Secretary of the Treasury Timothy Geithner has RENOUNCED! Renounced the evil ways of his earlier life of sin, that is. He has sworn off those wicked days of yore in which he repeatedly flouted the Homeland’s tax laws, and has been walking the straight and narrow path, rendering unto Caesar that which is Caesar’s.
And today, Caesar demanded a list of names. Yes, for the second quarter in a row, Mr. Secretary has brought us — in a timely fashion — the Quarterly Publication of Individuals, Who Have Chosen To Expatriate, as Required by Section 6039G. This list contains names of former citizens and green card holders who are on Chuck Schumer’s hit list no longer U.S. Persons. (To be clear, Geithner’s name is not one of them). He still hasn’t fixed the superfluous comma in the title, or the misspelling of HIPPOPOTAMUS, but hey, no one’s perfect, right?
However, even though Treasury Timmy met his publication deadline, it remains an open question whether he has published the names of all of the individuals with respect to whom he received information in the preceding quarter or quarters. The number of names in this quarter’s list is much smaller than in previous quarters. Furthermore, absent from the list are a number of people known to have given up U.S. citizenship in 2011 and early 2012, including Belizean anti-crime activist Yolanda Schakron, Jamaica’s former Commissioner of Customs Danville Walker, and notorious Canadian terrorist Peter Dunn of Isaac Brock’s Army.
The only name which is present as expected is that of South Korean Grand National Party political organiser Chris Nam Moon-key, who renounced late last year. And of course thanks to the speed of bureaucracy, people who actually renounced during the second quarter, such as Hong Kong’s new Technology and Communications Bureau Secretary Nicholas Yang and New Territories East Legislative Council candidate Erica Yuen, are not in this quarter’s list either; they might show up in October, if ever.
Others who renounced after 1996 but have never had their names published include South Korean actress Leslie Kim (better known by her stage name Han Ye-seul), Jackie Chan’s son Jaycee Chan Jo-fong, Taiwan-based environmental activist Robin Winkler, former Lithuanian president Valdas Adamkus, Ukrainian First Lady Kateryna Chumachenko-Yushchenko, Japanese ice dancer Cathy Reed, and writer Adam Bilzerian of St. Kitts (whom we’ve discussed previously).
Anyway, many congratulations and thanks to Mr. Geithner for his success in his ongoing struggle to obey the Internal Revenue Code. A few more quarters of this and his compliance rate might even rise from an “F” to a “D minus”!
Update: Laura Saunders of The Wall Street Journal is the first in the mainstream media with the story: “Taxpayers Who Renounced Citizenship Fell Sharply”. Pretty good coverage of the issues.
Expatriations surged to almost 1,800 in 2011, a sixfold increase from 2008. Experts say the increase was related to a recent drive to enforce U.S. tax laws concerning foreign accounts … The U.S. also has a broad definition of who is a citizen—including all those born on U.S. soil. As a result, there are many “accidental citizens” who don’t consider themselves American but owe U.S. taxes … Now the penalties for willful concealment of a foreign account are draconian and can empty an account. In addition, expatriates may find it difficult to return to the U.S. on a regular basis.
The article quotes Bryan Skarlatos of Kostelanetz & Fink LLP. He appears to do OVDI work and has published articles in tax journals on the topic.
The sharp decrease in the second quarter took some experts by surprise. “It may be that many people who were inclined to expatriate have already taken steps to do so,” said Bryan Skarlatos, a tax attorney at Kostelanetz & Fink in New York … Said Mr. Skarlatos, “Lots of people ask about expatriation, but they reconsider when they find out the tax requirements and what ties they would cut.”
The article has 27 comments already.
HuffPo’s staffer zealots are doubtless already busy scouring this list in the hope of finding another heretic to publicly burn at the stake!
