Patrick Cain, Global News, August 21, 2014: Want to shed U.S. citizenship? Get in line.
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UPDATE: August 27, 2014
UPDATE: August 22, 2014
The Patrick Cain article itself can use some comments, which uses Facebook, Yahoo, AOL or hotmail. There are only four there — the last saying “Being little brother has its benefits. But it also comes with a cost.”
(Correct!: Costs to stay within the new Berlin Wall and cost to get over it.)
One comment (Innocente) reports:
When the US DOS set the renunciation price at $450 in 2010, it stated that it covered less than 25% of the cost. Will the new price be increased to $1,800 ($450/.25) or perhaps $2,250 ($450/.20)?
Also, see the reasoning for the subsidized $450 below:
“Schedule of Fees for Consular Services, Department of State and Overseas Embassies and Consulates
A Rule by the State Department on 06/28/2010
Documentation for Renunciation of Citizenship
The CoSS demonstrated that documenting a U.S. citizen’s renunciation of citizenship is extremely costly, requiring American consular officers overseas to spend substantial amounts of time to accept, process, and adjudicate cases. A new fee of $450 will be established to help defray a portion of the total cost to the U.S. Government of documenting the renunciation of citizenship. While the Department decided to set the fee at $450, this fee represents less than 25 percent of the cost to the U.S. Government. The Department has determined that it must recoup at least a portion of its costs of providing this very costly service but set the fee lower than the cost of service in order to lessen the impact on those who need this service and not discourage the utilization of the service, a development the Department feels would be detrimental to national interests. See 31 U.S.C. 9701(b)(2).”
Another says:
Today I visited the consulate in Vancouver. … Both the clerk and the Consular encouraged me to renounce not relinquish as my relinquishment would be denied and I would have to come back later to renounce and then the fee would be going up to I think they said 2800.00 but it might be 2400.00 I stopped listening after they repeated no relinquishment one too many times. I insisted they forward my file to Washington.
So what will be the new fee that is a guaranteed right to renounce and when will it be implemented?
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As is pointed out, in Patrick Cain’s article:
Pushing the appointment into next year doesn’t just frustrate the impatient, however – it adds an entire year to U.S. tax reporting. Someone making an appointment now to renounce in Toronto in January wouldn’t be able to log out of the U.S. tax system until June 2016.
However, people can work the phones and find a U.S. consulate that can give them an earlier appointment, Nightingale says:
“If Toronto is booked up, you can go somewhere else. You can go to the Montreal consulate; you can go to the embassy in Ottawa.”
The U.S. State Department estimates that about a million people considered American under U.S. law (who may also be Canadian citizens) live here. In theory, all of them, unless their income falls under minimum levels, are supposed to file tax returns with the IRS, and report their bank accounts to an arm of the U.S. Treasury Department called the Financial Crimes Enforcement Network, on pain of heavy fines.
In practice, few did until recently.
It’s good that this article does mention you don’t HAVE to go to the consulate nearest where you live, in Canada, do renounce (or to relinquish based on a decades-ago expatriating act, for that matter).
It’s also good that this article makes it very clear that the tax implications of coming into full IRS compliance so you can renounce (not necessary if you’re claiming an expatriating-act relinquishment other than renunciation from before 2004, see other threads on this website for details) can be expensive even for “ordinary” cases (i.e. you’re not in the 1% or even in the 10% or perhaps even top 25% of income earners). This may help dispel some of the knee-jerk “just renounce already” reactions some persons who don’t bother to get the facts, have been blogging and responding to our bloggers. At least, for those people who encounter this particular story, bother to read it to the end, and then think about it for maybe five seconds … Sadly, knee-jerk bloggers and trolls usually aren’t that thoughtful or intelligent in their communications.
I particularly like the paragraph:
“We know for sure that residence-based taxation is enforceable, and citizenship-based taxation is not enforceable unilaterally. You cannot do it unless the other country steps up to say, ‘We agree. We are going to find people in our country who are of your nationality, and we are going to show you where they are, and we’re going to point you to their accounts.’ That’s what Canada has done with the IGA.”
Thank you for your accurate writing Patrick Cain. This sure helps get the message across.
Crossing posting some relevant comments re the increase in PRICE OF RENUNCIATION at U.S. Consulates:
http://isaacbrocksociety.ca/relinquishment/comment-page-40/#comment-2683035
http://isaacbrocksociety.ca/renunciation/comment-page-136/#comment-2692514
http://isaacbrocksociety.ca/renunciation/comment-page-136/#comment-2692991
http://isaacbrocksociety.ca/renunciation/comment-page-136/#comment-2693344
http://isaacbrocksociety.ca/renunciation/comment-page-136/#comment-2694028
Cross-posting information regarding current wait for appointments at Calgary U.S. Consulate: http://isaacbrocksociety.ca/2014/08/19/no-more-renunciation-appointments-available-in-toronto-for-2014/comment-page-2/#comment-2692409
Higher fees to reduce service? I guess they don’t give a care because we lose any ability to complain and be heard once the deed’s done.
