The venue and time for the “Solving US Citizenship Problems” Information Session have changed. This program will take place at:

The Westin Grand Hotel – Symphony Room (banquet hall)
433 Robson St. (between Richards and Homer – 2 Blocks NORTH of original location)
Vancouver, British Columbia V6B 6L9
Time: 1:30 – 4:30 pm
Donation $20 (to cover costs) payable at the door

In order to keep as much information as possible accessible in one place, it makes sense to expand this thread to include new information here rather than create a new post. Please feel free to share your thoughts, ideas and comments here. If you need any help, please email me as discussed previously. (Trishia)

Here is the first set of notes passed on from today’s program, courtesy of NoName.

Nuggets extracted from one take-away of John Richardson presentation in Vancouver on February 22. No guarantees.

Same demographic (persons in 50s and 60s) prevails in five sessions over past six weeks.

Crossing the border should not become a problem, with or without US passport. Like FATCA, border crossing is all about the money, and the US wants the money.

The worst way of doing the worst thing is to engage with a US-based professional.

There is only relinquishment of US citizenship. Renunciation is nothing but one specific form.

Part two of the Afroyim Supreme Court decision is that the US cannot force you out of citizenship, but that is what they are doing now.

The primary value of US citizenship to residents outside its borders is right of access to the United States.

Repeated recommendations of The Sovereign Individual by James Dale Davidson (1997).

Never speak of “backdated CLN” — that phrase expresses belief that US citizenship is still held.

Passage of time as US citizen abroad equals ongoing increase of US tax liabilities and penalties.

Do not under any circumstances ask a US consulate if you are a US citizen.

Expansion of “US person”-based taxation will come. FATCA allows United States to define “US persons” however it wants on an ongoing basis.

US taxation practice views “foreign” status as open invitation to assign extraordinary penalty.

For a person living outside the United States, tax compliance cripples ability to do financial planning.

Perjury on 8854 means deliberate falsification. No perjury if incorrectness limited to confusion, mistakes, etc.

Two reasons for coming into tax compliance with US: renunciation, desire to remain US citizen. Those who plan to remain a US citizen should become compliant.

Re 8854 tests for “covered” status: there is no relationship between income test and net worth test. Net worth test is punitive because crossing of $2 M threshold subjects all assets to expatriation tax.

Start with draft of 8854 to assess tax situation, not with five years of backfiling.

Richardson describes a case for relinquishment of US citizenship prior to 4 June 2004 as “holy grail.”

Two types of person abroad freely retain US citizenship: the poor, the rich.

Paying tax on unrealized capital gain offers one major tactic for reducing net worth.

Many people should be able to acquire enough competence to file their own five-years-of-compliance returns.

Updating this post on Friday, March 28 with notes submitted by Canoe.
First set is a topics summary.

Vancouver Information Session, February 22, 2014

Why do these sessions? To enable participants to feel what this is all about, so we can communicate [e.g., with a U.S. consulate and others].

Demographic of the room – Younger people should also attend; they need this information more than we do.

Fear, anxiety and other emotions – John’s recommendation is to calm down, don’t panic; includes don’t worry about the border (they want our money).

Think about how the situation got the way it is: With the U.S., everything has to be complicated. Most Americans abroad haven’t filed U.S. taxes – didn’t know about them. The media, lawyers, and accountants cause anxiety. Don’t pay attention to the media – [most] don’t have a clue. The worst thing to do [or one of the worst things] is to call a lawyer (especially one in the U.S.) without having an idea where you are going/want to go.

History of U.S. citizenship and taxation (including changes in U.S. citizenship and tax law) – this is vital to understanding where you are now. Discussion includes the expatriating acts that applied at different times; the concept of “intent” to lose U.S. citizenship (or not) when becoming a citizen of another country.

Jimmy Carter was the only U.S. president who actually valued Americans abroad. Senator George McGovern [D-SD, from 1962-1980]: Study that considered Americans abroad a “national asset”. (!)

Citizenship
American culture: You can learn a lot from movies and bumper stickers. Movie “12 Years a Slave” – concept of equal citizenship. 14th Amendment to the U.S. Constitution – Everyone born or naturalized in the U.S. is a U.S. citizen.

Need to distinguish between good American people [homelanders] versus the government. Without the experience of seeing the U.S. from the outside, experiencing what U.S. citizens abroad experience, [homelanders] cannot understand the situation of Americans/U.S. persons abroad; they don’t/can’t get it.