*Well, to add insult to injury, Mr. Geithner and his minions have again omitted my name from their fabulous list. Admittedly, I am a mini-minnow on their financial horizon, but IMHO my $450 is just as good as those paid by anyone else that did make it onto the list. So far I have not received so much as a scrap of paper officially attesting to my renunciation, which took place in Marseille on February 6, 2012; however, since I was divested of my passport on that date, I now consider myself a non-US person.
I was hoping that I would make the list this time but, alas, I did not. I, too, have not had any communication since renouncing in Halifax on March 26, 2012.
Notorious Canadian “Freedom Fighter” you mean. I admit being a “ringleader”.
Thanks Eric, for keeping on top of this. I think that your last post suggesting that the IRS was expect 11,000 8854 is much more accurate number. If we discount 1,000 year to year 8854’s for people who were covered under the Reed Amendment, then we have 10,000+ per annum. 189 is laughable.
It might be possible to estimate how many expatriations are happening at Bern, Berlin, and Toronto by assuming that the waiting times to get an appointment means that they are literally doing full time expatriations. Thus, for typical consulate, an expatriation takes about a total of an hour to do. This means, given the normal bureaucratic work capicity, that they could process maybe 1-2 per day. That’s six per week. That’s turns into 6 expatriations *52/4=78 expatriations per consulate per quarter. That’s 234 per quarter per consulate. That’s actually pretty close to 189. Should we assume then that 45 relinquishments were not approved and that the only three consulates accepting renunciations are Toronto, Berlin, and Bern?
The fact that it took nearly a year from the date that I relinquished by taking Canadian citizenship 28 February 2011 for my CLN to get an appointment at the consulate (I called for an appointment the next day), to be approved (29 February 2012) and then over a month and a half for me to actually receive it after approval, suggests that the actual numbers that the State Department is processing are enormous. Otherwise, there wouldn’t be such a back log.
@OP: I agree it’d be interesting to know the full number of individuals renouncing. But, quit antagonizing them into expanding the named list. You’re working for Schumer, et al that want just that. Such a list shouldn’t even exist as it violates an individual’s privacy. I don’t want to be on it. We already *know* it doesn’t include all individuals because it only includes “covered expatriates.” How some around here don’t get that point yet is baffling. I’ve no doubt that there are errors of omission of covered expatriates on that list–this is a government agency after all. But the reality is that many or most names of people that we know personally who are “missing” from it are people who weren’t considered “covered expatriates” and thus we wouldn’t expect to be on the list anyway.
That said, 189 is surprisingly low even for covered expatriates. Just wait for the spike after FATCA comes into effect in 2013 when Americans abroad who are currently unaware of it become painfully and intimately familiar with it. Then the numbers are really going to spike!
I notice a lot of names that appear to be Chinese. I read somewhere that there was prestige among Chinese business people to having US citizenship, but that many were now having second thoughts due to FBAR and FATCA related issues.
The United Shades of Preposterous. Renunciation means never having to be the punchline in a sick joke.
Q Why did the Little Moron take out American Citizenship?
A The Little Moron couldn’t get a date with anything else.
or
A The Little Moron’s finger cramped on the trigger of the assault rifle and it wouldn’t stop shooting.
@Michael
We discussed this theory before (that the list only includes covered expatriates). There’s two problems:
As for the existence of the list and privacy concerns: in lots of countries, change-of-nationality information is printed in the official gazette as a general matter of principle. Publishing names (without even any birthdates like in that JCT report from 1995) is comparatively mild. My generally impression is that the State Department already doesn’t like having to give any information to the IRS and that they’d stonewall any further efforts. (One alternative theory is that the list is underpopulated because State is holding back CLNs. That would cause its own problems with 8854 filings though — how would the IRS verify that an 8854 filer actually gave up citizenship on the date claimed?)
