it gets your CLN. So what? The letter could be ignored as it would be a fishing (phishing?) expedition.
*Passort OR Citizen Certificate – They both prove you are a Canadian citizen. What difference, at this point, does it make (said while pounding my desk)?
@Old & Simple
As I understand it, if Canada ends up signing an IGA and if you have a US place of birth and an account over $50k or cash value insurance policy over $250k (or other lower limits agreed in an IGA or self-imposed by your bank), you can prevent your bank from sending anything to the IRS if they have previously reviewed and maintain a copy of:
(1) a self-certification that the account holder is neither a U.S. citizen nor a U.S. resident for tax purposes (which may be on an IRS Form W-8 or other similar agreed form);
(2) a non-U.S. passport or other government-issued identification evidencing the account holder’s citizenship or nationality in a country other than the United States; and
(3) a copy of the individual’s Certificate of Loss of Nationality of the United States or a reasonable explanation of:
(a) the reason the individual does not have such a certificate despite renouncing U.S. citizenship; or
(b) the reason the account holder did not obtain U.S. citizenship at birth.
So, you need to provide 1) AND 2) AND one of 3), 3a) or 3b). In the absence of 3), you are reliant on 3a). I’m not sure you can argue 3b). The issue with 3a) is the term “reasonable explanation”. It’s up to your bank to determine what a “reasonable explanation” is and different banks may have different policies. Your explanation may be reasonable to one bank but not to another. Your bank may decide they will only accept 3) and not 3a) or 3b). With a CLN, you have certainty.
@ Edelweiss
Thanks for putting that in more definite terms than I did. I thought I was right. Get a CLN and cover your a$$ets — especially if you have a good case to obtain the coveted back-dated version of a CLN.
*@Old and Simple
(from Old and Simpler)
“The reason I ask about what IRS is doing with all those copies of CLNs is I’m worried, as an old relinquisher (1979) , if a CLN will put me on an IRS list that I might otherwise avoid as being too poor to trigger a FATCA search at my bank.
And if the upcoming intergovernmental agreement means that the CRA is going to ask our banks to collect birth place info to transmit to IRS, will they really send that info just for those accounts over the FATCA $50,000 limit?
‘m trying to come up with a decision tree. Until I found out about the CLN copy sent to IRS ( Thanks for the DOS manual, Pacifica), I thought that getting a CLN would give me closure.
Now I wonder.”
Believe me, I sympathize. I spent almost a year of with my “decision tree” – file the back tax returns and renounce?, do nothing and hope for the best?, relinquish and hope that the IRS won’t hound me for the rest of my life? Finally I went ahead and relinquished in Calgary in October of last year and am still waiting for that CLN which will hopefully be backdated to 1967. Having made that decision I feel quite a bit better, but like you, I continue to worry about what will happen with the information DOS sends off to the IRS. Most days I take comfort in what Michael Miller and so many others have said – that it would be much too much effort for the IRS to pursue all of us ancient relinquishers, and if they did, so what, but still there is that nagging 3-in-the-morning “what if”. At any rate, on many levels I would have been lost in this quagmire without IBS and I thank everyone, yet again, for the information (much more comprehensive and useful than I got from an immigration lawyer), generosity with their time, and support.
You asked about having to show a Canadian passport. I was only asked for identification at the consulate. I provided my passport but I think a driver’s license would have been sufficient. They had my Citizenship Certificate to show that I wasn’t becoming stateless.
However as you have no doubt read, some consulates pretty much do what they want and make up the rules as they go along.
Good luck with your “tree”. It’s not an easy decision and there are so many unknowns.
@ monalisa,
Re:
That would give me even more reason to have nothing, NOTHING, to do with such a country who would pass further punitive legislation.
Yes, the media articles most often focus on the rich and overlook ordinary middle-class or working class expats. As we know, the media is a shadow of its former real journalistic self and over and over, as Petros puts it, a water carrier for the IRS. The rich is absolutely what the media wants to focus on and put in the minds of those living in exceptional USA (and, sadly our other countries’ media, it looks like, doing the same). Neither little me who cannot nor any super-rich person that can easily afford to pay an accountant and to pay a bit of double tax should be corralled in by the USA if it is our choice to live in another country anywhere in the world. Eduardo Saverin, I’m sure, followed all US law, paid all required exit taxes and other taxes in renouncing his US citizenship and they wanted to pass further punitive law for him and others following him, after the fact. We’ll likely learn that Tina Turner has been compliant with her taxes and will follow all US law to renounce (or better yet get Swiss citizenship and therefore RELINQUISH) her US citizenship. Both, I’m sure, want to have the same right to conduct business and bank as others in the country where they live, not be bogged down year after year after year with US extra-territorial requirements that make them second-class citizens in the countries they live. Both will have checked out properly. They have, through their talents, their entrepreneurship and their taxes, given very much to the US. They should owe the US nothing more. Neither should I nor you.