Regarding intent to retain or lose U.S. citizenship, ask yourself: What did you do? When did you do it? What did the [U.S. citizenship] law of the time say? You have to look at the laws at the time you did what you did. Use of a U.S. passport doesn’t necessarily convey a person’s intent to retain their U.S. citizenship – e.g., “just obeying orders of a border guard”. A person can still relinquish after using a U.S. passport.

Countries have the right to make laws inside their borders. For the U.S. to deem someone born outside of the U.S. – this is an extraterritorial application of the law. (So why not just deem the whole world a U.S. citizen?) Doubt they can deem a person born abroad a U.S. citizen. However, if you registered the child’s birth, then you have accepted the U.S.’s invitation. (Note: The 14th Amendment definition doesn’t cover people born outside of the U.S. to a U.S. citizen parent.)

A book worth reading (especially the first two chapters): The Sovereign Individual: Mastering the Transition to the Information Age, by James Dale Davidson, 1999. He predicted the current situation regarding complexities of citizenship in an information age.

Certificate of Loss of Nationality (CLN): If a person became a Canadian citizen years ago, they may – or may not – want to get a CLN. If you are not a U.S. citizen or U.S. person, you don’t have to worry about U.S. taxes/filing.

Language is very important: Saying [I want to] “renounce” means that you are NOW a U.S. citizen. Then, tell them: Hi. I’m here to renounce. You have the right to do this. But if you relinquished years ago, inform them, tell them: Hi. I relinquished [past tense] in X year.

You have to take care of yourself. Renouncing may not be the best thing to do – for example, if your job prospects are better in the U.S. On the other hand: Aging – As a U.S. citizen abroad, the definition of aging is “a gradual and consistent acquisition of tax liabilities and penalties”. Young people need to hear and understand this message. You have to decipher your own situation. There is no one size fits all.

Citizenship-based taxation (CBT): U.S. citizenship = Taxation. U.S. people admit this when they make comments like, “More people are coming into the U.S., so, what does it matter if expats leave?”

CBT is really U.S. person-based taxation. The U.S. defines who is a “U.S. person”, and the definition can change. Includes U.S. citizen, green card-holder, a person with substantial presence in the U.S. The U.S. will expand this definition over time.

Wherever you, as a “U.S. person”, are in the world, you pay taxes to the U.S.: On every cent; according to the exact same rules as apply to U.S. residents; and all “foreign” forms of saving, pensions, etc., are penalized. The U.S. says that your primary tax obligation is to the U.S. The U.S. doesn’t like anything [it considers] “foreign”. The word “foreign” is followed by “penalty”. A “penalty” starts at $10,000.

Taxation is about: (1) Paying for services. And Americans abroad get no services from the U.S. (2) A tool of social policy – in Canada, to promote responsible savings and retirement planning. Examples: Canadians often consider their house as part of their retirement planning (i.e., downsize, sell, use funds for retirement). This is a taxable capital gain under U.S. tax law. Also, RRSP for retirement planning.

Huge problems for Americans abroad: What for Canadians are sacred instruments for retirement planning (e.g., house, RRSP, TFSA), are sacred instruments of tax evasion for the U.S. Another example: “foreign corporations”. In the view of the U.S.: The whole life of a U.S. citizen abroad = an endless scheme of tax evasion.

Special rules govern marriages between American citizens and “alien” spouses. Example of gift tax rules. Also, married filing jointly (with spouse), or married filing separately [to avoid bringing one’s spouse into the IRS system]. Married filing separately has a penalty: Certain taxes kick in at a lower level. This is far more insidious than people realize.

Citizenship-based taxation = a form of life control, first and foremost. People do not renounce U.S. citizenship for tax reasons, but for reasons related to life control [getting control of their life back].

Earned income vs. passive income: Many [U.S. citizens abroad] with earned income do not pay U.S. taxes. (Foreign earned income exclusion, FEIE) But as soon as you go to passive income (say you retire and live on a pension), you cannot use the FEIE.

Doing your own U.S. taxes? Question about Richard Pound’s book, A Tax Guide for American Citizens in Canada, 2013; not bad.

You don’t have to be tax compliant to get a CLN. The State Department [handles CLNs] is separate from the IRS. (But if you are not tax compliant for 5 years you become a “covered expatriate”)

How renunciation triggers the tax issue. Why come into U.S. tax compliance? People come into compliance because they either: (1) want to get compliant in order to renounce; or (2) want to remain U.S. citizens.