@Northern Shrike: A lot of HKers were scrambling to get any foreign passport they could back in the 1980s after the UK refused to give real ones (only fake useless BNOwhere passports). It wasn’t exactly a matter of prestige, more like having somewhere to flee to in case Beijing really started screwing things up around here. Smart or wealthy HKers managed to qualify for Canada, Australia, etc. (The kids of the richest man in HK Li Ka-shing are both Canadian citizens, for example).
The US was not a popular choice in general, but a lot of people who were already studying in the US at the time decided they might as well go for green cards and citizenship. They either didn’t know about US citizenship-based taxation, or didn’t think it would become a serious issue. 20 years later they’re clearly regretting that idea.
Based on spelling of names, I count 33 Hong Kongers, 14 from Taiwan, 9 from mainland China, and 9 from South Korea. Some of them are probably giving up green cards rather than renouncing citizenship, of course.
@Eric, The exceptions to the rule don’t change the basis of it. Read it for yourself: http://www.gpo.gov/fdsys/pkg/BILLS-104hr3103enr/pdf/BILLS-104hr3103enr.pdf They are required to publish expatriates as defined in 877(a) (whom we refer to as ‘covered expatriates’). See p.165. And in 877(a), you’ll note that these individuals are defined by a given net worth value or a given average income over the preceding 5 years. Because this was created in the 1996 the amounts are now much higher, of course. But that is the basis of the law. The wording is such that they are not limited to naming only these individuals and have discretion to name others, which would make sense in the case of prominent individuals as you mention and others such as Mike Golguski et al. If a person hasn’t hasn’t accurately filed taxes for the preceding 5 years, then they also become a covered expatriate even if under $2mil in net worth and ~$124,000 average income for the preceding 5 years. So you really have to know the details of an individual’s case. Then we add in the fact that this is a government agency with concomitant incompetence and they are bound to cause errors of omission and unnecessary inclusion. But none of this changes the the basis of the name and shame law–that is covered expatriates. You’re wrong to say that it’s a myth.
Based on all this, it’s quite expected actually that Petros, Peter Dunn, wasn’t included on the list given that given, from things he has said previously, that it sounds like he would not be considered a covered expatriate–i.e. he has assets and income below the thresholds and has accurately filed his taxes the preceding 5 years. So I would have been surprised if he was on the list. Now, that said, could they add him in the future? Yeah, possibly. They seem to have that discretion with individuals, such as Mike Golguski for instance, who are very outspoken about their renunciation. They could. But I wouldn’t expect them to start including ‘uncovered’ expatriates as practice because doing so would skyrocket the numbers and wouldn’t be in the government’s interest as a vote of unpopularity.
So, inconsistent with a touch of government incompetence and possible downward manipulation, yes. Random, no. The basis is covered expatriates.
@Michael: You should look at the current law, rather than an old statute which amended it. The Legal Information Institute, GPO, etc. all maintain updated versions of the United States Code. 26 USC 6039G(d):
Amusingly enough, 877(a) does not actually define “losing United States citizenship”. It only defines people to whom 877(a) applies. (As Daniel Moynihan noted at the time, a lot of the laws passed during that two-minute hate back in 1996 have blatant drafting errors). In contrast, 877A(g)(4) actually does define “relinquishment of citizenship” — without reference to “covered expatriate” status.
There’s plenty of different opinions on this topic even from people who know the law well. Andrew Mitchel has looked at this issue and keeps coming up with two different conclusions. First he though that the list contained all expatriates. Then he thought again that it only contained covered expatriates. Then he thought a third time and concluded again that it contains all expats. Phil Hodgen thinks it’s only the 8854 filers. Etc.
On the other hand, if the list only contains covered expatriates, it would give us a fairly simple theory to explain why the number dropped this quarter: the whales who would be “covered expatriates” weren’t able to get appointments to renounce because the consulates are overwhelmed with minnows.
@ Eric, thanks for having this information on your finger tips. My reading of the statute is simply this: the Secretary of State provides the Secretary of the Treasury copies of all CLNs and the latter is supposed to publish the names on the list. It does not say those covered by the 877(a) or 877A, but gives the impressions that the list is supposed to contain all who relinquish.
