I was asked to move this post here. It concerns my visit to the U.S. Consulate in Halifax to inform them that my wife and I had relinquished in 1973.
Hi everybody,
I posted this to the forum yesterday:
Just got home from Halifax and our visit to the U.S. Consulate. Not sure what I expected but it was fairly painless with a couple of unexpected twists.
First of all the consulate is a tiny suite of offices in an office tower. You get buzzed in by the receptionist/telephone operator/security guard. That gets you into a very small space where you have to put all metal objects (including your belt) into an equally small tray and then step through the metal detector. Then you step into a room the size of a large bedroom with about twenty plastic chairs screwed to the floor and you sit. This waiting room is also the interview room – there are wickets around one side (nobody at them at all – staff or clients.)
My appointment was for 9:30 and I arrived at 9:00 and they took me at 9:05. I spoke to a clerk who asked the purpose of my appointment and I said I wanted to inform them that I had expatriated in 1973. She was having none of that. She said she didn’t mean to imply that I was lying but they had a lot of people recently claiming this(!) so I had to have all the forms filled out as though I were relinquishing today. I thought this might be the case so I had already filled out these forms. She then asked if the other person coming in this morning was my wife. I said it was and she told me to go get her and they’d process both of us at the same time. Her appointment was for 11:00 so this was good news for us.
I got my wife and returned. The same clerk asked us for documentation. She seemed to think I should have a form signed at my citizenship ceremony renouncing US citizenship. Not sure if I did that or not but her suggestion to apply for copies under Access of Information and make another appointment was not what I wanted and I looked quite distressed and told her I wasn’t coming back. Back to filling out forms as though relinquishing today.
She asked us for birth certificates, marriage certificate, driver’s licenses, citizenship certificates, landed immigrant cards, passports *and* any old passports we had to show how often we’d traveled into the U.S.!! I explained that we had only used passports in the past couple of years to enter the U.S. and that no border official in the U.S. had ever stamped our passports. I further explained that I didn’t get old copies of passports when I renewed. She was astounded at that news.
She also strongly recommended that we write up a page of “Why we relinquished” as mentioned at the bottom of 4081.
Reading this it makes her sound a lot worse than she was. Actually she was very polite and co-operative. I think she was just a bit stressed by the numbers relinquishing recently in Halifax.
In any case she took all the paperwork and said that normally there is a second appointment necessary but she would type everything up and we could get it all done today. Then she told us to go away for an hour and she would get it done up.
While we waited (eating breakfast) we wrote up the page she had urged as per 4081.
Returning an hour later we were told to wait for a consular official. This time it was a young man who started with: “This should be painless and very quick.” He went through the forms and we signed in front of him. He told us it was good to relinquish as opposed to renouncing because it was free and we agreed that was good. We asked about copies and as others have said were told it is policy not to give copies. We asked about wait time to get a CLN and he said that it used to be about a year but there had been so many recently that they were processing them more quickly(!) He said between 2 months and a year. I’m hoping for the 2 months but expecting closer to the year.
Left the office about 11:30 and drove back to N.B.
Overall, as I said, painless and cooperative. Now if they’ll just date it 1973.
Re Green Card issue–If you are out of the US for over a year without an extention, then the green card is terminated and invalid.
@ greyowl, that’s an interesting point. Do you have a link for it? (Not that I doubt you, but it is an interesting point). The IRS also has a exit procedure for Green Card holders. I doubt seriously a Green Card holder’s tax status automatically expires. I kind of think that it requires that person actually fill out some forms at very least. This leads to the same conclusion as the exit procedure for those who relinquish their citizenship–done with the rights of citizens, but not with the obligation to pay taxes. The Hotel California.
Petros,
Actually if a green card holder leaves the US to return back home or relocate to another country, he must formally cancel his permanent residence with Homeland Security. And if has lived in the US for 5 years or more, he is then subject to substantially the same exit taxes as the US citizen who renounces his US citizenship. Here’s a link with some information:
http://www.taxesforexpats.com/expat-tax-advice/citizenship-surrender.html.
