Here’s a small extra piece of the puzzle for those of us trying to figure out exactly who gets listed in the
expat honour roll Federal Register “name-and-shame” list of ex-citizens. There are indeed some people who have to pay the exit tax but don’t have to have their names published: naturalised citizens who are stripped of their citizenship by U.S. courts, usually for naturalisation fraud or war crimes committed prior to naturalisation.
This post is not particularly useful to most Isaac Brock Society readers contemplating relinquishment or renunciation — unless you’re in need of some comic relief and would like to read about a mildly amusing drafting error in the exit tax statute.
Denaturalised citizens and the exit tax
From 1996 to 2008, the exit tax — defined solely in 26 USC § 877 — had no real definition of the date on which an ex-citizen should be treated as losing citizenship, or indeed what “loss of citizenship” meant at all. A court might or might not have treated a denaturalised ex-citizen as subject to the exit tax — after all, denaturalisation does not necessarily mean “expatriation” in the sense of departure from the United States.
However, after the new § 877A was enacted by the HEART Act of 2008, the situation changed — Congress apparently felt the need to be more precise about “date of relinquishment”, and among other changes, § 877A(g)(4) explicitly stated for the first time that denaturalisation indeed counts as relinquishment of citizenship for purposes of the exit tax. It says that, however, in a rather clumsy way:
(4) Relinquishment of citizenship
A citizen shall be treated as relinquishing his United States citizenship on the earliest of—
(A) the date the individual renounces his United States nationality before a diplomatic or consular officer of the United States …
(B) the date the individual furnishes to the United States Department of State a signed statement of voluntary relinquishment of United States nationality …
(C) the date the United States Department of State issues to the individual a certificate of loss of nationality, or
(D) the date a court of the United States cancels a naturalized citizen’s certificate of naturalization.
If Chuck Rangel (D-NY) and all his HEART Act co-sponsors had simply written “the individual” in Subparagraph (D), the statute would be entirely unambiguous; no individual who is not a naturalised citizen would be in possession of a certificate of naturalisation anyway. But instead, Subparagraph (D) refers to “a” naturalised citizen.
So say for example that John is “a citizen” who went to the consulate last week and whose relinquishment date we are trying to determine. Subparagraphs (A) through (C) state that John shall be treated as relinquishing U.S. citizenship on the date that John filled out some paperwork. However, Subparagraph (D) states that John shall be treated as relinquishing U.S. citizenship on the date that “a” naturalised citizen was denaturalised. Emma Goldman was “a” naturalised citizen whose certificate of naturalisation was cancelled in December 1919 — clearly earlier than any of the dates discussed in Subparagraphs (A) through (C). So there we have it: John’s relinquishment date is almost one century ago, before there was any exit tax.
All over the common law world, courts often interpret the word “a” quite generously for defendants, even where substitution by “the” might seem to better match the legislative intent. For one random example that was in the news recently, I refer you to Turbo Top Limited v Lee Cheuk-Yan, a case in which the Hong Kong High Court ruled that trade unionists indeed have the right to protest outside of any person’s workplace and not just their own workplace, in consequence of Trade Unions Ordinance § 46, passed in 1972 (hardly a pro-union or pro-demonstration period in Hong Kong history), which states:
Notwithstanding anything in this Ordinance, it shall be lawful for one or more persons, acting on their own behalf or on behalf of a registered trade union or of an individual employer or firm, in contemplation or furtherance of a trade dispute, to attend at or near a place where a person works or carries on business …
However, I have the feeling if you try this same argument in U.S. Tax Court, you’ll get yourself declared a frivolous litigant; the court will probably reject this reading of the statute in favour of a reading which actually produces tax revenue. So I merely mention this error as another example of the phenomenon which Daniel Moynihan noted back in 1996 with regards to the unenforced and probably-unenforceable Reed Amendment: laws actually written by angry Congresscritters themselves, rather than their lobbyists, are generally specimens of horrible draftsmanship.
Denaturalised citizens and the Quarterly Publication law
Though denaturalised citizens are apparently subject to the exit tax, 26 USC § 6039G(d) — which theoretically defines which names of ex-citizens Jack Lew should be printing in the Federal Register — oddly does not seem to require any federal agency to tell Treasury about denaturalised citizens. And of course, Treasury is only required to publish the names of ex-citizens with respect to whom they receive information.
(d) Information to be provided to Secretary
Notwithstanding any other provision of law—
(1) any Federal agency or court which collects (or is required to collect) the statement under subsection (a) shall provide to the Secretary—
(A) a copy of any such statement, and
(B) the name (and any other identifying information) of any individual refusing to comply with the provisions of subsection (a),
(2) the Secretary of State shall provide to the Secretary a copy of each certificate as to the loss of American nationality under section 358 of the Immigration and Nationality Act which is approved by the Secretary of State, and
(3) the Federal agency primarily responsible for administering the immigration laws shall provide to the Secretary the name of each lawful permanent resident of the United States (within the meaning of section 7701 (b)(6)) whose status as such has been revoked or has been administratively or judicially determined to have been abandoned.