As to the many theories about this list, the media seems to be using it to refer to the total renunciants. But we know so many that should be on the list, and the consulates have started having waiting lists since a couple years ago, I think it is like CPI or unemployment numbers: they never tell you the truth, because it makes it look like the current government is doing a bad job. (See shadowstats, e.g.). In addition, it is in the government’s interests to keep the CPI down, because their expenses go up when CPI goes up. So let’s just assume that this is like all other governments stats: they are professional liars.
@ Michael, I should indeed be uncovered. But the IRS is supposed to publish the list within a month of receiving the CLN, how can they determine if you are covered or uncovered? I didn’t send my 8854 in until June 15; unless Hillary is taking her sweet time in sending the CLN’s to Geithner–there doesn’t seem to be time limit for her. May be she just lets the copies for Geithner collect dust along with the corpse of the guy who died at his desk who was responsible to get the envelopes ready?
Here are several relevant State Department Consular Affairs procedures on CLNs and citizenship renunciation dated 29 June 2012:
Interagency Coordination and Reporting Requirements FAM 1240:
http://www.state.gov/documents/organization/113465.pdf
– FAM 1240 details the procedures for the State Department to report CLNs to the USCIS, FBI, and IRS. The above link was previously reported.
Loss and Restoration of U.S. Citizenship FAM 1210
http://www.state.gov/documents/organization/109065.pdf
Renunciation of U.S. Citizenship FAM 1260
http://www.state.gov/documents/organization/115645.pdf
The USA (other governments too I’m sure) is infamous for manipulating the numbers. Your reference to Shadow Stats, Petros, was bang on. And remember the first bank bailout? The 800 billion number was just a number they thought would look about right (or get away with?) but they had no idea what it should be (actually zero would have been my choice). And then there are the casualty reports from all of the USA’s hegemonic wars which are calculated to support their propaganda. (I think the suicide a day stats should be included too but that will never happen.) As for the victims of the wars, well it was made clear from the getgo that they wouldn’t even try to count them. (Actually I think they do have a secret gun barrel with notches on it but it’s for their eyes only.) So just sprinkle many grains of salt over the loss of citizenship numbers and any list they conjure up and don’t swallow any of it. If they want the number to be low they will simply make it so. If the actual number creeps up to the extremely unacceptable zone they will start to count only those people who stood on one foot during the renunciation oath. Part of this comment is snarky I know but really, how much do you trust these critters?
@Eric, Your new link makes it even easier to prove my point. I stand word for word by what I wrote before when I took the time to write a more nuanced explanation with the understanding that there various factors affecting the number reported, so I’m not going to revisit that. But the basis of this is covered expatriates as defined in 877a. This is clearly defined in your own link:
(a) Treatment of expatriates
…
(2) Individuals subject to this section
This section shall apply to any individual if—
(A) the average annual net income tax (as defined in section 38(c)(1)) of such individual for the period of 5 taxable years ending before the date of the loss of United States citizenship is greater than $124,000,
(B) the net worth of the individual as of such date is $2,000,000 or more, or
(C) such individual fails to certify under penalty of perjury that he has met the requirements of this title for the 5 preceding taxable years or fails to submit such evidence of such compliance as the Secretary may require.
Source: http://www.law.cornell.edu/uscode/text/26/877
You can find the link to this page at the bottom of the page that you linked to http://www.law.cornell.edu/uscode/text/26/6039G#d Note that there are three separate links, click the middle one.
And they also defined “covered expatriate” here:
http://www.law.cornell.edu/uscode/text/26/877A#g which again point back to what I posted above and to elsewhere.
And you can also see Form 8854’s instructions for an up-to-date definition with current dollar figures.
