Notwithstanding any other provision of law, not later than 30 days after the close of each calendar quarter, the Secretary shall publish in the Federal Register the name of each individual losing United States citizenship (within the meaning of section 877 (a) or 877A) with respect to whom the Secretary receives information under the preceding sentence during such quarter.
Notices to be printed in the Federal Register for 30 July 2014 have just been placed on public inspection, but the Quarterly Publication of Individuals Who Have Chosen to Expatriate is not among them. This means that for the eighth quarter in a row, the list of certain expatriates will not be published in a timely fashion as required by 26 USC § 6039G(d).
Defenders of the poor beleaguered Secretary of the Treasury will claim that he already approved the list for publication, and it’s someone else’s fault that it failed to actually get published on time, and that he hasn’t broken the law. But applicable case law shows quite clearly that when a statute requires publication of a notice, mere agency approval or placement on public inspection is not enough to meet the requirement of the law.
And since the IRS is so concerned that about international reporting requirements these days, shouldn’t they be enforcing 6039G(d) just as strictly as they enforce its neighbour, 6038D?
Promulgation, filing, publication, and time limits
The Secretary of the Treasury has never been taken to court over late expat honour rolls — I haven’t been so mean and vindictive as to dob him in on a Form 211, otherwise I’m sure the IRS’ fearless Criminal Investigations Division folks would fly right back from London and Hong Kong to DC to have a chat with him. However, more important plaintiffs have sued government officers over other, higher-stakes stuff in the Federal Register, and the government has occasionally responded by arguing that the suits should be thrown out because some 30 or 60-day deadline allegedly started running on the date of filing rather than the date of publication.
There’s limited support for the government’s position in 44 USC § 1507, a fairly old provision of law which has survived intact ever since it was created by the Federal Register Act of 1935, with only minor changes in wording since then:
Unless otherwise specifically provided by statute, filing of a document, required or authorized to be published by section 1505 of this title, except in cases where notice by publication is insufficient in law, is sufficient to give notice of the contents of the document to a person subject to or affected by it.
However, the “unless otherwise specifically provided by statute” part is often fatal to the government’s arguments, because statutes almost always require publication, not mere filing. Rowell v. Andrus, 631 F.2d 699 (1980), turned on this point:
… the Government argues that even if the 30 day deferred effective date provision of § 553 is construed as applying to final rules, the regulation in question here was filed with the Office of the Federal Register on December 30, 1976; that this was over 30 days prior to the February 1, 1977, effective date; and that such date of filing for publication with the Federal Register office commenced the 30 day waiting period. Consequently the Government says that the time period prescribed by § 553(d) was satisfied in any event.
It is true that 44 U.S.C. § 1507 states that the filing of a document with the Office of the Federal Register is sufficient to give notice of its contents. However, we feel that another part of § 1507 is the key to the answer here … [t]he “unless otherwise” language of § 1507 leads us to 5 U.S.C. §§ 552(a)(1) and 553(d) which require publication 30 days before the effective date, as opposed to mere filing with the office. The common meaning of the word should apply, there being no statutory definition. Clearly “publication” in the Federal Register requires more than mere “filing.”
Both of those sections cited in Rowell are part of the Administrative Procedure Act (APA). The first one, 5 USC § 552(a)(1), requires each agency to publish its regulations in the Federal Register, and goes on to require that:
Except to the extent that a person has actual and timely notice of the terms thereof, a person may not in any manner be required to resort to, or be adversely affected by, a matter required to be published in the Federal Register and not so published. For the purpose of this paragraph, matter reasonably available to the class of persons affected thereby is deemed published in the Federal Register when incorporated by reference therein with the approval of the Director of the Federal Register.
The second one, 5 USC § 553(d), states that “[t]he required publication or service of a substantive rule shall be made not less than 30 days before its effective date”. And so the court decided that since the APA uses words like “published”, the regulations could only come into effect 30 days after the date of publication, not 30 days after the date of filing.
In the late 1980s and early 1990s there were at least two more cases involving disputes over date of filing vs. publication: National Grain & Feed Association v. Occupational Health and Safety Administration, 845 F.2d 345 (1988) and Sea Watch International v. Mosbacher, 762 F.Supp. 370 (1991). In both of those, the government argued that the plaintiffs’ petitions against regulations were time-barred (each case involved different statutes: 29 USC § 655(f) and 16 USC § 1855(d), respectively) because the petitions came more than X days after the regulations were filed with the Federal Register, and the government claimed that the date of filing should be regarded as the date of “promulgation”.
And in both cases, the DC courts rejected that argument because the petitions came within X days of the actual publication in the Federal Register. (Regardless, 26 USC § 6039G(d) does not use the word “promulgate” anyway, so even the long-rejected argument that “filing” = “promulgation” could not excuse the government’s lateness.)