My now adult son has set foot inside America in the past. As my son, he “supposedly” inherited US citizenship. He has relatives in the US and we have visited them from time to time. That was well before the times we’re in now. My son was born in Canada, raised in Canada, never had his birth registered with the US, never lived in the US, never had any benefit from the US. However, the US says I or any other Parent, Guardian or Trustee of a developmentally delayed or otherwise mentally incapacitated person does not have the right to renounce on our family members’ behalf, even if we think that in their best interests. Instead such persons are entrapped with US citizenship and absurd, unaffordable administration of compliance costs year after year after year, forever. For what? My son, I know, has a much better life here in Canada than he ever would have had in the US. I have determined how my family will deal with our situation. However, there are many, many, many others that this will affect, most of whom don’t have a clue of it and will not be able to afford it either financially or emotionally. They have more important things to deal with on a day-to-day basis. It is all about morality that I will continue to fight for these others as so many wouldn’t have a voice to do so.
I absolutely refuse to have anything to do with a country that even thinks of further punitive action against US Persons abroad. I will gladly be a part of any class-action suit to fight such further extra-territorial abuse. I want nothing to do with a country that tries to pen “its people” (really?) in – it is the new Berlin wall they are building. I want nothing to do with the “homelanders” who don’t have critical thinking skills to see the absurdity of what their great country thinks it is entitled to enforce on people who have the audacity to leave such an exceptional country – out and out abuse. I arrived there entirely by accident of birth and left by choice. I never did and never will buy in to blind patriotism.
Thanks again folks for all the info and encouragement. Yes, I am an old worrier…might have something to do with having spent my working years in a bureaucacy with extremely complicated union contracts.
That being said, for old relinquishers, CLN or not, it’s basically about trusting that Canada won’t let IRS come up here and seize assets. Whether they find you through a CLN or through zeal of FATCA compliance by a financial institution, if they can’t collect, the only problem is nasty threats by mail.
For those whose profession or business requires travel and transactions across the border, things must be much more scary.
And, excuse me if this sounds like a play for pity, but personally I have to deal with the fact that I am at a higher risk for stroke and senile dementia, having been diagnosed with arteriosclerosis of the brain. The doc thinks we can hold it off with the medication he gave me, but it’s not hard for me to imagine how awful it would be to be receiving harassment from the IRS at the point where I can’t really understand anymore what’s going on. That’s why I am thoroughly documenting it all and will be leaving proper instructions to my future self or caregiver.
I’ll let the IBS know if I go through with the CLN at the Montreal consulate, and send details and updates for the directory as they arise.
Having thought of all that can go wrong, I pretty much expect to be rather calm and philosophical about all this once I have made up my mind.
@Old&Simple,
Exactly, your health should be your most important concern. Too many are putting up with the stress of all this US nonsense, which in turn exacerbates health concerns and wastes too many precious minutes of time and quality of our lives, especially for us old & simple ones. I hope you make your decision to relinquish, receive your CLN and live free from the worry of all this. Damn them!
@all…
I see a lot of comments about the $50K threshold here, and I want to remind those that might not have seen a comment I posted elsewhere, which basically says, that this so called ‘safe harbor’ for the minnow or low risk / income Americans abroad, might not be so safe if a country signs an IGA. So don’t lull yourself into a unrealistic expectation that you might escape detection.
Be aware of what is happening in the UK, with the guidance that the HMRC is now providing giving. This is their approach, and while it may NOT be the approach of other countries, like Canada should it sign up, but as you know, countries do copy each other. I think it is safe to say, that other Treasury offices who are considering signing the IGA are watching the UK carefully to learn from it’s experience.
I point you to this article, whose title gives no indication of a minor bombshell revealed within it..
UK financial institutions may face compensation claims if they send inaccurate data under FATCA regime
Last two paragraphs:
So keep an eye on that, as the $50K threshold might just be meaningless, at least as far as the UK goes. And frankly, if you were running the IT department of a bank required to reprogram, wouldn’t you want to make your software script simpler, if you could? It sounds to me that the UK might give in to that pressure.
From an IRS perspective, what do they care? The more info the better as far as they are concerned, and they have plausible deniability “We didn’t require them to give us everything, but if they have, we must act on it!”
