Lagoon, a pre-1995 relinquisher, recently sought the opinion of three lawyers in the expatriation field, all of whom felt that it is not necessary for relinquishers of that era to file with IRS. Lagoon’s account first appeared as a comment on the Did you relinquish before February 6, 1995 thread, but due to its detail is worthy of a post of its own.
Lagoon writes:
More information about my consult with three lawyers. I am not comfortable posting their names without their permission. I can tell you how I found them though.
One lawyer is quoted on this site. I contacted him for a personal consultation and gave him the details of my case. The lawyer is very conversant with the issues related to relinquishment vs renunciation and the changes in tax law over time. We spoke about risk, and that the issues for relinquishers are like a double low probability combination. If I wanted certainty, the lawyer could, if I wanted to spend between $5-10,000 go forward to get an opinion letter from IRS. If I did that the first consult they would have with IRS would be on a no names basis, to ask questions about whether or not IRS would issue an opinion letter (or something to that effect, they are my lay person words). While I would like to do this, so that there could be something in writing from IRS on this matter, I really don’t have that kind of money to spend. However, going this route would give the ‘certainty’ that we are all seeking about the issues of concern related to the need to contact IRS after relinquishing.
The second lawyer was referred to me by an accounting firm here in Victoria BC where I live. When I took my elderly mom, who is a US citizen and landed immigrant to the accountant, they asked me about my own status. I later had a consult with them about my own affairs, no notes taken during the meeting. They will not take on clients in situations like mine unless the client has consulted with a tax lawyer. The law firm they recommended is in Seattle. The lawyer I spoke with in Seattle is one of the owners of the firm and she is dealing with people from all sorts of nationalities around the world on the issues discussed on this forum. She is the one who said the changes and differences between the state department and IRS differences in the date of determination of reliquishment are a legal theory matter. She essentially said the same thing as the first lawyer – I have a good case for relinquishment, and there should be no need to contact IRS.
The third lawyer is someone in Calgary. I googled to find someone who had spoken about FATCA and was a tax lawyer. Their advice during my initial consult was that I did need to clear taxes, and needed to file for 5 years etc. Upon later reflection, I came to appreciate that their advice was based on a ‘literal’ interpretation of existing law/regulations as they are written. While they acknowledged the evolution of these laws, they did not support my arguement that I had no obligation to the US on tax matters after becoming a Canadian citizen in 1985. It was their office that called me yesterday to say they had done further investigation on the matter, and that all I needed to do was to file for a CLN. They also told me the appointment process I used to book my appointment in Calgary was the wrong process. (Calgary and Vancouver use different processes for booking for relinquishment appointments – I have posted elsewhere on this site about these differences). I did not take detailed notes during the conversation, but I recall them saying they had talked to someone at IRS about the matter. Given they they have changed their advice to me, I am quite happy to go back and to confirm whether this was based on a conversation with IRS or something else. This law firm has several people who for years had worked with IRS.
So…if one had the resources, it seems that getting a good lawyer to go the route suggested by the first lawyer, that is getting an opinion letter from IRS, or at least a consult on a no-names basis, might be the way to go. However, I am not sure you’d get IRS to put something in writing.
So, given the 3 + hours of conversations I have now had with 3 lawyers, I am very comfortable in understanding that the form for advising on the consequence of relinquishment/renunciation is something that did not take into account the fact that so many people technically relinquished long ago – and are now only realizing that documentation of this relinquishment is something that is needed.
Hope this helps.
@all
amen to ” if you don’t believe you should be a US taxpayer, don’t sign up to be one!’
like i have said before…..my wife and i have made the decision based on our last encounter at the border with me being questioned about why i was traveling with a canadian passport and being told that when we reach our destination to go to the post office and apply for a us passport….that we have made the decision to never go to the states again….it was not a decision taken lightly as we do love vacationing along the west coast of the states but the potential problems of getting sucked into the system far out weigh the return on our enjoyment of the west coast beaches
the less chances we give the us gov’t to know who we are the less they will know about us and if it means no travel to the us of a…..so be it
Yup! I concur. Not signing up for my own summary trial, conviction and execution, thank you very much!
It seems to me that the question of what to do depends largely on the age and and life circumstances of the person.
Younger people – If they can make a clean break without substantial cost, renouncing makes sense and getting the CLN makes sense even it means some tax compliance. They have little to lose. Furthermore, they will have freedom to live a normal productive life.
Older people – After a lifetime of saving for retirement they have everything to lose.
So, it’s important to not generalize here.
@ USCitizenAbroad
while i totaly understand what you are saying about generalizing i have a hard time understanding why anyone would come forward with the potential penalities hanging over their heads.
as it stands right now canada has not signed the iga with the us so until the gov’t of canada makes it next move to my mind there is nothing left to do but not give the us any possible information that they can come after you for at a later date. unless like you point out for a younger person that is able to make a clean break at little or no cost to them.
my situation is such that while i myself am not well off i am involved (signatory on their accounts) with 2 not for profit entities that each hold well over the $50,000 threshold in their bank accounts and i have no desire to see those groups potentialy impacted by the irs.
like i have said in other posts according to my accountat he guesstimates it would take about $45,000 in fines and fee’s for me to become compliant and this is before the 2 above mentioned entities are brought into the picture.
for us older people (who would have thought i am considered older) who are well into our lives this wrinkle the us gov’t has lobbed us came out of left field and it effects us greatly. i am not willing to roll the dice every time i cross the border that will this be or will this not be the time that i get ushered into the little room and asked to disclose personal information to a gov’t i want nothing to do with but can not afford to break free from.
@Metteleman
Agree with you. Again the point I am making is this:
1. We don’t know how this is going to play out long run.
2. If somebody is young enough, lots of life career ahead of them, few assets, little income which equates to renouncing at little cost:
Why not renounce so that this is over and done with. The young person can then go forward in life, free to live, invest, love and be a normal person.
Here is the definition of “aging” for a U.S. person abroad:
“The gradual increase of your IRS penalty base, through increased earnings, assets and deemed awareness of Form Crime”.
I would advise almost ANY young U.S. person abroad to renounce. In fact, for a young person, renouncing U.S. citizenship is the single biggest and best investment they can make in their futures.
I recognize that is my opinion, and I recognize that it’s not shared by all, but there it is.
The exception might be for those who were born dual citizens and are not subject to the Exit Tax. But even then, they are still subject to the filing requirements and Form Crime penalties.
@ USCitizenAbroad says
absoutly 110% agree that for a young person in that situation run don’t walk to the nearest consulate to renounce even if it means having to borrow the $450.
It occurs to me that if you get a FATCA round-up letter from a financial institution, because of your USA birthplace, then the IGA requires the financial institution to obtain EITHER a certificate of loss of nationality OR a self-certification WITH and explanation of why there is no certificate of loss of nationality. You then unequivocably state that you swore an oath to Her Majesty with intent to lose USA citizenship. Be sure to do something with this letter you write, like get it notarised and copied and make the banksters keep a copy, so you are on record now about what your intention was in the past.
Another approach: Using your Canadian passport, apply for some type of tourist visa to enter the USA. When they catch your USA birth place they tell you that you are still a U.S.A. citizen. State Department policy is, they ask you what was your intention when you made the oath to Her Majesty and you tell them you intended to lose U.S.A. citizenship. By issuing you a tourist visa, even one you never use, the State Department goes on record calling you a non-citizen, since U.S.A. citizens enter without a visa. And the State Department keeps a record of it.