One of the commonest responses by those who have never studied the issue of US personhood is,”If you don’t want to pay your taxes, then renounce your citizenship.” Well, just off the top of my head here are some reasons that people may be reluctant to renounce United States citizenship:
- There is a $450 [now $2350] fee for renunciation. I don’t want one stinking penny to support the evil Federal government of the United States.
- It is possible that I am not a US citizen, and I don’t think that I am one. If I renounce I am admitting to them that I am a United States taxpayer. Relinquish, don’t renounce if you can.
- I don’t want to show my face to a US consulate: that will put me on their radar and I am better off them not knowing I even exist.
- I don’t want to stand in line. Waiting times have been over one year at some US Consulates.
- I’ve never been in compliance with the IRS, and I don’t have a Social Security Number. I’ve never paid taxes to the United States, but if I renounce, I will have to certify five years of tax compliance under threat of perjury. If I can’t do that, then I can’t fill out the exit tax form (Form 8854), which has me reveal the value and kind of all my assets to the IRS against my will. I may owe a huge amount of money in back taxes and fines, not to mention that I am afraid of 300% FBAR fines of my financial wealth. I’ve had PFICs in my portfolio, and I know that will cost a lot to bring into compliance. I have had a pretty good TFSA increase and TFSA’s are not tax free in the US. I have had a personal corporation or a sole-proprietorship business in Canada which has permitted me to defer taxes on retained earnings in Canada–but this is not allowed in the USA. I’ve made heavy RRSP contributions which have deferred my taxes in the Canada, but I can’t defer personal RRSP contributions in the USA. I sold my house and paid no taxes on it because it is my primary dwelling–the US expects taxes on anything above $250,000 capital taxes, money which I’d refuse to pay if I could.
- If I renounce, I may not be able to visit my relatives in the United States because I will have to give up my passport and the United States has threatened anyone who renounces for tax purposes with permanent exile from the United States.
- I have to be able to travel now, and if I renounce I won’t have a travel document.
- I will not expose my spouse and family to threats of fines for innocent financial accounts.
- I don’t want to become stateless. My country will not allow me to become a citizen until I renounce US citizenship which means I will become a stateless person.
This is by no means a complete list. But here is one more: (9) I don’t want to go through the hassle of dealing with American bureaucracy the way that this person has:
Hello All,
I’m new to posting here but have been reading up on the comments for quite some time. Since I’m in desperate need of support from people who know exactly what I’m going through, I’ve decided to make my first post here. I’ve been living in another country for about 10 years (won’t post which one, just in case), and I renounced last month. This whole process of receiving another nationality has been going on for nearly a year now, where the other government needed 3 months to approve my case after I had already spent 4 months jumping through hoops for them and taking all kinds of tests to ‘prove’ I was capable of being a citizen. Still, I was fine with all that, and I got the approval under the condition that I renounce my US citizenship. I was born and raised in the US, but never felt American, as odd as that may sound to some. So right after I graduated college, I left, and I integrated myself into another country so well that I can speak the local language without an accent and whenever I go to the US (which isn’t often), I get culture shock. I don’t really have any ties left in the US (all my friends are here), except for my mother, whom I love very dearly. For health reasons, she cannot visit me here, and I always have to go visit her. When I moved abroad, I was told by our CPA that I didn’t need to file a US tax return unless I worked for an American company. Like an idiot, I believed her, because I thought, “Well, she’s an accountant, she should know.” You can imagine my shock when I contacted the US embassy for an appointment and found out they were all lies. I am already paying crippling taxes in this country, and now the US wants a piece of what very little I have left? I don’t think so. I don’t make a lot, and in fact, I haven’t made over the required reporting amounts for about 2 of the five years. The other 3 I was barely over. I’ve only been allowed to work here freelance since I got here, and my citizenship is only guaranteed providing that I can shed the burden of my US citizenship AND keep my standard of living the same. When you work freelance, how in the world are you supposed to do that?