It can be almost as complicated as renouncing US citizenship, I think that the capital gains tax that must be paid when you leave may be based on the difference between the value of the assets on day you became a US resident (rather than their date of acqusition) and their market value on the day prior to the date of permanent residence cancellation; but other than that the rules are pretty much the same.
Have there been any further results in this case?
@Roger Conklin
It’s true that a long time period as a green card holder can render one subject to the same exit taxes, but the time period is longer than you think. One needs to have been a green card holder for 8 of the last 15 years for this to kick in:
http://hodgen.com/chapter-1-a-quick-overview-of-the-exit-tax/
Also note that it’s not time lived in the US per se, but time lived in the US as a green card holder that counts. Green cards typically take years to get–it varies vastly depending on individual circumstances but I’d say the average time period is at least 5 years. So you’re really looking at around 13 years or so of living in the US before the exit tax would kick in.
@ Charlie,
Johnnb and his wife got their CLNs in July 2012, indicating they expatriated in 1973. There’s also several other reports on the Halifax consulate in the Consulate Report Directory.
@ Charlie,
Just realised I’m not sure if you’re referring to the original post or the discussion about green cards — at any rate, I was referring to the original post.
Hi There My New Dear Friends,
I have just found out about what is going on and still in the “OH MY DEAR LORD” phase. I don’t think acceptance will be coming soon. Just to find a place to put all of my hysteria I have composed an anecdotal account of my situation and the current state of affairs as I understand them.
Although naive in my hope to be heard I intend on sending it to every Canadian/US newspaper, TV station and US Congress person I can find an address for. I’ll even try my luck with the prez.
I know many others before me and certainly the more professional and well spoken are out there fighting this catastrophe. My letter, if I can get it in a “letters to the editor” section of some papers, might speak to the more common folk like me finding themselves unknowingly involved in this mess. Of course I will alter it a bit for US consumption with how they will be losing Canadian tourists, their image being destroyed even more outside the country, forcing us to renounce and how they have made it that I can never come home. (Though I never want to go back…just a little old lady guilt stuff).
I would be delighted if you could comment on my letter below as to where I have might have misunderstood the situation before I send it off to the universe. Is there anything I have missed? (Also I have a tendency of messing up tenses and commit many other grammatical errors so grammar correction is also welcome). I’m sure it will be worth nothing but it will make me feel better. I can’t just sit here and moan.
Here is what I’m thinking of sending out: (Sorry it is so long but I just can’t stop blabbing hysterically).
Canadian Government is Allowing IRS to Bankrupt Canadian Seniors
(Hey Ottawa, you are throwing granny under the bus).
There are many with dual Canadian/US citizenship and people unaware the US considers them US citizens living in Canada. God help you if you have an American parent or happen to have been born there and left when you were three minutes old. The IRS considers you an American for tax purposes. With the enactment of FATCA and the requirement of FBAR filings many of these law abiding Canadian citizens could be thrown into bankruptcy. If they don’t comply they could be denied entry into the US and possibly arrested crossing the border. Many have family in the US and also enjoy vacationing there. Canadian banks are now required to identify these people and report them to the IRS. The banks will most probably be closing their accounts and certainly not opening any new accounts to this large subset of Canadians due to the administrative costs and the toxicity of these accounts. The banks will be severely penalized if they have unreported US citizens as clients.
I am sure there are many folks out there finding themselves in situations similar to mine. Here is my story:
I am a senior, have lived in Canada since 1976. I became a dual citizen in 1983. Both of my children were born and raised here, I am Canadian. Although I was aware of needing to file US taxes (the US is one of two countries in the world that taxes its citizens world wide, the other being the terrorist country of Eritrea) my income was below the need for filing. Even if my income had been more substantial the cost of hiring an internationally savvy accountant to prepare the required returns is in the $800-$1,000 range, even if no taxes are owed due to foreign tax credits.
Like many ordinary folk I don’t read financial magazines, don’t spend my leisure hours reading tax treaties and live an ordinary law abiding life of a retiree; knitting, tending my garden and walking the dog. (Or currently trying to keep the snow off of the front walk). I live frugally on a modest monthly RRIF withdrawal and CPP.