Here an article from today from IBS’ old friend Roy Berg.
http://www.mondaq.com/canada/x/335598/Income+Tax/Is+the+Canadian+FATCA+lawsuit+a+Pyrrhic+War
All he talks about is CBT and US citizenship and doesn’t mention the little problem of treating all resident citizens equally under the eyes of the law.
In Asia it’s even worse: except in Japan or mainland China there’s usually only one or two diplomatic posts per country which handle renunciation, so if one’s overbooked (or deliberately chooses not to offer enough slots for appointments) and the other deliberately contravenes the FAM’s directions to offer appointments to people from outside the consular district, your renunciation ends up requiring international travel.
That means travel documents (not like Europe/South America where you can cross borders with your regular ID card), visa fees (especially if you’re using a non-citizen travel document because your naturalisation hasn’t gone through yet), plane tickets (too much ocean around here, so ground travel would mean ferries, which are limited in number and not much cheaper than planes), probably lodging costs, time off from work because you need to be in a foreign country on a working day, etc. All in addition to whatever BS fees the consulate decides to charge you.
(And of course, double most of the above costs if you have mobility or other health issues which require your spouse to accompany you for your own safety.)
Roy Berg — carpet-bagging enabler of tyranny for the empire.
He’s really hoping to get rich on FATCA so he’s pissed that two Canadian ladies are throwing a monkey wrench into his game.
Bloody hell: is this anything like what the new price is to be?
http://isaacbrocksociety.ca/consulate2/comment-page-30/#comment-2698610
@calgary411
They are obviously not satisfied with the exit taxes being levied on covered expats so they will just hit EVERYONE with an exit tax.
Wow. And I thought $450 and plane tickets was bad enough.
I be they start charging to document relinquishments as well
The collection of recent anecdotes about an impending renunciation fee increase does not surprise me one whit. When I coughed up a couple of years ago, I moaned inwardly about not already having done the job for free prior to 28 June 2010. I also consoled myself that it was sure to get much worse in the future — aka the Hodgen Principle. The “final rule” Federal Register item from 2 February 2012 is worth a read. Find it annotated and linked to at
http://usxcanada.wordpress.com/2012/02/02/2012-feb-2-kennedy/
That notice of fee changes back then shows some doubles, triples, and even one sextuple. So a quintuple now for renunciation seems entirely plausible. So far no one seems to have speculated or rumored on the possibility that a lucrative new fee could be imposed for relinquishment as well. The only upper boundary on fee increase probably will be the case that can be made for actual costs incurred. To some degree, those costs seem likely to exponentiate as volume grows (gov isn’t biz, so no reason for unit costs to fall). Besides which, that wonderful raft of beneficial services provided to extraterritorial U.S. persons couldn’t possibly be funded by … [gulp] … mere taxation. Whether a tidbit about an upcoming price increase should be viewed by the “customer” as helpful tip or pushy threat is so subjective, isn’t it?
The notion that the current renunciation fee only covers a portion of the costs is laughable. Who defines the process and the resultant costs? Not the “US persons” who have to pay for it to be sure. If the costs are too high, then it’s time to rethink the process. Apart from that, aren’t these “services” supposed to be one of the benefits of having US citizenship in the first place? If everything is so expensive, why are US consulates profitable?
Pingback: The Isaac Brock Society | Comparison of fees and procedures for renouncing citizenship in various countries
The State Department’s Paperwork Reduction Act filings say it only costs them about two hours and US$67 to process each DS-4079. But then they also claim that each renunciation costs them more than $1,800.
So I wonder: what could they possibly be blowing all the rest of that money on? I doubt it’s travel costs. And it’s certainly not printing costs. So it must be human effort spent looking through records; in simpler terms, wages. Assuming the same hourly wage as for DS-4079 processing, that implies they’re spending 50 hours per renunciation. Or maybe there’s one person involved in the process whose wages are a lot higher (IIRC, someone here claimed that CLNs have to be signed off by very high-level folks), but then how much time could that person really be spending?
This conversation took place at a US consulate in the near future.
Johnny Canuck: ‘I’d like to renounce’. Consul: ‘that’ll be $2500.’
JC: ‘Arghhh!’ Consul: ‘ I beg your pardon’. JC. : ‘I said Argo’.