“Covered” persons: The Holy Grail is to NOT be a “covered” expatriate. There are 2 types of people who renounce: (1) Those the U.S. doesn’t care about (not covered); and (2) Those where the U.S. wants a piece of the action [money] (covered).

“Covered” persons are subject to an exit tax. 3 situations cause a person to be “covered”: (1) Net worth over $2 million; (consider ways to reduce your net worth to below $2 million). (2) Average tax liability for 5 years of a certain amount ($155,000?) (i.e., not the amount of income, but the tax on income). (3) Cannot certify that you’ve filed 5 years of taxes; (You can file all 5 years at once; reasonable effort in filing).

Forms for IRS after renouncing: Taxes filed for 5 prior years as a U.S. citizen. Tax filed after renunciation for the partial year as a citizen; also the non-resident return for the other part of the year. Form 8854 to list one’s assets.

Begin at the end: John’s recommendation is to fill out form 8854 first, for yourself, to see what is there. If joint asset, split into 2. Note that net worth means you deduct liabilities (e.g., mortgage). Exchange rates, fluctuation of Canadian dollar – Pay attention to these.

Another Holy Grail: To show that you relinquished before changes in U.S. tax law happened in 2004, especially before 1996.

Q: Can you renounce without filling out Form 8854? Some people may do, or want to, but they may have been in Canada for so long that they actually relinquished years ago and just not realized it. (!)

Q: Can the IRS collect taxes/penalties in Canada? Enforcement tools? Canada-U.S. tax treaty – If a person was a Canadian citizen at the time, the Government of Canada won’t help the IRS collect.

Q: Can the IRS come into Canada and sue you? Revenue Rule – No.

U.S. today – Something is really wrong there if a person is better off: as an illegal immigrant than having a green card, or by renouncing, rather than retaining U.S. citizenship. These things have to change! (Reference to someone’s comment about an “FBAR Museum” in the future.)

John (the speaker) is “on your side”. Feels and appreciates the injustice. He tries to get people “out” so they don’t have to think about the U.S. (and taxes/filing) [on a daily basis]. Ways he helps: Shows you that you are NOT a U.S. person [e.g., you relinquished years ago]; help with deciding how to reduce your net worth below $2 million.

The second set of Canoe’s notes (below) are a complete description following John’s talk.

Vancouver, February 22, 2014

Looking at the group, and the demographic: Younger people should be here. Younger people need this information more than we do!

Those of us who are here are here because we’re frightened, distraught, etc. (Lots of emotions.)

First – John wants to calm people down.
1. Don’t blow things out of proportion. Don’t panic.
2. Don’t worry about crossing the border. They want our money. Note regarding asking for U.S. passport to enter – and leave – the U.S.: It’s about control.
3. Regarding February 5, 2014, when Canada signed the Inter-Governmental Agreement (IGA), and “all hell broke loose”. (Reference to someone who calls FATCA “Fear and Terror Caused by America”) Life won’t change – unless you make it change. People have had the same bank accounts for years.

Second – Should think about how we got here.
• With the U.S., everything has to be complicated. Congress’s notion that every person has to have a lawyer from cradle to grave.
• John used to help people retain U.S. citizenship. (!)
• Citizenship has always been a big issue for the U.S.
• The U.S. used to say: You will lose your U.S. citizenship if you take Canadian citizenship. Now, they try to impose U.S. citizenship.
• Most Americans abroad haven’t filed U.S. taxes – didn’t know about them.
• The media, lawyers, and accountants cause anxiety. Don’t pay attention to the media – [most] don’t have a clue.
• The worst thing to do [or one of the worst things] is to call a lawyer having no idea where you are going. Especially a lawyer inside the U.S.

History.
• American culture: You can learn a lot from movies and bumper stickers. Movie “12 Years a Slave” – concept of equal citizenship.
• 14th Amendment to the U.S. Constitution – Everyone born or naturalized in the U.S. is a U.S. citizen.
• Noted that Canada is currently changing the definition of citizenship in that they can strip dual citizens of Canadian citizenship – because there is no definition of citizenship in the Canadian Charter of Rights (Constitution). (Nothing like the 14th Amendment.)
• U.S. Immigration and Nationality Act, section 349: Expatriating acts. A relinquishing act is something that you do. Expatriating acts have changed over time, e.g., serving in the armed forces of another country.
• All there is is relinquishment. Renunciation is one of the ways of relinquishing citizenship.