I have a very small TFSA account, a checking/savings account and a RRIF. Under the IRS FBAR ruling, which I just found out existed, I was/am required to file forms to the IRS for each account for the past eight years. The Canadian government is boasting that they have negotiated with the US that TSFAs and RRSPs will not be taxed by the US however a US tax return must be filed, along with incurring the accounting fees, requesting a deferment in paying taxes on these accounts until they are withdrawn. FBAR forms will also be required for these accounts.
The penalty for not having filed these forms, even if no taxes are owed, is $10,000 per form per year for I believe back eight years. With my three accounts requiring FBARs that would be (3 x $10,000) x 8 years = $240,000 in penalties for accounts that I do not owe taxes on. There is also a penalty for not checking a box on the yearly tax IRS tax return for deferring RRSP payments. This means no matter what your income is you have to file US tax returns and pay the hefty accounting fees just to check that box and if you are unable, file your FBARs.
It seems the best option is to just quietly file all the required back forms, there are accountants out there that will do it for around $2,000, then just sit back and hope for the best. Of course now I am “identified” by the IRS, have not paid the penalties and can’t enter the US for fear of doing “time”. What I am left with is hoping that the IRS and DHS haven’t linked their computers YET. Just leaves ya with a great feeling huh.
There is a popular term for people finding themselves in this situation; we are the “minnows”. The low hanging fruit the IRS can “get” with minimal effort. The whales, as the hedge fund, wealthy tax evaders are referred to are more difficult to catch. They have fancy lawyers and accountants and have their cash under a coral reef in the Cayman Islands. We are a good ROI.
I understand my problem is with the IRS (don’t worry I am also yelling at them but guess what….they don’t care) but our government is not acknowledging that this problem exists and is not helping us at the intergovernmental level. More importantly they are now actively reporting the existence of these accounts to the IRS so they can come after us. (That is unless they just close these accounts before they report us). The Canadian government can not collect these taxes nor penalize us yet they are exposing us to harsh penalties if we decide to ever step one foot into the US. They are aiding and abetting in making us international criminals. Interestingly you can’t even renounce/relinquish your US citizenship without becoming tax compliant unless you want to be deemed a “covered expatriate”. If you don’t become compliant you can’t enter the US without going to jail. Many of us have family in the US, some like to holiday there during the cold Canadian winters; the choice is bankruptcy or never being able to visit your grandchildren……..Thanks.
Americans somehow consider themselves exceptional….yes, they are exceptionally cruel and the Canadian government is not protecting us. This has become a human rights violation!
I would like to remain anonymous as I fear the IRS will come knocking at my door any minute. (Yes, they are making me paranoid. The Canadian government has caved thus far, what’s to stop them from letting the IRS just waltz in.)
By George, Charl, I think you’ve got it! And you got it down in writing so much better than I’ve ever been able to do it. I wouldn’t change a thing. It is a good reflection of your state of mind and they have to be made to understand the fear of FATCA. Whenever I’m writing a comment or a letter to an MP or whatever I figure I’m just an ordinary person and if my accuracy is a bit off and perhaps I dramatize a bit too much then it really doesn’t matter. I do my best. In the case of the MPs in particular, I expect them to have more resources and to be better informed than I am (it’s not the case but I expect it anyway) so let them sweat the perfect accuracy thing. I can lead them to the FATCA information trough and durn it I do expect them to drink or else I’ll come back and dunk their heads again. With MPs I found cc’d e-mails seldom get any responses but the main thing is that your e-mail is there and someone will have at least mentally taken note (one hopes) and added to all the others received on the topic it becomes more likely to garner attention (one hopes). Anyway, I’m so happy to have you with us!
Chari The best option for you is to do nothing. We’ve discussed why. Relax, put it from your mind. Find something else to occupy your time. Believe us -nothing bad will happen to you. The IRS doesn’t know you exist and won’t unless you are foolish bough to tell them.
“If you don’t become compliant you can’t enter the US without going to jail.”
This is of course simply untrue. You have been travelling to the US for the past 20+ yrs without any problems. No reason to stop now.