@Old&Simple, you have nothing to worry about. Read this blog from the site here:
http://isaacbrocksociety.ca/2011/12/16/did-you-relinquish-before-february-6-1995-then-you-did-not-have-to-inform-the-state-department/
Just do as recommended regarding informing the relevant authorities and that’s it. You have no tax obligations to the US and haven’t since you relinquished.
Medea, does that mean I have to send IRS a letter even though the DOS has already sent them a copy of the CLN?
I mean, this seems weird. I already sent a letter to Irs with my 1979 tax return stating that I would no longer be filing because I had lost my American citizenship by becoming Canadian. ( Unfortunately, I don’t have a copy.
And again, about collections and enforcement, what can IRS do to a long time Canadian with no assets in the US?
*@Old&Simple, I’m in almost the same position that you are, though I didn’t send IRS a letter when I stopped filing. I have thought about sending a letter now that my CLN has arrived, but I will probably wait to see if my name shows up on the Federal Register list before I make a decision on that. My position is that I don’t have any further reporting requirements to the IRS because my relinquishment was long before the 1995 and 2004 law changes which created the current reporting requirements. I’m hoping Roger Conklin will soon be able to provide or provoke clarification of the US legal position regarding that issue.
@Old&Simple, This is what the blog says:
As a result, it appears that we have no requirement to provide any IRS-specific forms or statements to the IRS, including form 8854! It would appear that a simple notification letter from us (notarized and duplicated, I would suggest) indicating that the Department of State has processed and issued a CLN showing a relinquishment date prior to February 6, 1994 should suffice.
The IRS can do nothing to you. Your relinquishment was decades ago and you have no tax obligations from that date. The same for you, AnonAnon.
@Medea, Why would you contact the IRS at all? That would cost a postage stamp. If they contact YOU, then you can send the explanation or just flat out ignore them.
Personally, I’d be curious to see if anyone who gets sufficiently back dated CLN will ever get contacted by the IRS–just in time to get resounding f-off. If you are in Canada, all your assets in Canada, why would you worry about the IRS? They can’t collect, and they won’t try. They can assess any liability that they want: there is just no mechanism for collecting taxes on a Canadian citizen.
The CRA gives many enough trouble enough for one lifetime. Let’s put the IRS in persective. It is the local persecutor of American residents which is trying to expand into the territory of other sovereign persecutors. Eventually this turf war will result in a sitdown between the mob bosses and they will divide up the spoils. I’m pretty sure that the US mob boss isn’t going to get anything out of long time Canadians who have all their assets in Canada and their person here as well. However, if you want to volunteer money, write a cheque out to them and send it, they will gladly receive it. So we will not volunteer anything ever again. Agreed?
Listen, I’ve started a group called Expats Anonymous. If you have a urge to write a check to the IRS, you have to call your sponsor and he will talk you out of it.
Now that FATCA reporting is supposed to be in Place, effective jan 1, 2013, I don’t see that renunciation is a valid option.
From Jan 1 til today, you are a reportable US person. If you live in a country that has not renounced FATCA, you will be reported and you then begin a discussion as to whether your Residence country will care about the differences between sections 26 and 31 while they are responding to USA tax liens.
“Get out while the going is semi-good” seems to be over. As of now, I don’t see how the past can be fixed (although perhaps going forward it will solve some things)
Please correct me
@Mark Twain, Renunciation is always a valid option. Semi-good is still in place even with FATCA. Remember, Phil is looking at it from inside looking out, not from outside looking in. I wonder if many of his clients are long-term residents of foreign countries. Kind of doubt it.
I don’t think one can fix everything in the past. I’ve never filed an FBAR and never plan to. It’s just none of their business how many accounts I have. The important thing for those in Canada is to become of Canadian citizen ASAP. If relinquishment is an option upon becoming citizen, that’s a really good time to do it. Saves you $450 later.
Mark, key words being “supposed to be”. Do you really think anything is in place?
Hi Mark Twain.
If you were responding to my last posts, we’re talking about backdated CLNs for people who automatically relinquished US citizenship by taking canadian citizenship back when the US consulats informed them that the burden of proof was on them if they wanted to maintain US Citizenship.
my comment is independent of others–only relating to the title.
First off, I see that Sweden and the other countries I have worked in, are patsies and will accomodate tax liens regardless.
The bank searches will be submitted March 2015, regarding activities from Jan 1, 2013.
They will report to the IRS now. Renunciation beginning now wouldn’t be finished til much later. Hence, tax liens would be generated.
I only see that ones assets must be located in a safe Place as the key. I can’t see that renunciation creates a benefit (for the past sin of living outside Revenue States of America) after Dec 31 2012.