• The U.S. [used to say that] taking Canadian citizenship means losing your U.S. citizenship.
• This history is vital to understanding where you are now.
• In the 1960’s, voting in a foreign election meant expatriation [from the U.S.]. Court case: A naturalized U.S. citizen voted in an election in Poland, and was deemed by the U.S. to have lost his U.S. citizenship. He got a lawyer and took the case to the U.S. Supreme Court in 1967, and won (to keep his citizenship). The Court’s ruling was based on the 14th Amendment, which says who is a citizen. Effect of the 14th Amendment is that Congress cannot throw their enemies out of the country (i.e., by removing citizenship). Key in the decision: (1) Government cannot take a person’s citizenship; (2) Your citizenship belongs to you, not to the government. Congress cannot do anything that causes forcible destruction of a person’s citizenship. […like causing U.S. citizens to renounce? Making the lives of U.S. citizens abroad a hell so we will have to leave?]
• In the 1970’s – Viet Nam and other reasons to come to Canada. At that time, the Oath of Allegiance to Canada didn’t allow dual citizenship.
• Prior to 1986 – If a U.S. citizen became a Canadian citizen, they lost U.S. citizenship. For people in this situation, it’s a matter of getting one’s paperwork in order.
• In 1979, the citizenship issue went to the U.S. Supreme Court a second time, on procedural issues. Jimmy Carter was the president – the only U.S. president who actually valued Americans abroad. Senator George McGovern [D-SD, from 1962-1980]: Study that considered Americans abroad a “national asset”.
• 1986 – President Reagan signed a law codifying “intention” [with regard to losing one’s U.S. citizenship when becoming a citizen of another country].
• 1990 – U.S. State Department standard: Assumed a person’s intent to retain U.S. citizenship when becoming a citizen of another country; no intent to lose U.S. citizenship.
• Since 1990: There is no obligation to take back one’s [former] U.S. citizenship, though the State Dept. would give it back [to person’s who would have automatically lost it on becoming a citizen of another country].

Citizenship.
• What is the value of U.S. citizenship now? The right of access to see one’s family. Citizenship as mobilizing people.
• U.S. citizens living inside of the U.S., though good people, cannot imagine life outside of the U.S. It’s like Americans abroad are Romulans [from Star Trek]. [Homelanders] cannot understand [living outside of the U.S. – or living outside as an American abroad]. They can’t get it. No experience of looking at the U.S. from outside. They don’t care because they don’t know. [For these reasons, the disregard of Americans abroad should be directed to] the government of the U.S., not the U.S. people.

On questions regarding “intent”:
• Ask yourself, What was your intention at the time you became a Canadian citizen?
• Use of a U.S. passport doesn’t necessarily convey a person’s intent to retain their U.S. citizenship – e.g., “just obeying orders of a border guard”. A person can still relinquish after using a U.S. passport.
• Voting – perhaps the worst thing; evidence of intent, but not determinative.
• Ask: What did you do? When did you do it? What did the [U.S. citizenship] law of the time say? You have to look at the laws at the time you did what you did.

Q: What is a “U.S. person”?
• This term is in the Internal Revenue Service (IRS) Code, not in the Constitution.

About the fear of children born in Canada being “doomed” because they have a U.S. citizen parent – John’s opinion on this:
• Is a child born in Canada a U.S. citizen or not?
• Countries have the right to make laws IN their borders. For the U.S. to deem someone born outside of the U.S. – this is an extraterritorial application of the law. So why not just deem the whole world a U.S. citizen? (a next step for FATCA/IGA?)
• Rules that determine U.S. citizenship for a person born outside of the U.S. – Doubt they can deem a person born abroad a U.S. citizen. [However] If you registered the child’s birth, then you have accepted the U.S.’s invitation. (Don’t know of any cases of the U.S. forcing U.S. citizenship on someone.)
• Note: Someone born outside of the U.S. is not a 14th Amendment citizen – could be stripped of their citizenship.
• There are additional complexities regarding the number of years that U.S. parent(s) lived in the U.S.