It might be better to qualify it by saying, “If you don’t become compliant you can’t enter the US without the fear of going to jail.” The past 20 years were NOT what the next 20 years will be like. The IRS is using this fear, whether it be rational or irrational, to force people into compliance. It’s just my opinion but I believe we need more defiance and less compliance but then everyone has to choose their own path.
Em, thank you so very much for your comments I will change my letter before I send it to the universe. I’m retired and one thing I have is LOTS of time. Duke of Devon I so wish I could actually absorb your calmness. I’m trying here but I keep flipping out. Unfortunately my mother passed away last year in the US and I am in the process of getting her house ready for the market. The selling price won’t even come close to paying my IRS penalties. But I am so going to be on the radar screen. (You know I am old and not so good at this posting stuff so please forgive me for posting my letter in the wrong place) Can you move here?
@ Charl
Just post it again wherever you feel it would be better suited. Everything gets put everywhich place at Brock. There are many Brockers who have in the past couple of years had the sad duty of taking care of an estate in the USA, almost all because of their elderly mothers passing away. My husband lost his mother in 2012 and Petros his father in 2013. Blaze recently lost her mother. We are the demographic being hardest hit by the fiasco of FATCA. We may have lots of time on our hands but this is not how we should have to spend it.
Is there anything in particular I need to know in regards to settling her estate in relation to this new mess? I will be putting the house on the market hopefully in May. I certainly don’t mind paying whatever fair taxes are due. My terror is with the penalties I somehow have inadvertently racked up and will they take it out of the house monies. Also do you know if a Canadian inherits something from the US how is it brought up to Canada? I know there is a $10,000 limit on what can be transacted. Is that per day or year or what. I just hate being soooooo clueless about everything. I feel like I am walking around in the dark and keep bumping into things.
Chari. You won’t be able to learn what you need to know from an internet blog. I can tell you that you personally won’t owe any taxes on your Mother’s estate . The estate pays any taxes owing; not the heirs.
Let’s suppose your mothers estate is $ 1 million. In the US the first 5.25 million is tax exempt. There may or may not be capital gains or state taxes but again they are paid by the estate, not the heirs.
Once any taxes due are paid by the estate, the residual money can be paid to anybody anywhere. There is no limit on how much can be transferred to you or anyone else. There is no $10,000 limit.
Clearly you need to find a trusted advisor to help you settle this. Settling the estate and your compliance are separate issues. Try to keep them that way. Deep breath and one step at a time. Bear in mind the US cannot collect tax penalties in Canada .
@ Charl
My husband’s mother’s house was sold before her death (needed it to pay for assisted living), so the money was already in her bank account when she died. There was not enough in her estate to trigger US taxes. I don’t know how my husband plans to get what remains of his inheritance transferred to Canada. It sits in a non-interest bearing account in the bank his mother used to use. He gave away a great deal of it to US relatives and is still searching for others. The $10K amount is simply an amount that the banks are supposed to report. My husband usually transfers an amount less than that and I don’t think there is any limit on how many times per year but I suppose multiple transfers would be flagged too. Sorry I can’t be more helpful. Do you have any siblings living in the USA which could take care of all this for you? It would be much easier that way. BTW, my husband was and still is US tax compliant so that was a help but I have to tell you the stocks his mother had were a headache to cash in because neither of us had any dealings with those critters before.
@Duke of Devon. I so wish I could relax about this. I am overwhelmed with confusion, sadness and fear all iced with a large dollop of raging anger. Reckon I’m still still in the OH MY GOD phase. Maybe when Spring comes and the sweet crocuses start showing their pretty faces my spirits will lift.
Can I bore you all and ask you to comment on a letter I have prepared for US consumption. It is much is like my previous letter, sorry, but I have directed this at the US government. Please correct where I am misguided and help with additions I might have overlooked. Yes, I am hysterical but a hysterical granny can sometimes be a deadly force to reckon with or at the very least awfully annoying.
