[Editor’s note: This post clears up the issue of whether 8854 is required for people receiving backdated CLNs: If your expatriation date is before 2004, the rules are different]
(This comment from yesterday, buried at the end of an ancient thread, may have gotten lost in the perpetual flurry. So I repeat it here as a posting in its own right.)
Nobody has yet convinced me that any person who now relinquishes or renounces is not required to file Form 8854 to satisfy the IRS.
This official document says that 8854 applies to anyone expatriating after 16 June 2008.
And this official document says at 2.A — unless I can’t read — that for practically all of the Brock crew, unless you have already done the US consulate thing, you have not expatriated yet. Backdate that precious CLN to 1776 if you want, but when did you actually visit the US consulate?
Principle Number One: Department-of-State and Department-of-Treasury/IRS are weird and separate fiefdoms — and you are a serf to both. The best path to escape from those overlapping dark dominions seems a murky mystery.
Is there any chance we could get informed opinion on the Form 8854 requirement — rather than heartfelt assertion, raw speculation, desperate hope, wild wish, etc etc etc?
At the least, I’d love to see two “professionals” come up with diametrically opposed views. That couldn’t possibly happen, could it?
New Addendum: Counterexample is the cornerstone of scientific validation, aka hypothesis disproof. Today 13 June 2012 at Brock we have the wonderful and extremely valuable reporting from freeatlast: that the Federal Register name-and-shame list is not limited to “covered” expatriations. One more goofy speculation laid to rest.
I think if you read the form, there is actually no provision for those who expatriated before a certain date. Since the CLN clearly states the date of expatriation, good luck to the IRS to force the issue for those who are getting the CLN 30 years after the expatriation date:
Thanks, Petros. Useful comment. What that says to me is that everything changed on 4 June 2004, as far as the IRS is concerned, and no “before” exists, which is how that situation seems to be described in their documents on dates and on who has expatriated.
If you already possess an older CLN, you are a rare bird like schubert1975, and are clear of the mess. If you don’t have that CLN, you are not going to get one without filing Form 8854 – unless you just want to become an automatic “covered” expatriate.
How Department of State views the situation may be quite different, and who really cares, because their main task is to send in the rescue team to extract you from the severe troubles you are bound to encounter outside their so so safe borders. And not to punish you otherwise!
Well, if the IRS is unaware of the law, they may decide to send you a reminder or even a $10,000 fine for not filing 8854. But the problem is the perverse nature of requiring people to inform the consulate to expatriate at a time when no such requirement was necessary. That is why we filed this post, which gives evidence that if your expatriation date was before 1994 or 1995 you had no requirement to inform the consulate meaning that the 8854 form was not required either: Did you relinquish before February 6, 1995?
Personally, I would advise do nothing at all. But who the hell am I? Just a person who thinks that the United States has gone bonkers under the current adminstration–though it had been going that way for decades now.
I can confirm that everyone needs to file the 8854 – A consular officer just told me last week that I would need to as well, even though I am not a covered expatriate and would only need to file one year’s worth of income tax and FBAR forms for this year. I legally had no reporting requirement before 2012 due to very limited income and cumulative bank account balance under 10,000.
The Federal Register is total nonsense if it is supposedly reporting everybody – The consulate in my country couldn’t take an appointment for me for over 4 months, and they said that they do one renunciation a day usually. If we assume that that is, on average one per day, then one European consulate alone has handled 120 expatriations alone. I shudder to think how large the numbers at London, Bern and Toronto truly are. The numbers are embarrassing, so they are probably “cherry picking” a mix of the high profile and unknowns to form a balanced list to present to the public.
Yo! Perverse is the word! Over at USxCanada in the Documents section I have just finally gotten around to listing that most revealing document unearthed a while back by Tim: Review of the present-law tax and immigration treatment of relinquishment of citizenship and termination of long-term residency. The date is noteworthy, about one year ahead of June 2004.
I stumbled across a few interesting bits in pdf 7 of 13. Pages 51-52 have a section on CLN, and a lot of blather about being able to revoke CLN! Then on page 72, item 4 seems to be talking about Reed amendment — here’s that bit in full:
No former U.S. citizens have been found inadmissible under section 212(a)(10)(E) of the INA since its enactment on September 30, 1996. The INS, Department of Justice, the Department of Treasury, the IRS, and the Department of State have been working to develop administrative guidelines and procedures regulations necessary to implement section 212(a)(10)(E) of the INA. This effort has been hampered by the lack of coordination among the various agencies.