Just to make things confusing, different agencies have different rules on when a notice should be regarded as “promulgated”, “released”, or some other such vague term. The FCC, for example, provides in 47 CFR 1.4(b) that two documents actually published on the same day in the Federal Register can be considered to have different dates of “public notice” if one is part of a rule-making proceeding while the other is not. Naturally, there have been lawsuits about this too, such as Adams Telcom v. Federal Communications Commission, 997 F.2d 955 (1993). But, as mentioned above, the “expat honour roll” statute uses the plain old word “publish” and not other unclear synonyms like “promulgate”, so cases like this FCC one aren’t relevant anyway.
And of course, none of the above cases show the slightest concern for the date which the authoring agency itself puts on the notice (for example 23 April for the previous quarter’s list of ex-citizens, which was not published until 2 May) — that date is legally irrelevant, and could not possibly constitute “publication”, since the notice certainly was not available to the public on that date.
Who cares when some stupid notice gets printed?
There’s another difference, of course: the Quarterly Publication of Individuals Who Have Chosen to Expatriate does not consist of regulations. It is a meaningless, error-filled list of names (with the occasional street address, village, job title, or corporation thrown in for good measure). The inclusion or exclusion of a name has absolutely no legal implication, notwithstanding long-dead proposals to use the list to enforce the Reed Amendment. (The IRS could have required, for example, that banks subject to FATCA check the Quarterly Publication if customers previously known to have U.S. citizenship later claim that they’ve given it up — but the IRS did not, presumably because they’re just as aware as the rest of us that the Quarterly Publication is garbage.)
So it’s doubtful that there is even any “person subject to or affected by” the Quarterly Publication for purposes of 44 USC § 1507. In simpler terms, no one can actually demonstrate harm when this law is broken. Even if the actual expatriates included (or not included) could argue that they are “affected”, it’s not clear what relief a court might grant them.
But that doesn’t mean the law should go unenforced, right? No one can actually demonstrate harm when U.S. Persons outside of the U.S. fail to fill out Washington’s endless, incomprehensible paperwork on their local-government-approved bank, retirement, disability, and health savings accounts which the IRS treats as if they were offshore tax avoidance instruments. But Jack Lew and John Koskinen are off on a pointlessly costly, legally-dubious worldwide crusade to enforce 26 USC § 6038D and similar provisions of law which demand all that paperwork. And before that crusade, there were the equally meaningless FBARs that “U.S. Persons in Un-American Countries” are required to file with the Financial Crimes Enforcement Network — which had to arrive in Detroit by the 30 June due date, not be postmarked by that due date, at least until they made us switch to their ridiculous e-filing system.
Ever since all of us here at the Isaac Brock Society started arguing against FATCA, FBAR, Form 8621, and the rest of the citizenship-based taxation mess that the U.S. imposes on its emigrants, government officials and Homeland “tax justice” crusaders and their loyal enablers have been calling us “tax evaders” and “anti-tax zealots” — even when we owe no tax — because we fail to fill out all this meaningless paperwork, or argue that it should be abolished.
So I simply ask that the IRS be held to the same standard as us — required to comply with pointless, incomprehensible procedural minutiae, while facing life-altering fines, ejection from banks, attacks on honour & dignity & privacy, and inability to live a normal life like all of your neighbours. After all, the law is the law, right?
@notamused, if the list is not of those just paying the exit tax, then how is the list composed?
@JC: I personally have no idea how the list is actually composed, and I doubt anyone else really does either. The only discernible principle I can make out is “whatever State feels like sending the IRS & the IRS feels like printing”. The numbers of confirmed omissions and other errors (misspellings, ridiculous entries like “Kfar Saba” and “RBC Reinsurance” and “Vice Consul”, etc.) suggest a compilation process with poor internal controls and little attention paid to accuracy or the demands of the law.
However, it is clear that the FR list does not consist solely of covered expatriates. This is an old myth against which we have large amounts of evidence.
First, the IRS has only two ways to make a determination of covered expatriate status:
(a) they get a Form 8854 from you saying you have sufficient assets, average tax liability, or missing paperwork in the past 5 years; or
(b) they get your CLN from State and do not receive your 8854 by the end of the next filing period.
Because of (a), the IRS has no idea you are a covered expatriate until at least the year after your expatriating act, but some people have appeared in the FR list within months of their expatriating act. Two examples from Korea: actor Robert Holley (expatriating act sometime in 1997, appeared Q4 1997) and Korea Electric Power Co. president Jang Young-sik (relinquishing act in April or May 1998, appeared Q3 1998).
