Renouncing U.S. Citizenship – Second thoughts
You better be careful what you wish for, you must might get it!
The internet is abuzz with discussion about U.S. citizens wishing to expatriate.
So, far the comments have been dominated by:
– those who desire to to renounce U.S. citizenship
– those who are desperate to demonstrate that they lost their U.S. citizenship when they became citizens of another country
– those who are basking in the glow of knowing they are no longer U.S. citizens
But, there is anther side. Are there people who renounced U.S. citizenship and are now regretting it?
I received the following message from somebody who recently renounced U.S. citizenship:
I renounced US citizenship for a variety of reasons (a year ago) and am feeling more and more like did I make a mistake. I think things are horrible in the US but it seems so hard to find a place that is both open to immigrants and that offers me some of the opportunity I definitely experienced in the US. My family wants me to go back so much, but I really am opposed to so much of what the US is doing both in the US and without. But I am really struggling with doubts and fighting depression over my situation.
Any advice for building a support network? Thank you so much.
What are your thoughts on this? What advice would you give this person? Should there be a support group for those who have renounced U.S. citizenship? Many believe that renouncing U.S. citizenship will be the end of their problems. Will it be the beginning of a new set of problems?
Your thoughts?
@Swisspinoy, thanks for your kind words. If I had to make a bet, I’d wager that the US will continue to allow former citizens to visit because it could create diplomatic incidents otherwise. They also need us to be able to spend money there to help bolster their economies, whether it be Disney World or a vacation home.
I wouldn’t even be surprised if they eventually try to lure people back by more frequently offering residence visas. They could even eventually offer people the right to resume their citizenship under certain conditions. They will probably start off with the stick but ultimately switch to the carrot to, especially if they reform to residence based taxation.
I also agree that no matter what happens, that it’s a natural part of life to have regrets about something. We can’t have it all but we can learn to feel gratitude for what we have.
What I find most fascinating about this lively discussion is that despite a large and very diverse group of participants, so far as I can tell not a single one of us was motivated by tax avoidance when we expatriated. Yet every single one of us are already being vilified, demonized and scapegoated as “tax cheats” and “unpatriotic traitors”. Those of us who are “covered” are also literally being treated like criminals, despite having complied with both U.S. Immigration and Tax laws to the letter.
Meanwhile, true criminals who violated U.S. immigration law to enter the USA illegally and work there for decades without paying a penny in taxes are about to be offered immunity and a fast-track to citizenship.
Go figure.
@monalisa and similar comments from others
What you may not realize is that Congress doesn’t have to agree this EX-PATRIOT nonsense is a good idea. It’s already clear that the bill did not get support in its standalone form.
But Schumer, Casey and Reed will eventually be successful in quietly slipping it into a larger bill. When that happens, no congressman in his right mind is going to expend political capital trying to get it removed – there’s just no incentive. And once it passes, there will similarly be no political incentive to repeal it. The fact it makes no sense and actually imposes economic hardship on USA (by incenting expatriates to invest their savings elsewhere) will never get anyone’s attention.
Once it passes, which I’m sure it eventually will, our only hope will be to have it overturned as unconstitutional by the court system. That would take several years at bare minimum, and such a case might never be heard by the higher courts.
I welcome enlightenment if I’m missing something, but so far as I can tell it’s basically inevitable that covered expatriates will be permanently barred from ever returning to visit the USA. I have my home in the USA on the market for precisely that reason. The only hope we have would be if Schumer, Casey and Reed were not re-elected in the 2014 elections. But with Schumer up for party leadership, that seems extraordinarily unlikely.
@PoliticalXpat
“The only hope we have would be if Schumer, Casey and Reed were not re-elected in the 2014 elections.”
That’s exactly the point. Those US expats who can vote are spread so thin throughout the voting populace that they are simply off the the radar for all candidates.
I still think that FATCA was a mistake, and an “honest” one. Levin and Co were really intending to target “rich guys exiting the US with mountains of cash made in America, and in so doing stealing from the US economy.”
