I’m making this morning’s comments to another thread part of this separate post so more of those affected will realize there needs to be certainty for them about this issue.
From USCitizenAbroad, and I agree:
There is ONLY one clear answer from the USG that is acceptable and that answer is:
People born abroad are NOT automatically U.S. citizens.
This would clarify the position of the USG.
If they say:
People born abroad ARE automatically U.S. citizens – that is their position but it is (in my opinion) as a matter of law wrong. Eventually the validity of their position will be tested in court.
Now, what is more important than the clear position of the USG, is that the persons affected by this take a clear position on their own.
That clear position: I am not a US citizen and therefore NOT a member of their “Tax, form and penalty club”.
Finally, I would be very surprised if the Consulate writes back and says people born abroad are not automatically U.S. citizens.
Some people make things happen.
Some people watch things happen.
Some people ask “What happened”
By featuring this prominently it will force the issue. This is extremely important for FATCA IGAs (if they happen).
But if the IGAs don’t happen, the banks will probably enter into agreements with the IRS. Now, the question becomes:
Who are they looking for? If it is U.S. citizens then the ONLY question that is relevant is:
Were you born or naturalized in the U.S.?
If the answer is Yes, then the logical next question should be:
Have you relinquished your U.S. citizenship?
There is no other question that is even relevant.
We need keep a very close eye on this.
Now, of course IF THEY ASK THE ONLY RELEVANT QUESTION, the banks are moving closer and closer to HUMAN RIGHTS VIOLATIONS.
This is as my frustration abounds. I still have not gotten a reply from Sylvia D. Johnson from the US Embassy, Ottawa.
Nor have my comments to the “The Accidental US Citizen” blog gotten out of moderation: Comments Still Awaiting Moderation — Flott & Co. PC — The Accidental US Citizen.
July 6, 2013 at 4:24 pm
The problem is that they need to be very careful about what they say. You may not get a response. In the interim I believe that if you were NOT born in the U.S. and you have never claimed U.S. citizenship (that you may have had a right to) that you:
Lie low. Take the position you are NOT a U.S. citizen.
July 6, 2013 at 4:45 pm
I certainly will do both — lie low and take the position my son is NOT a US citizen when and if I’m asked as shown here: http://isaacbrocksociety.ca/fatca/comment-page-29/#comment-422408 what my relationship is to the person for whom I hold a Registered Disability Savings Plan (RDSP).
“Identify relationships between one account holder to another to ensure that individuals who are subject to FATCA guidelines are also identified regarding the relationships to other customers as well.”
I would like to have something very definitive from the USG for the possible conversation on that day. But if not, in my back pocket I will have your analysis, which I absolutely believe is what should be the case.
All who are affected here need to understand what you have given us “Birth abroad – Your Get Out of Jail Free Card – Don’t let the US increase it’s tax/penalty base”
The move after that is theirs — and the move after whatever theirs will be will be mine. I think I’ll be ready.
July 7, 2013 at 12:56 am
@calgary411, I’ve been waiting over a week now for a letter from the US which states that a check to me is legit so that I can cash it, and that’s not even the US government! If the form-filing-nation can’t even do something as logical, natural and simple as that, then you’ll never get a response.
July 7, 2013 at 1:41 am
Calgary, they really can’t give you a written response b/c it would become part of a paper trail record that could work against them in future. But, if I were you, I would just operate under the assumption that your son needed to present himself at a consulate and present evidence that supported his claim to USC so it could be evaluated and a judgement made, and since the USG requires that he do this himself, and be aware of what he is claiming, technically, his right is a non-issue. He can’t claim something he can’t understand anymore than he could renounce it, right? You aren’t allowed to do either for him, so if the USG wants to come after him, first they have to mount a case to prove he is a citizen in the first, which I really doubt they would bother with, nd if a financial institution wants to know his status, you can simply – and honestly really – say that he isn’t a USC. He is a Canadian born and raised.
imo, no consulate is going to touch your query with a ten foot pole. They know what a slippery slope it is because they can’t really go around and prove case by case that this or that child born in another country to an expat meets the criteria for citizenship, and they wouldn’t want this particular loophole becoming widely known. Their silence is – in a way – your answer and probably means you’ve found the Achilles Heel on their Trojan Horse.
Not that Lisa! says
July 7, 2013 at 3:32 am
@calgary411 – I would like to second what YogaGirl is saying and illustrate it with an example from my own experience.
Italy uses jus sanguinis in determining citizenship. Last year I found out that because my father was born before my Italian grandfather became a US citizen, I have been an Italian citizen since birth, even though my father never claimed his Italian citizenship. However, I must now prove this to the Italian authorities and doing so requires producing lots of documents and presenting them to the Italian authorities. I have met with the Italian consul and while my line of descent is clear, without all of the proper documentation, I cannot get official recognition that I am Italian, e.g., an Italian passport. Before I prove my claim to citizenship, I cannot exercise the rights that I am entitled to as an Italian.