So while I agree with Em and others that almost certainly there is manipulation of these numbers because, as I stated previously, renunciation numbers serve only as a vote of unpopularity toward the government. And there is nuance to this as well, such as exceptions listed in the links above–e.g. individuals born with dual citizenship and meeting certain requirements can be exempt from being considered a covered expatriate irrespective of their level of assets and prior income. And certainly there is government incompetence involved and also willful discretion such as including prominent figures, as the law allows this. But my fundamental point remains. The basis of the name and shame list is “covered expatriates,” as defined above. That’s clear.
When you realize that the basis is covered expatriates, then it makes clear sense as to why the list contains far fewer individuals than we estimate empirically are renouncing based on wait times and estimates of number processed daily at given embassies.
The curious remaining question is how Form 8854 factors in. How can they possibly meet their requirement to publish names 30 day after the quarter in which an individual renounces, particularly because form 8854 is where you discover whether you are considered a ‘covered expatriate’ and it’s due with ones final tax return, accord to p.3 of 8854’s instructions. It’s likely that only those working the system know the answer to how this is handled. But note that it’s 30 days after the calendar quarter for which the Secretary received information during this quarter–not the quarter in which an individual performed their renunciation or relinquishing act. And also note that this information isn’t limited to a CLN, they also receive information from the IRS, such as after an 8854 filing. It could well be that if a person wasn’t thought to be a covered expatriated upon the Secretary receiving their CLN, but then falls under the definition of covered expatriate based on their 8854 filing, that the Secretary could then include such a person in the round following the 8854 filing, which would be information received about the renunciation (not limited to a CLN) indicating the individuals falls “within the meaning of section 877(a) and 877.” But I don’t think anyone really knows how that is exactly handled. Probably only those working the system know what happens in such an instance.
@micheal
I don’t know what to make of your postings, let me restate my experience:
Renounced in early 2011
I am Not a covered expat
My name appeared in october federal register
I dearly hope you are wrong because that might mean they consider me “covered” even though I was not?
The tax forms are only due the year FOLLOWING renunciation, year in April or June… 30 days after renunciation they cannot know if you are covered or not, can they? How could they then publish names every quarter?
On July 4th, Swiss television broadcast a 2:20 minute segment on US dual citizens renouncing their US citizenship. At 1:30 there is a brief interview with the US Ambassador, Donald Beyer. He states that it bothers him when US citizens who grew up and lived most of their lives in the US renounce their citizenship. He then states that he considers it practical to renounce when the renunciant is a US citizen because one of his parents was or was born in the US while the parents were on vacation and don’t intend to live there.
http://www.videoportal.sf.tv/video?id=39053d8b-917c-4fb5-bd69-89d490bf836e
Bloomberg apparently stated in an article that 500 US citizens renounced in Switzerland in 2011. In an interview in the Bern newspaper “Der Bund” of July 8th, the US Ambassador to Switzerland states that it was less than one-half that figures. See fourth to last paragraph of interview:
http://www.derbund.ch/ausland/amerika/In-den-USA-ist-man-auf-viele-Arten-frei-zu-tun-was-man-will/story/23305769?track
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@freeatlast,
“The tax forms are only due the year FOLLOWING renunciation, year in
April or June… 30 days after renunciation they cannot know if you are
covered or not, can they? How could they then publish names every
quarter?”
Read the last paragraph of my recent comment above.
“I am Not a covered expat. My name appeared in october federal register”
I do not know what to make of an experience such as yours if you were published and not a covered expatriate. Clearly the law allows it, but does not require individuals such as you to be published. The question we should ask is ‘why?’ in a case such as yours. Is there any pattern to discern from yours and similar situations in which an individual’s name was not legally required to be published, but still was? That is something you should try to figure out. Talk with an attorney, talk with any contacts at the state to ask why your name was listed if you were an uncovered expatriate. You are in a good position to contribute to figuring out a pattern for situations such as yours. If you can figure out why you were published in your case and others and similar situations work to figure out the reason behind theirs as well, then we a better chance at discerning what, if any, pattern or logic behind this that applies to cases such as yours where an individual is uncovered, and thus the law doesn’t require that their name be published, but they still choose to publish it. The law allows it, but ‘why was it?’ in such a case.