Originally, I was told before I went to the embassy that I would have my CLN in approximately 5 weeks. Upon arrival, one woman said to expect 8-10 weeks while another said 6-8. I e-mailed the consulate a while ago to ask if the wait times were still the same because I have lost a lot of work recently and cannot make it up because I have no passport. I have a driver’s license, but it’s not recognized here for whatever reason as a valid form of ID, so no ID, no job. I’ve spoken to my new country about getting a replacement ID from their system, but they said that legally my residence permit should be enough. I’m finding, though, that many companies around here are turned off and disturbed by the fact that I no longer have a passport and consider me some kind of risk. Anyway, I received an answer that the wait times are now around 12-15 weeks. This is the THIRD time that my wait time has been doubled. First 5, then ten, now 15! I asked if it was 15 in total or 15 from today, and they answered with “Hopefully in total :)”. They don’t even know!
This is absolutely ridiculous and unacceptable. I was supposed to start a new job in October – my dream job – which I can now no longer do because these idiots are just sitting on their hands while my life has been turned upside down. If my mother dies or gets even sicker, I will not be able to visit her because I have no passport, I can’t find decent work, and nothing in my personal life is allowed to change. I’m not even allowed to move or get married, meaning that I’m holding people at arm’s length just because I have absolutely no idea how long this is going to take. I’m not a person who cries, and in fact, I can’t even remember the last time I did before that, but the moment I got that E-mail, I just burst into hysterical tears. Every day feels like a year, and what happens if my renunciation is not even approved? I’ll have to start all over!
I’m also being ostracized by any and every American that I know, who can’t fathom that I would ever give up ‘the most precious and coveted citizenship in the world’. (Barf). I’ve had people start yelling at me on more than one occasion just because I simply said that I renounced. I didn’t say I hated the US, I didn’t say anything bad about the US, just that I love this country and I made the decision that I was a citizen here and not the US. Seriously, do people think we’re going to just magically change our opinions when they freak out like this? My feelings of apathy for the US have just slowly turned into loathing during the course of this process. People ask me every day if I have my passport from my new country, and all I can do is get tears in my eyes and beg them to please stop asking me that because this process will take a while. Still, they care, so they constantly keep asking. It’s like digging in the knife a little deeper, especially when my citizenship approval here can still be revoked if the government so chooses. I just want to be free, want to belong to a country that I feel so at home in, and I find it so ironic that a country which preaches freedom from the rooftops is taking so long at granting me mine. And if and when it does, it will punish me for that by ‘naming and shaming’ me on some stupid list and trying to paint me as a tax dodger. If it weren’t for my mother, I’d never set foot in that country again and have gone so far as refusing to buy US made products or even speak English.
Anyway, I’ve basically just stopped believing anything the consulate tells me because I have to in order to protect my sanity. I’m worried that when 15 weeks rolls around, they’ll extend it to 25 or something. My life stayed constant for a while, but now it’s starting to roll backwards like a boulder down a mountain and of course the US doesn’t care. Sorry I’m ranting to all of you for probably what seems like no apparent reason, I was just wondering if there was still anyone here in the forums or whatever these are outside of North America and what they were originally told about their CLNs vs when they actually got them.
@Embee,
I laughed out loud at your creation – as usual! Thanks for making us laugh and keeping morale high as we continue to poke holes in CBT and FATCA – as well as skewering the FATCAnatics and the FATCAllaborators who’d like to make Canada into the newest US State. Which Obama hopes to be able to see from his new office – in Ottawa.
To me the fundamental answer to the question of “why don’t you renounce” is a fairly simple one. It is NOT a viable strategy for the long term, at least as long as the US has CBT. As long as the US has CBT then:
1. The US can declare anyone it wants to who lives abroad to be a citizen.
2. The US can charge whatever fees it wants to renounce.
3. The US can delay renunciations–both before and after the interview–as long as it wants.
4. The US can charge whatever taxes and penalties it wants–both pre- and post-renunciation.
While some individuals may choose to renounce for their own reasons, for the above reasons renunciation is simply not viable as the only remedy open to a Canadian citizen living in Canada.
And of course FATCA/C-31 unfairly hurts other groups of people besides just people the US calls US citizens.