• Reference to a book worth reading: The Sovereign Individual: Mastering the Transition to the Information Age, by James Dale Davidson, 1999. Predicted the current situation regarding complexities of citizenship in an information age.
• U.S. citizenship is the worst citizenship in a digital age.
• The concept of citizenship is irrelevant.
• We have a ring-side seat to the dismantling of the U.S.

Certificate of Loss of Nationality (CLN):
• If a person became a Canadian citizen years ago, they may – or may not – want to get a CLN.
• If you are not a U.S. citizen or U.S. person, you don’t have to worry about U.S. taxes.

On forms for relinquishment/renunciation, see John’s website, where you can get these forms: http://citizenshipsolutions.ca/
• Question: If you renounced in 1975, should you fill out these forms? You can use a CLN offensively or defensively.

There are 2 types of persons who don’t want to retain U.S. citizenship any longer:
1. Those who are no longer a U.S. citizen – because of having done some relinquishing act.
2. Those who clearly are a U.S. citizen – but don’t want to be one.
Language is important:
• [I want to] “renounce” language means that you are NOW a U.S. citizen.
• Tell them that you “relinquished” [past tense], e.g., back in 1965.

Important to determine the starting point – ask: What is the story of my life? What did I do? When?

Principle: some people had to do a specific act to KEEP their U.S. citizenship. If that applied, what do you now want to do about it?

High net-worth individuals need to think carefully.

Repeat: There is only “relinquishment”. Renouncing is one form of relinquishment.

• One type of situation: [If you relinquished years ago…] Tell them: Hi. I relinquished [past tense] in X year.
• Expatriation tax: 1st was brought in during President Clinton’s term. [If a person is subject to this] Whatever is the cost of this – can be better than the long-term costs of staying a U.S. citizen.
• Another type of situation: Tell them: Hi. I’m here to renounce. You have the right to do this.
• Renouncing might not be the right thing to do for everyone. (example of a young person looking to be a university professor; more university teaching jobs in the U.S.)

• You have to take care of yourself.
• Aging – As a U.S. citizen abroad, the definition of aging is “a gradual and consistent acquisition of tax liabilities and penalties”.
• Young U.S. citizens abroad [or U.S. persons]: Younger people are not listening; they have to hear this message.

Counseling people on citizenship:
1. Are you a Canadian citizen? Is the answer an immediate “yes”? If the answer is not an immediate “yes”, then there is a problem.
2. Are you an American citizen? Is the answer an immediate “no”? If the answer is not an immediate “no”, then there is a problem.

• You have to decipher your own situation. There is no one size fits all.

Citizenship-based taxation (CBT).
U.S. citizenship = Taxation.
• U.S. people admit this when they make comments like, “More people are coming into the U.S., so, so what if expats leave?”
• [Given the tax considerations, citizenship-based taxation] The last thing an illegal immigrant should want in the U.S. is a green card!

• This is really U.S. person-based taxation and the definition of “U.S. person” can change.
• Includes U.S. citizen, green card-holder, a person with substantial presence in the U.S.
• The U.S. will expand and expand and expand this definition over time.
• FATCA allows the U.S. to define “U.S. person” any way they want, forever.
• The movie “Oblivion” should be mandatory viewing for all U.S. citizens abroad. The plot involves fake humans put on Earth to transfer resources to aliens. = FATCA.

How CBT works:
• The U.S. defines who is a “U.S. person”.
• Then, wherever you, as a “U.S. person” are in the world, you pay taxes to the U.S.:
o On every cent;
o According to the exact same rules as apply to U.S. residents; and
o All “foreign” forms of saving, pensions, etc., are penalized.
o (But the U.S. will give you some little things, to make it seem better.)
• The U.S. says that your primary tax obligation is to the U.S.
• The U.S. doesn’t like anything [it considers] “foreign”. The word “foreign” is followed by “penalty”. A “penalty” starts at $10,000.

Taxation is about:
• Paying for services. And we Americans abroad get no services from the U.S.
• A tool of social policy – in Canada, to promote responsible savings and retirement planning. Examples: Canadians often consider their house as part of their retirement planning (i.e., downsize, sell, use funds for retirement). This is a capital gain under U.S. tax law. Also, RRSP.

Huge problems for Americans abroad:
• What for Canadians are sacred instruments for retirement planning (e.g., house, RRSP, TFSA), are sacred instruments of tax evasion for the U.S. Another example: “foreign corporations”.
• In the view of the U.S.: The whole life of a U.S. citizen abroad = an endless scheme of tax evasion.
• Special rules govern marriages between American citizens and “alien” spouses: example of rules governing the transfer of property.