(Note that the IRS typically doesn’t even publish tax forms until a few months before the due date; e.g. for taxes due on 15 April 2015, they’ll release the draft forms in late 2014. IIRC, someone on this very site — SwissPinoy? — wanted to get all this garbage out of the way ASAP and tried to early-file using a draft 8854 or the previous year’s version or something, but the IRS rejected it and told him to do it again with the proper version.)
Because of (b), a person who has no idea about the Form 8854 requirements (or deliberately chooses not to file) is not known to be a covered expatriate until late in the year after their expatriating act, but again, people you’d expect had no idea about Form 8854 have appeared far more quickly than that (e.g. this article I translated earlier about a South Korean apple farmer.)
Second, the publication cycle of the FR list is quarterly, but taxes are due once per year. If the FR list only included covered expatriates, you would see a large batch of names once per year, or maybe in two consecutive quarters (as the IRS finished the 8854s) with only a small number spread out in the rest of the year (e.g. late filings). Instead we see basically similar numbers every quarter without much seasonality.
And third, we also have explicit confirmation from Isaac Brock Society folks who either appeared in the FR before filing their 8854 (i.e. IRS has no idea of covered expat status), or are middle-class folks who spent enormous amounts of money getting their taxes in order before relinquishing (i.e. IRS knows they are not covered expats either by reason of assets, tax liability, or missing paperwork) and showed up anyway.
As Eric states, it appears to be quite random who does or does not appear on the list. To my knowledge, for every proposed theory on how inclusion is determined, there has been at least one counterexample which renders that theory invalid.
Thanks for that detailed response.
It’s not the “name and shame” list, but this notice is set for publication in this coming Monday’s Federal Register:
Taxation of Canadian Retirement Plans Under U.S. – Canada Income Tax Treaty
It is a request for comments on a proposed continuation of a current information collection procedure, Revenue Procedure 2002-23, which is described in the Abstract as follows:
It’s interesting that for purposes of complying with the Paperwork Reduction Act of 1995, the document gives the Estimated Number of Respondents as (only) 20,000 and the Estimated Average Time per Respondent as 30 minutes (just another 30 minutes billable by one’s US tax return preparer).
Some readers of this IBS web site may want to submit official comments on the proposed extension, as called for in the request for comments.
And, the IRS is a week late so far: no Quarterly Publication scheduled for printing on 6 August
The quarterly list for Q2 of 2014 for the Federal Register has just been revealed at
It is 15 pages long with 40 names per page except on the first and last pages, making it just under 600 names this time, for whatever that is worth.
Thanks. I got 576 names (no street addresses, villages, or reinsurance companies this time). Will start a new thread once I figure out who’s in it and who’s not.
Thanks. I tentatively counted 576 names on the IRS’ 2Q 2014 list.
The IRS list is, of course, supposed to include both renunciations and relinquishments. For 2Q 2014 the FBI NICS running count shows 1,203 renunciations for 2Q 2014. The FBI NICS data should be a subset of the IRS data, since it is not to include relinquishments, but it is in fact larger. An accountant might attribute this to “timing differences”; I smell a politicized rat in the IRS numbers.
A trickle will still drain a tub – eventually.
I wish a big news outlet would do some real investigative journalism on what’s really going on with these renunciation numbers.
One interesting name on the list is Patrica Gräfin Beissel von Gymnich. She is a German countess in her late 20’s and is involved in running the family business. The family business looks like this:
@Bubblebustin, I agree. Why will no influential news organization in the U.S. ask the State Department how many CLNs they are issuing each quarter??
@Innocente, you’re probably right, unless it’s some other Patrica Gräfin Beissel von Gymnich. 🙂
Seriously, of what use is just a list of names, especially when some of the names are fairly common ones, unlike that of the German countess?
The FBI NICS renunciation running total is available at July 31, 2014: 26,000. This is an increase of 577 for July 2014 and shows total renunciations of 2,193 for YTD Jan-Jul 2014.
Patrick Cain at Global News wrote an article on the discrepancy between IRS and FBI NICS figures. An update detailing that the situation has not improved might be worthwhile:
The IRS needs to start publishing a complete list – the truth will come out at some point and they will lose face, again.
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Fox news would be a good one to ask?
This showed up today via twitter.
The Department of Homeland Security has provided statistics pursuant to a Freedom of Information Act (FOIA) request regarding the number of green cards surrendered each year since 2000 as evidenced by submissions of Form I-407 (discussed below). I provide here the numbers of green card relinquishments since 2010, when FATCA was enacted:
2013: 11,185 (queried on June 20,2013)
At first glance, it shows the opposite trend. However, the 2013 data is only for half (or less) of the year.
I believe it shows that the Federal Register is incorrect, as it is meant to reflect loss of greencard (as explained in the wikipedia article)
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