As soon as I have your input I am going to go on a robo emailing blitzkrieg, US congress and senate here I come. If nothing else it will make me feel better. (maybe)
Here is my US letter:
US Government Destroying Lives of Seniors Abroad
There are many with dual US citizenship and people unaware the US considers them US citizens living in abroad. God help you if you have an American parent or happen to have been born there and left when you were three minutes old. The IRS considers you an American for tax purposes. With the enactment of FATCA and the requirement of FBAR filings many of these law-abiding citizens could be thrown into bankruptcy. If they don’t comply they could be denied entry into the US, though not happening yet my fear is it is on the horizon. Sitting in that line up at the bridge you will wonder….will this time be OK? Will I have to turn around and drive home? That holiday I’ve already paid for….will they let me on the plane? My mother is ill, my grandchild was just born…..on and on goes the very real horrors I can make myself ill thinking about. When I really get myself into a frenzy I envision myself in San Quentin or Attica….do they have a special ward for grannies?
In my situation, until recently, I had aging parents in a US nursing home. I HAD to get there. Hopefully my son living in the US will bless me with grandchildren soon. Oddly, I hope to be able to visit them. Many have family in the US and also enjoy vacationing there. Banks are now required to identify these people and report them to the IRS. Many banks world wide are closing US accounts and certainly not opening any new accounts to this large subset of people due to the administrative costs and the toxicity of these accounts. The banks will be severely penalized by not being able to invest in the US if they have unreported US citizens as clients.
I am sure there are many out there finding themselves in situations similar to mine. My nightmare is Canadian but in any country that has signed a FACTA agreement the same rules apply.
Here is my story:
I am a senior, have lived in Canada since 1976 having come here with my then husband looking for work. I became a dual citizen in 1983. Both of my children were born here and as they grew and became entrenched in their Canadian lives it became increasingly more difficult to pick up and come home so we stayed and time just rolled on. I am old now and entrenched in my simple life in the country. I have one adult child here and one in the US.
Although I was aware of needing to file US taxes (the US is one of two countries in the world that taxes its citizens world wide, the other being the terrorist country of Eritrea) my income was below the need for filing. Even if my income had been more substantial the cost of hiring an internationally savvy accountant to prepare the required returns is in the $800-$1,000 range, even if no taxes are owed due to foreign tax credits. Am I being irrational in thinking if I don’t owe any taxes I don’t have to read treaties? Is it irrational to think if I don’t live someplace, don’t use any services, don’t have any benefits that I still owe money? If indeed I am that idiotic then it is certainly time for me to go into a nursing home. I can’t be trusted to care for myself.
Like many ordinary folk I don’t read financial magazines, don’t spend my leisure hours reading tax treaties and live an ordinary law abiding life of a retiree; knitting, tending my garden, walking the dog and shaking my head at Rob Ford. (Or currently trying to keep the snow off of the front walk). I live frugally on a modest monthly self funded retirement plan (RRIF) withdrawal and the Canadian Pension Fund. I file my Canadian taxes using U-File. I answer all the questions in the interview thingy and press send. With my modest income I am not required to file US taxes so I never interacted with a US interview thingy. Is this another thing on my annual “to do” list that I forgot? Get eves troughs cleaned, windows washed, read tax treaties. Freakin’ Hell, I can’t even figure out how to text on my flip phone let alone know where it is.
OH, but wait…..I’m having an unusual moment of clarity. That was the plan all along. Quietly change the tax rules on a low information group who has no representation in congress, no fancy accountants to inform them, impose inordinately harsh penalties and voila….US deficit zero. I’m next writing to the Canadian government to advise them to get on board the gravy train, why are they waiting? FACTA has to work both ways or it isn’t fair. They must quietly change the laws on all Canadians in the US, enact harsh penalties for non-compliance in reporting their IRAs/401Ks and bank accounts. Then tell the US government if they don’t comply in outing them we are not sending them any more NHL players. Reckon the NHL is worth a LOT more than they are going to get out of us. Good gracious, we could start stockpiling nukes maybe even build a subway to Pearson! Totally groovy.
I have a very small tax free savings account, a checking/savings account and a RRIF. Under the IRS FBAR ruling, which I just found out existed, I was/am required to file forms to the IRS for each account for the past eight years. The Canadian government is boasting that they have negotiated with the US that our tax deferred accounts will not be taxed by the US however a US tax return must be filed, along with incurring the accounting fees, requesting a deferment in paying taxes on these accounts until they are withdrawn. Then you must file a 1040NR. FBAR forms will also be and have been required for these accounts.