It’s just that 1) they couldn’t care less about the “collateral damage” (i.e. us), 2) going back on that would make them look bad in the eyes of some voters (the stupid “patriotic” crowd) and 3) correcting the “collateral damage” will not help them win any elections. It is in their personal interest to portray all expats as “tax cheats”, even those like me who never owed any. That earns more votes than they lose.
It was that understanding that moved me to renounce. Almost nobody* in the US gives a damn, except (some of) my relatives and friends. That made me very sad..and still does…because its so cynical. And such a disappointment after all they taught me in school. They said “with liberty and justice for all”, but it ain’t true.
*There are some exceptions, even at the IRS, but you have to approach them at a personal level.
@money, We have this “promise” from Finance Minister James Flaherty:
As published by CARP, June 2012:
Minister Flaherty: Canada continues to press for fair tax deal with United States
Faced with the knowledge they have an obligation to file U.S. tax returns (even if they most often do not actually owe any U.S. taxes) and FBARs, we appreciate that many dual citizens want to fulfill that obligation. But we also understand that the threat of large fines for simply failing to file a return they were never aware they had to file has become a frightening prospect causing unnecessary stress and fear among many honest, hardworking individuals.
As such, we have called on the U.S. government to look upon those individuals in Canada with leniency.
I am happy to report the U.S. government has listened to our concerns and the concerns of Canadians.
Last December, the IRS released new guidelines for U.S. citizens living in Canada and other countries for their U.S. tax return and FBAR filing requirements.
According to the guidelines, U.S. taxpayers who owe no U.S. tax are not subject to any penalties for a failure to file a U.S. tax return. In the case of a failure to file an FBAR, where the IRS determines that it was due to reasonable cause, there is no penalty. For more information, visit the IRS website.
We have also been clear that penalties imposed by the IRS under FBAR will not be collected by the Canada Revenue Agency (CRA) on behalf of the IRS.
While the Canada‑United States Income Tax Convention contains a provision that allows for the collection of taxes imposed by another country, this does not apply to penalties imposed under laws that impose only a reporting requirement.
Furthermore, our Government has been clear that CRA does not and will not collect the U.S. tax liability of a Canadian citizen if the individual was a Canadian citizen at the time (whether or not the individual was also a U.S. citizen at that time).
Many individuals are also concerned that the investment or interest income earned in their Canadian Tax-Free Savings Accounts (TFSAs) and Registered Disability Savings Plans (RDSPs) may be subject to U.S. tax.
While TFSAs and RDSPs – both introduced by our Government in recent years – do not yet receive an exemption from U.S. income tax under the existing Canada-United States Income Tax Convention, the Government will argue for such an exemption as the Convention is renegotiated with the United States.
Another piece of U.S. legislation causing concern is FATCA, which is proposed to come into force on January 1, 2014.
To be clear, Canada respects the sovereign right of the U.S. to determine its own tax laws and combat tax evasion. However, Canada is not a tax haven and people do not flock to Canada to avoid paying taxes. In addition, we have existing ways of addressing these issues with the U.S. through the exchange of information provisions of our bilateral Income Tax Convention.
That’s why the Government is actively seeking a solution with the U.S. government that both countries will find agreeable. The U.S. has been receptive to the concerns we have raised. This is reflected in the U.S.’s openness to alternative approaches that will minimize the red tape burden, minimize conflicts with privacy and other laws, and improve collaboration between governments.
We continue to work with our U.S. counterparts towards a fair and reasonable solution that will address the concerns of Canadians and protect their interests.
Jim Flaherty
Minister of Finance of Canada
@Political expat, it was because I’d have been stuck with having to pay an accountant at least $2000 and possibly as much as $5000 to file a +100 page tax return each year for the rest of my life. No thanks. I probably wouldn’t have minded so much if I were wealthy or earned a good salary, but am only part-time and on below average wages so I realistically couldn’t afford the compliance costs.
I believe that US citizenship is being priced out of the market for average working people. We certainly aren’t all millionaire’s here abroad!!!