Consul : ‘Argo what?’ JC: ‘Argo f**k yourself’
Is it time for a presser? ” USConsulate in Toronto not obeying US law.’
Refusing legal requests for CLNs
Appointments for renouncing US citizenship
unavailable until next year”
It’s so refreshing to read an article in the MSM that gets things right. Patrick Cain certainly understands the issues discussed here.
For those who were intending to renounce in Toronto, I’d like to suggest Halifax as an alternative. They have some slots open in September
http://canada.usembassy.gov/consulates/halifax.html
I relinquished there and have talked to someone else who went there. The Halifax Consulate is very easy to deal with and very friendly.They quickly sent my relinquishment request off to D.C. and I received my CLN in 9 weeks, which included the Christmas holidays.
Considering the potential costs of having to file a 2015 return and the possibility of a fee increase, a trip to Halifax may save money in the end. Besides, Halifax is a nice place to visit.
What is the expression on justice? Justice Delayed is Justice Denied!!
Concerning expatriation as a fundamental right, a reminder to all readers from the Expatriation Act 1868 which remains law;
“Whereas the right of expatriation is a natural and inherent right of all people, indispensable to the enjoyment of the rights of life, liberty, and the pursuit of happiness; ”
AND
“That any declaration, instruc- tion, opinion, order, or decision of any officers of this government which denies, restricts, impairs, or questions the right of expatriation, is hereby declared inconsistent with the fundamental principles of this government.”
I would have to say that ANY road blocks placed in the path of relinquishing/renouncing to include delays or any fee whatsoever is in fact unconstitutional.
@George
For us, freedom delayed is freedom denied.
“Please sir, I want some more freedom” begs the beleaguered citizen of the nation that espouses to lead the world in liberty and freedom.
“You want MORE freedom than we already bestow on you? It’s not possible to have more when you already have the most of any citizen on Earth! LEAVE, and prove that you love your money more than your country by paying a big fat fee, back taxes and penalties to us!”
UPDATE: August 22, 2014
The Patrick Cain article itself can use some comments, which uses Facebook, Yahoo, AOL or hotmail. There are only four there — the last saying “Being little brother has its benefits. But it also comes with a cost.” (Correct: Costs to stay within the new Berlin Wall and cost to get over it.)
One comment (Innocente) reports:
Another says:
So what will be the new fee(s) for the guaranteed right to expatriate and when will it / they be implemented?
DONATE: http://www.adcs-adsc.ca/
If the US renunciation fee is raised to US$2,000, here’s a quick back-of-the-envelope calculation on the amount of money that it could potentially cost Canadians with clinging US citizenship:
Scenario:
1,000,000 Canadians with US citizenship
1/2 renounce and 1/2 relinquish
Renunciation fee is $2,000 and Relinquishment fee stay at $0
Calculation:
1,000,000 x 1/2 = 500,000 renunciations in Canada
500,000 x US$ 2,000 renunciation fee = US$ 1 billion !
Comments:
1) It is conceivable that relinquishment will not remain a no-charge activity. If $2,000 was also charged, double the $1 billion to $2 billion!
2) Many Canadians with undetectable US citizenship may go underground rather than expatriate.
3) While 7.6 million US citizenship holders around the world could potentially bring in $7.6 to $15.2 billion in expatriation fees at $2,000 a head, it would be easier to fine a foreign bank. Of course, why not do that too!
Even with the increase in the number of relinquishments and renunciations, I really wonder if the number of dual US nationals is decreasing.
Just read an article this morning about a hospital in LA specialising on births for tourists from China.
Here in Japan there is no rush for the door yet, even though there a lot of dual US citizens who were born in the US while their parents were there on business assignments and then returned to Japan. The number is estimated to be at 10,000
There has been zero coverage of FATCA in the Japanese vernacular media.
If it is costing them so much then why not make getting the paperwork local to the consulates! I am sure the officers there are qualified to recognize whether or not a relinquishment is valid and qualified to process a renouncement without these documents needing to leave the building, go to D.C. languish there for months, be sent back, send out notifications and then mail out documents. Why not streamline the process so it’s not so costly, time consuming and difficult for all involved? They are so backed up but, it is the slow processing and keeping track of paperwork it would make sense to allow them to be processed with CLN issued on the spot and then copies sent to D.C. to be filed wherever these things go. I swear I think my CLN fell into a crack behind someone’s desk. They are swamped so why up the fee and not solve the back up problem? Do something that really speeds things up rather than slow them down. They can raise the fee but, all that will mean is dragging out this process even more. People will save up to get this done and over with if they have to. They haven’t got a choice. The people in control of all this in D.C. need to step up and do something to help local consulates work more smoothly and to allow people who wish to renounce or relinquish do so in a timely and efficient manner.