“I don’t know what to make of your postings”
The point of my postings is that covered expatriates is the basis of the law. It’s not a myth. However, the government is not limited to listing only those individuals. And if anyone actually reads my postings and looks at the evidence by reading the law for themselves they will see that it is true. The law has an explicit basis to name ‘covered expatriates,’ but isn’t limited to it. That is my point.
@ michael
are you yourself a lawyer ?
All I know is, I’m not covered, I renounced, I got my CLN within a month, and I appeared on the federal register within 6 months.
I’m not sure if it matters and I’m certainly not spending any more money with lawyers, etc. to try to understand it.
Everyone says “only covered expats are on the Federal Register”; I just wanted to clarify that this is not true. I know for a fact this is wrong because of my own story. I am not wealthy nor famous and there is no reason for me to have been “singled out”. I was in compliance when I renounced and all my data were below the limits to be “covered”.
I wonder if it would be possible to get the actual number of CLNs issued or 8854’s processed, THAT would give the real number of what is happening (perhaps some journalist could dig into that).
My thoughts are exactly as Em’s. The US is the reigning king of errors and ommissions and creator of conspiracies. If it’s really prejudicial information, they’ll just get a court-ordered seal for the next 40-50 years. These are US statistics, so they exist to be part of the US agenda, whatever that may be. So for reliability, I give them an F-. Too bad there isn’t some sort of independent tracking agency that tracks naturalisations, renunciations, and the like…
Michael, the part of the law cited in my comment and Eric’s comment above mine shows that the published list includes all those whose names are received from the State Department within 30 days of the close of each quarter. That means they are supposed to publish the list of people who were issued CLNs BEFORE they receive the 8854 form which is only supposed to be filed at the time when the last 1040 is filed and to be filed with it. In the case of expats, that June 15 on the year after the expatriating even occurred. So here is the timeline for me:
February 28, 2011, expatriating act.
April 7, 2011, informed the consulate
February 29, 2012, CLN approved
May 30, 2012, publishing deadline for list
June 15, 2012, deadline for filing 1040 and 8854.
Can you see from the above time line that the date for publishing my CLN on the list was April 30, 2012? The day for my filing my 8854 so that the IRS could learn whether I was “covered” would be June 15, 2012. In other words, the 30 day requirement isn’t even possible given your interpretation that only covered expatriates should be on the list. The IRS can’t find that information out sometimes for year. Suppose my April 7, 2011, relinquishment was approved one month later instead of almost a year (May 7, 2011). State then sends a copy of my CLN to the IRS. The IRS then has 30 days from the end of the quarter to publish my name (i.e., July 31, 2011). But I don’t file my 8854 until June 15, 2012. How are they supposed to know whether I am covered or not? Thus, by your interpretation of the law the Treasury Department CAN’T comply with the law. I would think that is the least charitable interpretation of law–one that cannot be complied with.
Your interpretation of the law, it seems to me, is not correct and that is why uncovered and covered expatriates alike appear on the list.
Andrew Mitchell has updated his charts. After his two previous changes of heart, it seems now he is uncomfortable taking any position on what exactly the number represents, so he’s been calling it “Published Expatriates”.
http://intltax.typepad.com/intltax_blog/2012/08/221-published-expatriates-for-q2-of-2012.html
Laura Saunders also has a blog post up (in addition to her previous article). Apparently she tried to get in touch with some of the people on the list and interview them, but failed. She did notice a few of the interesting names, like the former Queen of Yugoslavia and one of Israel’s new Supreme Court justices:
http://blogs.wsj.com/totalreturn/2012/08/02/the-renouncers-who-gave-up-u-s-citizenship-and-why/