Guess they are still working? On five-year-plan number three? Maybe Keystone Cops need to be brought in on that coordination effort? This stuff is so sick it is funny. Quintessential black humor.
@Don, the consular officers barely know the law that affects their job. How can you take their word when it concerns the tax code? I agree that you have to do it. But I wouldn’t start saying it is required of people who receive CLN which has been pre-dated before 1996 when the 8854 was first invented.
Hodgen et al. have suggested this is a court challenge waiting to happen. I agree. The IRS will tell you that you have to do it, in all likelihood, since they are pea-brained functionaries who don’t understand the first thing about freedom or laws which are intended to protect liberty and the rights of the People.
We first have to understand that the 8854 is abridgement of liberty no matter who has to do it. It is a violation of the 4th amendment: A man’s home is his castle. No one who is under the king must enumerate his assets for the king, because the man is king over his possessions within his own home. Thus, it is none of the king’s business. This is a principle of English law since the Magna Carta and an even deeper law going back to the Ten Commandments at least–i.e., the finger of God wrote, “Thou shalt not steal”–this affirms the private property rights of all people–not merely those under the Torah, as it doesn’t say, “Thou shalt not steal from your brother”, but “thou shalt not steal”. There is only one reason the IRS needs you to enumerate all your assets in the 8854 and that is so they know how much to steal from you.
Therefore, I would argue that not all people whom the IRS thinks should file this form should file it. If they relinquished their US citizenship before 1996, then let the IRS come after them, and then such former citizens should make the argument, “Well, I haven’t been a citizen for over 15 years–filing the 8854 makes no sense.”
Of course, as USX has indicated, they will make you a covered expatriate by default. But this is silly. It cannot stand even the slightest legal scrutiny. Why would the IRS want to go there? Especially when there are laws that show that a person was not required to present themselves to a consulate before 1996, and I would maintain further, that their own guidances probably showed that was not the case before that date. The IRS cannot win this one.
I’m cross-posting the following, which I posted on the other thread which Petros started on this topic today, in case anyone misses it:
As Deckard and I both posted some months ago in other threads, my reading of a 1997 IRS bulletin says that if your expatriation (via relinquishment) was before February 9, 1994 (I’m not sure I got the month and day right but I know it was 1994), form 8854 does not apply. But I’m not a lawyer, and the bulletin is in the usual near-incomprehensible language used in IRS bulletins.
In any case, IRS going after someone who relinquished 30-40 years ago but didn’t file for a CLN until now because they had no idea what a CLN was or of why they’d need one, would be utterly absurd. In any case, IRS can’t enforce that requirement in Canada, they can potentially grab you at the border (or DHS can) but to do that they need a warrant and need to go through a legal process that involves contacting you a couple of times about your filing “requirement.” First step IMO would be do nothing unless you get a letter from IRS at some point after you get your CLN, asking for an 8854, in which case maybe reply politely by mail saying “I haven’t been a USC for 30-40 years, I don’t believe I owe you any filing requirements” and see what they say. Then if necessary consult a lawyer if they come back, or just don’t cross the border again if that’s an option. CRA can’t and won’t collect anything for IRS on this if you’re a Canadian citizen, which presumably you are if you relinquished 30-40 years ago. That’s very clear in the Canada-US tax treaty and in statements from our Finance Minister in letters I’ve seen and that have been posted elsewhere on this website.
Those who renounce, yes. Not as straight-forward for relinquishments. After the date of the expatriating act for relinquishment, and for which you do not pay the fee of $450, why would you file a US tax return if you are not from that date a citizen? It would just put you right back into the hands of he US IRS — or at least that’s the way I see it (and, one of my mistakes and the reason I cannot now claim relinquishment vs renunciation).
Further to Calgary’s point, and using a different metaphor than the Dirty Harry one that Steven Mospick used a while ago,
you’re walking down a path, and see that a very nasty-looking grizzly bear is sprawled across it, fast asleep. Plan A: turn around and go back, quietly. Plan B: very very carefully navigate around the bear without waking it up, if that looks feasible given the terrain. Plan C: grab the biggest, sharpest stick in reach and jab at the bear to wake it up, to see if it’s really as mean as it looks.