Italy also requires Italians to travel into Italy on their Italian passport, but no one at the border is asking me if my father or grandfather was Italian.
As you have renounced, if you travel to the US with your son, you can tell the border guards the truth, that you are no longer American and that your son is fully Canadian. It seems unlikely that a border guard will start asking questions about when you renounced and when your son was born.
As for the tax issue, first, there is no official record/proof of your son as being American. Second, in my OVDI case, the IRS spent thousands of dollars in order for me to pay an extra $133 a year over 8 years. They know, as well as I do, that it was a waste of their time and money as well as a waste of my time and money.
Your son will likely owe something similar, or nothing at all. It is just not worth it to them to go after these small amounts of money. As further proof, I offer that when I was a self-filer, one year, I unknowingly made a very obvious declaration mistake of about $300 on my return. When I redid the returns for OVDI, my accountant advised me what it was and told me that it was so obvious to him on first glance that he was surprised that I was not contacted about it by the IRS. We assumed that the IRS knew and calculated that the hours spent to correct it would not have been worth the few dollars of tax they might have received.
Your anger at not being allowed to renounce on behalf of your son is fully justified, but I think you can let go of some of the fear. You have done everything to protect yourself and your family. The reality is that your son has not been able to document his claim to US citizenship and the risk the IRS will target him as a tax evader is low. I do not think there is any law requiring you as his guardian to document his citizenship, but I do not know. Again, your indignation is justified, but don’t fall into the fear trap the IRS has been aggressively setting since 2009 for Americans abroad. While, sadly, there is no certainty, the realities of your situation should be focused upon.
July 7, 2013 at 8:51 am
Thanks, YogaGirl and Not that Lisa,
I will not lose (but it doesn’t consume me so) my anger, for my son and for others like him who will be faced with this and — quite frankly what all “Accidental Americans” — live with now. It is not the border guards I fear and I likely will NOT be travelling across the border with my son for that and the fact that I have no desire to go there again or to spend any $$ there, except should I be needed in a time of health crisis of one of my remaining US siblings. I don’t want the risk of facing a confrontation at the border when I’m travelling with my son — alone I can now handle but not with them pointing a finger at him. They have won in barring our travel to the US for whatever reason, which we as a family do with more risk than any other family (with a non-US indicia) travelling to the US from Canada.
No, my fear is what I will be asked, as well as other Parents, Guardians, Trustees, by our own Canadian banks. What will it take to make the business of me and my family who are their Canadian clients more important than what they must certify to the US as they act as the offshore IRS agent? I really don’t know.
It does make my determination even stronger that I am ignored and don’t get an answer. Do they fear a highlighting of their human rights record, this aspect?
The US, besides being a bully, hides in not giving me and others a definite determination — an answer to our very simple question? Why are they giving incorrect information to anyone that comes to a US consulate or embassy, if it is incorrect? Why can they not let us know exactly what we must deal with? Why must we guess? Why must we have to think of work-arounds to unjust law? It appears more of US fear-mongering in a less obvious form.
The lion afraid of the mouse. Perhaps the US really does have a fear of this little old Canadian grandma, like the ones the former US Ambassador to Canada, David Jacobson, said the US was not looking for.
So you could have a situation where some 70-year-old grandma:
was born in the US;
moved back to Canada as a young child;
never earned any money in the US;
has no assets in the US; and
dutifully paid all of her taxes in Canada.
She didn’t file a US return because she didn’t think she had to. And because she didn’t owe any US taxes. Nonetheless, grandma could be theoretically subject to serious penalties. To my knowledge we have never gone after a grandma in those circumstances.
But there has been a lot of press about this lately and people are worried that we will come after them.
When I read all of this I was concerned. So last week I called the Commissioner of the United States Internal Revenue Service to see what we could do. I explained the problem to him.
The result is that both he and I are sympathetic to the concerns. We are going to work together to see if we can’t find a way to accommodate grandma — and others — here in Canada. But we have to figure out a way to do it without letting the person who is trying to evade taxes in the Cayman Islands off the hook.
The US government and all of its departments are spineless bullies in so many ways. Or they would “stand up like a man” — or the strong democratic country they portray (by brainwashing) they are. Or, why won’t they just change their law to resident-based taxation, which would solve so much collateral damage? I don’t know but in my belaboured quest for simple common sense, I will continue to wonder and continue to lie low, my work-around.
And another of my submissions to the Government of Canada regarding their negotiations with the US in signing an IGA for FATCA:
Senior Chief, International Taxation and Special Projects / Chef principal, Section de la Fiscalité international et projets spéciaux
Business Income Tax Division / Division de l’impôt des entreprises
Department of Finance / Ministère des Finances
Ottawa, Canada K1A 0G5
Telephone / Téléphone (613) 992-2980 Facsimile / Télécopieur (613) 943-2486 Teletypewriter / Téléimprimeur (613) 995-1455
Government of Canada / Gouvernement du Canada