@PoliticalXpat, I stumbled upon an article today while looking for family history and I found a mention of myself instead. I’ve been thinking about translating that part, so I’ll translate it here in response to your comment.
The article is titled “Globale Jagd mit Schweizer Daten” (global hunt with Swiss data), written by JOHN DYER in tagblatt.ch on 2.9.2013. The article can be purchased from swissdox.ch. Here’s my translation:
So, if I understood that correctly, the US Department of Justice is expecting more renunciations in response to national origin discrimination resulting from the hunt for tax cheats.
The more I read this thread and think about Mona Lisa’s comparison of the U.S. being almost a religion the more it seems like a two year long “Breaking Amish” scenario. Will we eventually be completely shunned for the “crime” of choosing not to be one of them? “Breaking American” Not to make light but, the steps involved in disconnecting from what you’ve been taught your whole life to find that reality doesn’t quite match up with reality, puts people through similar steps. Except not even religions have such paperwork as what we have to deal with. Mona Lisa, a religion is a very good way to describe what it is.
@monalisa1776
And when something is priced out of the market it loses value. The US government, not its citizens, is responsible for devaluing US citizenship.
@monalisa1776 : your comments September 2, 2013 at 5:02 pm
…… fear that the US is going to want retribution; if they can’t hit us with fines, I could see them making it much more difficult to visit the States [to see friends or care for ageing parents] which is ……………. an even crueler punishment.
Congress [could] pass punitive legislation to retroactively restore our US personhood, at least for tax purposes. At the very least, I could see them passing laws so that former US Persons are more easily entrapped back into US taxation.
[the conclusion that] I could no longer realistically afford to hold both passports……..was ………….a heartbreaking decision. .
@monalisa1776 my heart is broken upon reading your post and my fear grows. whilst I cant totally see that they would cancel visa waiver status for Brits (well maybe they would since UK Parliament voted to not go into Syria);……..I agree with your pessimistic assessment of trend of US legislation (s 1233 of the Immigration Act current stalled in Congress has been transferred to the renewal of the PATRIOT act (correct me if wrong))
The above is why we spent 40% of life savings to comeinto compliance …..to avoid me being covered Expatriot through tax test. I have ageing parents in US and several good friends it would kill me to not be able to go Stateside.
I thank all Brockers for “being there”…………. you are “candles in the wind of FATCA”. STRENGTH AND HONOUR FOLKS! 🙂
@Crystal, as you already know, I certainly feel for all you’ve been through!!
@Monalisa1776
@CrystalLondon
The reason for renouncing citizenship is that by renouncing citizenship the U.S. has no more jurisdiction over you. That’s it, by renouncing your citizenship, you are like the slaves using the “freedom crossing” at Lewiston, New York to escape into Canada. You are like the draft dodgers escaping to Canada in the 60s and 70s. You are like the Loyalists who were forced to leave the U.S. to avoid persecution at the hands of the Patriots.
http://historiclewiston.org/freedomcrossing.html
You are just one more of a long line of people who have escaped U.S. tyranny.
Renunciation means – That’s it jurisdiction/ownership over you done.
They can’t reassert jurisdiction even if they wanted to. Why not? U.S. law is not the issue. This would be governed by international which prohibits slavery.
Not gonna happen.
Of course, you need the right attitude which is:
I am a free person and NOT a U.S. citizen.
The extent to which the U.S. assault on its citizens abroad and subsequent renunciations affects people, seems to be related to the number of other difficulties people are experiencing.
I don’t know whether this is coincidence or not, but many of the people I have met who have been badly damaged by all of this are people who who experiencing trauma in other areas too. Health, marriage, etc. U.S. personhood seems to be the straw breaking many people’s backs.
Also, as PoliticalExpat points out:
The people who are the most affected by all of this seem to be the ones who want most to be in compliance with the law.
It’s as though U.S. law and policy is designed to:
– punish those who are the most honest and compliant with the law; and
– reward those who are not compliant with the law.