Citizenship-based taxation = a form of life control, first and foremost.
• The cost of filing U.S. tax forms is very high.
• Compare the purpose of Canadian taxation: (1) Raising revenue; (2) Promoting retirement planning.
• John keeps learning more and more, and can’t believe it all.
• Cross-border professionals: They identify all problems of compliance.
• U.S. tax laws are a gross intrusion into the privacy of the family.
• CBT = Extraterritorial taxation; = taxing residents of other countries on income they make in other countries.

• There is no reasonable prospect of financial planning [for U.S. citizen/person abroad].
Why do these sessions? To enable participants to feel what this is all about, so we can communicate [e.g., with a U.S. consulate and others].

Back to marriage-related issues – Filing status: Married filing jointly with spouse, or married filing separately [to avoid bringing one’s spouse into the IRS system].
• Married filing separately has a penalty: Certain taxes kick in at a lower level. This is far more insidious than people realize.

John’s experience: People do not renounce U.S. citizenship for tax reasons, but for reasons related to life control.
• Cost of getting U.S. tax forms done – for example, starts at $1,000.
• To do this properly, a person has to understand the theory of what this [U.S. taxation of citizens abroad, CBT] is about.
• There are two kinds of U.S. citizens abroad with problems: (1) Those who don’t file U.S. taxes; and (2) those who do file U.S. taxes.

Earned income vs. passive income:
• Many [U.S. citizens abroad] with earned income do not pay U.S. taxes. (Foreign earned income exclusion)
• But as soon as you go to passive income (say you retire and live on a pension), you are screwed.
• For example, a retired woman with no assets: One lawyer wanted to charge her $4,000 for one year’s tax filing.
• Anxiety leads to “the need” to consult a “high-end professional”. But they don’t know tax. You only need a lawyer if you are on the way to jail!

Most people’s [U.S. citizen abroad] issues are “Chevrolet issues”. [Or, as one person mentioned, “23-year old Volvo issues”.]
• Doing your own taxes. Question about Richard Pound’s book, A Tax Guide for American Citizens in Canada, 2013. Not bad.

Renunciation and taxes.
• You can’t ask a lawyer if you should file taxes. [They can’t advise otherwise.]
• People come into compliance because they: (1) want to get compliant in order to renounce; or (2) want to remain U.S. citizens.
• A person’s status with the U.S. State Department is different from status with the IRS.
• Expatriation taxes: Since 2004 (effective date June 4, 2004): Status as a U.S. person no longer determine your taxability. (IRS Bulletin)
• If you renounce: (1) You must notify the IRS; (2) You continue to be taxed. [Until?]

“Covered” persons:
• There are 2 types of people who renounce: (1) Those the U.S. doesn’t care about (not covered); and (2) Those where the U.S. wants a piece of the action [money] (covered).
• “Covered” persons are subject to an exit tax. 3 situations cause a person to be “covered”: (1) Net worth over $2 million. (2) Average tax liability of a certain amount ($155,000?) (i.e., not the amount of income, but tax on income). (3) Cannot certify that you’ve filed 5 years of taxes.
• Net worth: (only to punish a person).
o What did you pay for an asset? What is it worth today? What is the capital gain (i.e., for U.S. taxes)? Pensions – The U.S. deems these to have been paid out in full.
o Consider a person’s house in Toronto or Vancouver – Principal residence is subject to tax on capital gain in U.S. tax law. So…If you have a house in Toronto or Vancouver, an RRSP – a person could easily have a net worth over $2 million, which means a person is “covered”, and if renouncing, is considered by the U.S. to be an “evil, presumptive tax evader”.
o Net worth is only $1.9 million? Then not “covered”.
• Overwhelming problem if you don’t have the 5 years of tax filings including information returns. This means having made “reasonable effort” in filing. Note that taxes and FBARs are under separate “Titles” in U.S. law; FBARs are not in the IRS tax code.
• Information returns: In Canada, taxes are about income. In the U.S. taxes are about information. Examples:
o Form 8938 (FATCA; puts FBAR under the tax code).
o Foreign corporations: Form 5471 for small business; is really a complex tax return, not a “form”.
o Partnership.
o Other forms that the accounting community’s critical mass includes: TFSAs as a “foreign trust”; RRSP (but this is carved out under the Canada-U.S. tax treaty); 3520 and 3520A; etc.
• The Holy Grail is to NOT be a covered expatriate.