The first two paragraphs certainly don’t catch denaturalised citizens. “The statement under subsection (a)” means a Form 8854; as mentioned above, denaturalised citizens are theoretically subject to the exit tax, but unless they actually file their exit tax paperwork, Mr. Secretary won’t receive any information about them under paragraph (1). Furthermore, I am not entirely clear whether State also issues Certificates of Loss of Nationality to denaturalised citizens, but under paragraph (2) above they are only required to provide Treasury with CLNs issued under INA § 358, i.e. those issued to persons who lost U.S. citizenship while in a foreign state.
That leaves paragraph (3), information about cancellation of green cards. As far as I understand, denaturalisation causes an ex-citizen to revert to whatever status he or she held before naturalisation — in almost all cases, except for those lucky few naturalised by private bill, that will mean permanent residence status. Denaturalisation is often but not always accompanied by deportation proceedings; however, the Supreme Court ruled in 1964 that a naturalised citizen later denaturalised could not be deported for crimes committed during the period in which he was deemed to be a citizen.
I’m not sure what that means for people who are denaturalised but not deported — do they remain in the U.S. as green card holders or under a stay of deportation? In any case, if their green cards were not cancelled, USCIS is under no obligation to tell Treasury about them. And just to add another wrinkle, we know that back in 2000 the Government Accountability Office explicitly stated:
INS provides annually to IRS a computer disc identifying individuals who gave up their residency permits (green cards). However, IRS does not use the data to track expatriates because the data do not distinguish former long-term residents from other former green card holders and generally do not include tax identification numbers.
It is unclear if this still holds true. In 2012, the Federal Register lists began to claim that “[f]or purposes of this listing, long-term residents, as defined in section 877(e)(2), are treated as if they were citizens of the United States who lost citizenship”. However, I have not actually been able to verify any case of a person giving up a green card and then appearing in the list.
No denaturalised citizen has ever shown up in the list
So, that’s what the law says, but as we all know, Treasury’s choice of which names to print in the Federal Register doesn’t seem to have anything to do with what the law says. So in order to verify my findings, I turned to Wikipedia. In addition to the list of former United States citizens who voluntarily relinquished citizenship, Wikipedia also maintains a list of denaturalised former citizens of the United States. Out of the forty-six people contained in the list who lost citizenship in 1996 or later, none who were denaturalised by court order actually show up in the Federal Register, whether or not they remained in the U.S. after their denaturalisation.
The only people in Wikipedia’s list who actually showed up in the Federal Register were alleged ex-Nazis Jakob Miling and Dmytro Sawchuk. However, as a bit of digging makes clear, neither was denaturalised after losing a court case; rather, both chose to head off the denaturalisation cases by leaving the U.S. and renouncing, Miling in the former Yugoslavia in 2003 and Sawchuk in Germany in 1999.
Granted, the names of denaturalised citizens usually do show up publicly in court rulings, but there’s no mandate for any government department to create a centralised list of them. Apparently, Congress considers American emigrants who voluntarily give up citizenship to naturalise in other countries or serve in their governments and armies to be more evil and despicable and worthy of public humiliation than marriage fraudsters and Nazi death camp guards. After all, at least those ex-Nazis did their level best to move to the Greatest Country on Earth™, while those traitorous emigrants voluntarily departed from it to “snuggle up to a gang of foreign brutes”.
Eric, that’s more good analysis by you of the mystery surrounding the quarterly Federal Register list. I doubt that any official explanation will ever be provided for how it is put together. That’s why it’s important to find out how many CLNs are actually being issued each quarter by the State Department.
Pingback: The Isaac Brock Society
No, denaturalized citizens in the US do NOT revert to green card status. They lose all status in the US once they are denaturalized, effectively becoming illegal immigrants if they remain on US soil.
What happens then depends on several factors. For one thing, there are two different ways someone can be denaturalized–through criminal and through civil proceedings. The criminal proceedings involve being charged with obtaining citizenship through fraud. Automatic denaturalization results from conviction, but the person would first need to serve their prison term for that and any other crimes before deportation would be carried out.
Deportation is not automatic either–it is a completely separate legal proceeding from denaturalization which the former citizen can challenge separately. Of course, given that the person is now an illegal immigrant, it may be difficult to challenge deportation. However, one way to challenge it might be that there is no country to deport the person to. If they relinquished foreign citizenship upon becoming a US citizen, they don’t automatically get that foreign citizenship back just because they have now lost US citizenship–so it becomes impossible to deport them as there is no country to deport them to.
If the person is wanted for crimes in a foreign country–such as has been the case with ex-Nazis in the past although such cases are now rare due to the age of the few surviving perpetrators–they might also be deported or extradited for prosecution to that country.
If the person is neither wanted for prosecution elsewhere nor a citizen elsewhere, they will be permitted to remain in the US as a stateless individual. In that case, I believe they need to report on their whereabouts regularly to DHS but are otherwise free to go about their lives. In such cases, they would certainly remain a US person for tax purposes as they are physically remaining on US soil.
Thanks for the correction. As you can tell I’m a bit hazy on most sections of the Immigration & Nationality Act besides good old 349. But in my defence, so is Congress, otherwise they would have noticed that 877A(g)(4)(D) has the potential to “exit tax” people who aren’t even leaving the country. After all, it specifies quite clearly: your “expatriation date” is the date you lose citizenship, even if you continue to be taxed as a U.S. Person for the rest of that year because they have nowhere to kick you out to.
Pingback: The Isaac Brock Society | Bill to strip Social Security from ex-Nazis who fled the U.S. won’t affect other American emigrants