Could the latter be a “professional courtesy” extended by the U.S. government?
There is nothing worse in the world than attempting to be a “life compliant” U.S. citizen abroad. Just can’t be done.
@USCabroad, it almost seems that way, as though their system is set up to protect big-money interests who lobby Congress for special treatment. We have no effective representation so don’t matter one iota to them. They’d tell us to quit whining.
@SwissPinoy: “The US department of justice expects that the tax agreement will increase the trend of similar statements around the world.”
Incredible! So, they have anticipated that many won’t be able to keep citizenship and that it is nothing to do with taxes for those people? How low can they go?
@USCitizenAbroad: Yes, if you try to do what is right, you’re punished for it and the law is set up that way. Then again, if you participate in mortgage fraud on a massive scale and you are a major bank you get a big fat check to carry on. Same goes if you are Timmy Geither as well as many others who cheat on their taxes in the power circle of the U.S. Don’t be a minnow and a U.S.C.
Laws, like locks, keep honest men honest.
When making a decision always remember that no matter what happens later, ” I made the best decision with the information I had at the time”, repeat as often as necessary to yourself & live with it. People that have renounced or relinquished & are now second guessing themselves, please think about what thoughts would probably have been running through your head if you had not done so. Worries about filing, costs of filing, invasion of privacy, penalties for mistakes, the disrespect & villification from the USG, etc. Obviously there were concerns that caused you to renounce in the first place & you may not be happy now but I doubt very much that you would have been happy had you not renounced. Kind of a lose lose proposition for those that did not really want to give up US citizenship.
I understand the feeling of loss. But for me living as a Canadian my whole life, I anticipate nothing but relief when I can renounce next year. 3 celebrations. One when I renounce, one when I get my CLN & one when I finish the very last paperwork. Getting compliant has been a huge cost for me and I count it all as the price for my freedom. My freedom is worth a lot to me. But make no mistake, the US will be paying a high price as well for their treatment of Americans abroad and inflicting FATCA on the world and the ramifications are yet to be felt there.
“The extent to which the U.S. assault on its citizens abroad and subsequent renunciations affects people, seems to be related to the number of other difficulties people are experiencing.” USCitizenAbroad you have a great diatribes but also this whole thread is so vibrant. Maybe Victoria can organize comments and put into a pamphlet which unfortunately will get almost no readership in the USA.
I went go get my hair cut today in Vancouver BC and even my hairdresser has lots of stories about Americans with difficulties in Canada. Only your hairdresser knows for sure.
Calgary411 – It’s helpful to newcomers to exhume the Flaherty pronouncement. Maybe avoid calling what he said a ” “promise” “? It was what was the case at the time. That’s all. From day one, I took his reassurance as nothing more than Mr. Minister having directed some flunky to legwork the legalities and emit a rehash. Nothing to appreciate there. About like copying a gradeschool essay from the encyclopedia.
From American Citizens Abroad:
If you have had a bank account closed, have been denied banking services or are just having problems maintaining overseas financial relationships due to FATCA, CNN reporter Sophia Yan would like to hear from you.
Sophia Yan
CNNMoney
+852 3128 3247
+852 9170 9285
@sophia_yan
I have bought a place. I may even consider renting it out. You always have these second thoughts.
On Flattery letter it came from Finance Department the important thing to me is that it clearly states DBAR is off the table completely.
To Dash
I found your information the most useful I have received. I hope what some people have said to you has not pissed you off and that you return to this web sites.
@ money
What is FBAR?
@Kermitzil
Just wanted to offer you my best wishes for the great event on Friday – a truly significant day in your life and a brand new start. You are so lucky!
Is there any way you could tweet us your thoughts while it is going on? How you are feeling, what they are so saying, general commentary on the metamorphosis from U.S. citizen to “Free Man”!
P.S. Do tell. What secrets did your hairdresser share?
@Kermitzii
I think we have the same hairdresser.
@USCitizenAbroad
Cell phones not allowed, but we can send good vibes!