How renunciation triggers the tax issue.
You want to get the 5 years of tax filings.
Q: Form 8854: Have to check that you are tax compliant.

Renunciation forms:
1. Taxes filed for 5 years as a U.S. citizen.
2. Tax filed after renunciation for the partial year as a citizen; also the non-resident return for the other part of the year.
3. Form 8854 to list one’s assets.

Begin at the end: Recommendation to fill out form 8854 first, to see what is there.
• If joint asset, split into 2.

• If you relinquished prior to June 2004, especially prior to 1996 – there is no link between renunciation and the IRS. After 2004, renunciation was linked to the IRS.
• 2008: Expatriation tax consequences took the form of an exit tax.
• Holy Grail: To show that you relinquished before all these changes happened [if applicable].

Q: Can you transfer your assets to an alien spouse (i.e., non-U.S. person)? Is this a gift?
• Can do this over time, up to $140,000 [$144,000?] per year.

Q: What is the smart time to renounce – after having done 5 years of tax filing?
• You can file all 5 years at the same time.

John Templeton renounced U.S. citizenship in 1964. Could have been a result of a monumental change to U.S. tax law regarding “controlled foreign corporation” in 1962.

Q: Can you renounce without filling out Form 8854?
• Some people may do, but they may have been in Canada for so long that they may actually have relinquished years ago and not realized it. (!)

Q: Can the IRS collect taxes/penalties in Canada? Enforcement tools?
• Canada-U.S. tax treaty – If a person was a Canadian citizen at the time, the Government of Canada won’t help the IRS collect.

Q: Can the IRS come into Canada and sue you?
• Revenue Rule – No.

Q: Can the U.S. collect FBAR fines in Canada?
• FBARs are not a tax issue; Government of Canada won’t collect.

John (the speaker) is “on your side”.
• Feels and appreciates the injustice.
• Tries to get people “out” so they don’t have to think about the U.S. (and taxes/filing) [on a daily basis].

Why renounce U.S. citizenship?
• Not to be a U.S. citizen.
• To get the CLN – Don’t leave home without it!

You don’t have to be tax compliant to get a CLN.
• The State Department [handles CLN] is separate from the IRS.

Regarding dealing with anxiety about “being [perfectly] compliant” – No one can be tax compliant [with U.S. tax filing; too complex].

Q: Can you hold mutual funds in an RRSP?
• Probably OK (?), but don’t know what happens when the RRSP is collapsed.

Only 2 kinds of persons who can retain U.S. citizenship:
1. Those who don’t own anything.
2. Those who have so much money that they have a “personal IRS attaché”.

About renouncing (or not): You have to decide what your priority is.

John can be helpful, to:
1. Show you that your are NOT a U.S. person [e.g., you relinquished years ago].
2. To help you decide how to get your net worth below $2 million. Note that net worth means you deduct liabilities (e.g., mortgage).

Examples of getting below $2 million. Say you have $2.2 million in assets:
• Figure out how much untaxed capital gain you have. If you sell something in Canada, then the capital gains tax paid can lower your net worth below $2 million for U.S.
• Would you rather pay a capital gain tax to Canada or to the U.S.?
• Q: Could you take out a $500,000 mortgage? But what would you use it for?
• Give gifts to people: Give the money where you want it to go.
• Q: Do you have to notify the IRS of a capital gain in Canada? – Yes, but you get a tax credit.

Exchange rates, fluctuation of Canadian dollar – Pay attention to these.

Regarding concern about paying an exit tax (for “covered” person): Example of having to pay $300,000 exit tax. But look at the rate of return on this “investment” if you renounce.
• Cost of filing U.S. tax every year – $5,000; add stress and anxiety; consider your life situation (life expectancy? future marriage?). Could be a net benefit to pay the exit tax and renounce.

U.S. today – Something is really wrong, if a person is better off:
• as an illegal immigrant than having a green card;
• renouncing, rather than retaining U.S. citizenship.

These things have to change! (Reference to someone’s comment about an FBAR Museum in the future.)

Many people feel that these issues (CBT, etc.) are the single greatest injustice that has affected us personally. Feelings of betrayal.
But remember that, relatively speaking, our lives are still good.