A choice of Plan C might qualify you for this year’s Darwin Award.
“First step IMO would be do nothing unless you get a letter from IRS at some point after you get your CLN”
Do we know if anyone been contacted by the IRS after getting the CLN? I am still waiting for my CLN and do not plan to contact the IRS until I have the CLN in my hands. I change my mind from day to day but have been thinking of doing nothing until contacted. Let them make the first move and let them tell me exactly what forms they expect before I give them any information.
@Calgary, Petros and All
Indeed! Many thanks for pointing out the differences between relinquishment and the complexities of renunciation/relinquishment in the past for anyone who is reading. I admit that my situation is radically different than most: I am at the beginning of my career, have almost nothing by way of assets, have no FBAR problems and am renouncing, not relinquishing, because I want to be 100% sure that I will be successful and because I personally just want to get in and out and of the US bureaucracy as quickly as possible. If they want to seize half of all my assets then by all means – All of my “assets” have been accumulated in the past six months :P!
I agree that all of the forms and IRS end paperwork is of dubious legality, but when it comes to it I don’t want to cause any trouble and will just do whatever they want so that I am 100% “US free” as quickly as possible. I realise that most reading this blog it is not so simple and I admire your courage and determination to fight this great injustice.
If my bank accounts weren’t being threatened with closure and my health insurance company wasn’t starting to weed out “US persons” as clients, then I would also stand my ground and relinquish and fight them if they denied me that right. As it is I just want the CLN in my hand as quickly as possible so that I can be sure that I can survive financially in the coming months.
Whether or not the Consular officer knew what he was talking about, as Petros noted, he seemed quite clear that I had to initiate the contact with the IRS. You would think that the State Department and the IRS could streamline the process and make the effort to contact each other, but no, that would make the renunciation process too straightforward for us little people!
@Don Pomodoro, thank you for the information! I think I will still wait until I get the CLN before I begin with IRS.
For those who properly ceased to be US citizens (e.g., by naturalizing in Canada with the requisite intention to no longer be US citizens) prior to enactment of the American Jobs Creation Act of 2004, the expatriation rules should not apply (notwithstanding the very poor manner in which section 877A of the Internal Revenue Code is drafted).
2004 is when the idea was first introduced that a person who had otherwise relinquished US citizenship could nevertheless continue to be treated as a US citizen for tax purposes until some “notice event” (my own, inarticulate term) took place. This new rule was set forth in former Code section 7701(n) and it is 100% clear that it was purely prospective in application. Thus, for example, as of 12/31/07 it was perfectly clear that a person who properly relinquished US citizenship in the 1970s, 1980s, 1990s, for example, was (quite properly) “grandfathered” and not affected by section 7701(n) in any way.
In 2008, section 7701(n) was removed and the rule providing for a person relinquishing citizenship to continue to be treated as a US citizen for tax purposes, until some “notice event” occurred, was incorporated into then-new section 877A. While section 877A is worded very poorly in terms of its effective date, I (and other specialists in the area) find it inconceivable that the provision was intended to take people who relinquished US citizenship many years prior to 2004, and who were quite intentionally grandfathered by 7701(n), and convert them many years after the fact into US citizens once again.
Even for the US, that would be outlandish (and this is said fully in the context of the many other notable events of the last several years). I note in particular that, if such an outlandish thing truly had been intended, there would have been some discussion of it in the legislative history — and yet there is none. If your CLN says 1776 (or even 2003) on it, rest easy. You’re not a citizen.
Pingback: The Isaac Brock Society - If your expatriation date is before 2004, the rules are different
Pingback: The Isaac Brock Society - 8854 Encore!
Hello, firstly thank you all for the wonderfully helpful website and forum.
This questions is specifically directed to those who have renounced their US citizenships and who had never lived or worked in the US, never had a US SSN, and never filed a annual return.
1. Has anyone renounced and NOT filled in the 8854 form?
2. Has anyone renounced and NOT filled in their IRD income tax year forms?
3. Has anyone filled in 8854 and IRD income tax forms without an SSN?
Most important, has anyone who had not filed a 8854 form or the annual returns directly been contacted by the IRS or been chased? what happened? what consequences?
Thanks in advance so much
see more at http://isaacbrocksociety.ca/2015/10/10/expatriation-date-form-8854-certificate-of-loss-of-nationality/comment-page-1/#comment-7337998