The penalty for not having filed these forms, even if no taxes are owed, is $10,000 per form per year for I believe back eight years. I have three accounts requiring FBARs that would be (3 x $10,000) x 8 years = $240,000 in penalties for accounts that I do not owe taxes on. I DO NOT HAVE THIS MONEY! There is also a penalty for not checking a box on the yearly tax IRS tax return for deferring these retirement planning accounts. This means no matter what your income is you have to file US tax returns and pay the hefty accounting fees just to check that box and if you are unable, file your FBARs. Yes, again I’m the poor fool. How exactly was I suppose to know this? Maybe you could start using those drones of yours to drop IRS fliers. (How I did find out was via a neighbor who is a Canadian financial advisor. Her office received a notice regarding FATCA last week and she sent me an email asking if this might affect me. I went on the Google and slowly descended into suicidal depression.)
There is a popular term for people finding themselves in this situation; we are the “minnows”. The low hanging fruit the IRS can “get” with minimal effort. The whales, as the hedge fund, wealthy tax evaders are referred to are more difficult to catch. They have fancy lawyers and accountants and have their cash under a coral reef in the Cayman Islands. We are a good ROI.
Dearest IRS do you understand some of the consequences of doing this? Maybe you don’t care about the “blow back”, the absolute anger and terror you are inflicting on your citizens abroad. Many of us have had to go abroad to find a job that you don’t seem able to provide just to survive. We are doing you a favor not being on welfare or SNAP. How about the tourist/shopping dollars you’re going to forego when we can’t enter the US for the ever increasing potential of losing all of our money or, God forbid, one day going to jail? Many of us care for aging parents in the US, have grandchildren there, folks we are supporting with our foreign dollars. Many of us thought we would go abroad for a while and one day return home. Now if we decide to come home we will be forced into the “Uncle Sugar” plan after we pay the penalties you have inflicted.
You tell us there are voluntary disclosure programs, streamline procedures, many different vehicles for us to become compliant. Just trust you, it will be OK. Take a minute to search the internet for the stories of people who have tried that. The rules change mid stream, you still want your money from people that don’t have it, shouldn’t owe it and all are deemed willfully noncompliant. How can you be willful about something you had no idea existed? But no, of course we are all just evil tax evaders just trying to screw Uncle Sam. Are you kidding? Please don’t wonder why you are increasingly known as the evil empire abroad, even your own citizens are really, really angry and frankly terrified of you. You are destroying any good will that we as mini foreign ambassadors might have spread.
You are leaving us with only one option, an extremely sad option also riddled with land mines, that I never, ever saw in my future. I was an extremely proud American living abroad. I follow MSNBC and Fox just to have the whole picture, vote by proxy and remain very involved in my culture, it is in my DNA. Now you are forcing me to renounce my citizenship. Even then once I apply for renunciation you will deem me a “covered expatriate” if I don’t pay the penalties I owe and force me into bankruptcy. How you manage your “covered expatriates” remains to be seen but my best guess is that it won’t be pretty. You also have to approve my relinquishing and I’m betting that if I owe you money you won’t approve. I am that criminal willful tax evader you have your sights locked on. You won’t let me in, you won’t let me out…..Dear Lord what am I suppose to do? You are throwing granny under the bus. That once coveted US citizenship is now a noose around my neck. Notice to all those seeking the American dream…be careful of what you wish for, that dream may carry you to the poor house. Seems the choice is bankruptcy or never being able to visit your grandchildren, care for your aging parents, never being able to come home……..Thanks.
Americans somehow consider themselves exceptional….yes, they are exceptionally cruel. Once again the 1% will still have the means to avoid taxes and the deficit will be balanced on the backs of the poor. This has become a human rights violation. We are not physically bruised or tortured, it is even worse, you’ve taken our souls. I know this sounds extreme but it is exactly how I feel and exactly what you have done.
I would like to remain anonymous as I fear the IRS will come knocking at my door any minute. (Yes, they are making me paranoid. The Canadian government has caved thus far, what’s to stop them from caving a wee bit more.)