@Dash, I share your concerns that the U.S. may one day expand its definition of ‘U.S. Person’ to include former citizens and, thus, make expatriation for tax reasons futile. It would deter people off renouncing.
And, like you say, even if this doesn’t happen, they could use stealth by bottlenecking renunciations by making appointments much harder to arrange or indefinitely delaying CLNs. This would also put people in the awful limbo of not knowing whether they could subsequently safely file 8854 to cleanly exit from the IRS. I also wouldn’t be at all surprised if they increased the renunciation fee from $450 to perhaps $2500 or even $5000!!
I also remember being shocked when I read that some mutual fund providers are not going to allow former U.S. citizens to invest in their financial products, even with full documentation to prove they expatriated. Perhaps they’re scared that people might produce CLNs but still potentially be ‘covered expats’ by not having properly logged out by certifying five years tax compliance via 8854; as I understand it, the IRS would still deem them U.S. persons and, thus, could land the foreign bank or financial institution into deep trouble if discovered via FATCA.
The issue I see here is that, even after filing 8854, the IRS doesn’t actually offer full certainty that they consider you out of the system because they never offer any official acknowledgement. You just have to hope that no news is good news….it’s why I won’t ever feel completely safe. I would imagine that the standard statute of limitation for my final tax return would be at least three years, if not six.
There’s also the awful risk that Congress might even pass retroactive legislation to extend statutes of limitation. I suppose it will all depend on how desperate or spiteful they feel.
Monalisa,
See: http://isaacbrocksociety.ca/2014/08/21/u-s-consulate-appointments-toronto-is-booked-up-no-problem-you-can-go-somewhere-else-adding-to-your-expense-for-the-whole-u-s-expatriation-experience/
and
http://isaacbrocksociety.ca/2014/08/22/comparison-of-fees-and-procedures-for-renouncing-citizenship-in-various-countries/
Thanks!
ML you will never hear from them again. Full stop.
I’ve just made my fourth donation, via Paypal. I’m not renouncing for two reasons. First, the practical one: I’d have almost insuperable obstacles in proving that I ever had U.S. citizenship in the first place. I was born in Canada, with one American parent, and I was registered as an American born abroad when my family moved to the U.S. in early 1978, when I was a pre-teen. I was told that I’d lose my claim to U.S. citizenship if I moved back to Canada as an adult, and so that’s what I did in the mid-80s, dumping the passport and social security number that I’d been issued when we moved. Okay, I was naïve not to realize that the law might have changed, but, hey, I was also a teenager, and naïveté comes with the territory. And I’ve lived as a single-citizenship Canadian ever since. The few times that I’ve visited the U.S. since the mid-80s, I’ve travelled as a Canadian, with a Canadian passport as ID (I didn’t have a driver’s licence). In order to file taxes to renounce, I’d need to reclaim my long-abandoned social security number, which I have no record of anywhere. To find out what it was, I’d need a passport: I’d have to document American citizenship, and I can’t possibly provide any of the other documents that SS will accept – a U.S. birth certificate, naturalization papers, or a consular report of birth abroad. But to get a passport, I need to provide my SS number (or face a $500 fine), and even if the fine were waived, I’d have to document everywhere my father, now long dead, lived before I was born. I really have no idea where he was over all of the more than four decades that covers.
The second reason is that I unequivocally deny that I’m American in any practical or emotional sense, and so I have nothing to renounce. I wasn’t born there; I have never lived there as an independent adult; I don’t need, want, or claim any benefits of U.S. citizenship; and I’m perfectly happy never to go to the U.S. again. It’s a foreign country, and I won’t accept that a foreign country has the right to make me do complicated jumps through an unending series of hoops in order to have the same rights as every other citizen in the country of my sole citizenship.
The reason that I’m contributing to the lawsuit is that it is absolutely intolerable that my government is conniving with a foreign power to strip me of those rights.
janeb,
The absurdity continues. Yours is, of course, a great example in capital letters. Thanks very much for contributing to this lawsuit which is as much for you as everyone of us.
I’m glad you’re here with people who understand what you’ve just told us. Can any of those close to you really understand what you are going through when you tell them this story.
Take care and thanks again!!!