In July 2012, Leneuoti Tuaua and four other plaintiffs filed suit in the D.C. District Court against the U.S. government and three State Department officials, claiming that American Samoans should be entitled to U.S. citizenship rather than their current “U.S. national” status. The lawsuit was dismissed in June 2013, but the plaintiffs appealed to the D.C. Circuit in February.
A number of legal scholars have filed amici briefs for the appellants, including Michael Ramsey of the the Tenth Amendment Center. More recently, the Department of Justice filed its own amicus brief attempting to rebut the appellants’ claims. Marianas Variety reports:
On Tuesday, the Obama administration on filed a brief before the District of Columbia Circuit Court arguing that Americans born in U.S. territories have no constitutional right to citizenship. Relying on a series of controversial Supreme Court decisions known as the Insular Cases that have been compared to Plessy v. Ferguson, the Obama administration defended a federal statute that expressly creates two classes of American nationals: those who enjoy the protections of U.S. citizenship and those who do not.
One of the more obscure consequences of this two-class system is a corner-case interaction between the Immigration & Nationality Act and the Internal Revenue Code: U.S. non-citizen nationals abroad are not “U.S. Persons” for tax purposes under 26 USC § 7701(a)(30).
This has no effect on American Samoans at home, since they — like every else — pay taxes to their local government for the services they actually use. It does make things simpler for American Samoans who move to Apia or Auckland or Australia or beyond. Due to the U.S.’ strange system of non-resident taxation — shared with only one other country on the planet, Eritrea — U.S. citizens (including Puerto Ricans and U.S. Virgin Islanders) and green card holders who live in other countries must spend thousands of dollars on professional assistance checking in with the IRS every year to prove the obvious fact that they’re already paying taxes to the country where they live and owe no U.S. tax. However, non-citizen nationals abroad are exempt from the IRS’ requirements.
But for the far more numerous American Samoans living in the fifty states, who pay the same taxes as their neighbours, this exemption is useless — and nevertheless, they pay a high cost for it: they cannot enjoy the same voting rights as people from other U.S. territories, nor many other rights enjoyed by other Americans, such as sponsoring a foreign spouse for a non-quota green card. Under Washington’s bizarre ideology, the price for freedom of emigration is your right to vote and your right to family life.
American Samoans and FATCA
Various sources have explored the impact of “non-citizen national” status on American Samoans residing in California, Hawaii, and other states. But here, I’ll discuss the lesser-known impact on American Samoans residing in other countries, such as the 489 people who reported their place of birth as American Samoa in New Zealand’s 2006 census.
As Marianas Variety points out:
Tuaua v. United States considers whether the Constitution’s guarantee of birthright citizenship extends to people born on American soil in a U.S. territory. The plaintiffs in the case were born in American Samoa, a U.S. territory since 1900. Among the plaintiffs are three veterans. American Samoa is distinguished as having the highest casualty rate in Iraq and Afghanistan of any U.S. jurisdiction. By statute, these plaintiffs and others born in American Samoa are recognized as “nationals, but not citizens, of the United States,” meaning that these passport-holding Americans must naturalize in order to be considered citizens by the federal government.
So back in the Homeland, the federal government has doubled-down on its commitment to maintaining rigid lines between “U.S. citizens” and “non-citizen nationals”. But abroad, the situation is even worse: thanks to FATCA — the U.S. effort to hunt down every American who maintains a so-called “foreign” bank account outside of the U.S., even if that account is down the street from them in the country where they actually live — non-citizen nationals are mistakenly being subject to the disadvantages of U.S. citizenship, while enjoying none of the corresponding advantages.
The confusion begins because of FATCA Intergovernmental Agreements which define “U.S. Territory” to include American Samoa, without clarifying whether bank customers born in American Samoa should be treated as falling under the “U.S. place of birth” category of “U.S. Indicia”. These same IGAs still define “U.S. Person” to include only “a U.S. citizen or resident individual”, not a U.S. non-citizen national, meaning that an account opened by an American Samoan who resides in a foreign country (though not one who resides in American Samoa) technically is not a U.S. reportable account under FATCA.
But do you serious think banks in New Zealand — let alone in non-Anglophone countries — will understand this when confronted with an American Samoan customer who carries a blue passport listing a place of birth which is clearly defined under the IGA as “U.S. Territory”? Or will those banks just close the accounts of American Samoans and cancel their mortgages, as they have done to other members of the American diaspora?
Evidence: financial institutions don’t understand the citizen/national distinction
I have located only one bank (DHB Bank, a Dutch/Turkish commercial bank) whose publications suggest that their legal advisers grasp the intricacies of the American Samoa issue. Far more typical of the Compliance Complex is the law firm of Arendt and Medemach, which — possibly due to inter-language confusion over the distinction between “citizen” and “national” — erroneously claims that under Luxembourg’s IGA:
Luxembourg FIs will be required to report accounts held by individuals that are classified as a Specified US Person under FATCA, including US nationals, US permanent residents, as well as on non-US entities that are controlled by such persons.
Similarly, F&C Investments (a subsidiary of Canada’s BMO Financial Group), presumably responding to FATCA, now states that “all registered [fund]holders must be over 18 years of age and not US Nationals/Persons”.
This illustrates a broader phenomenon: non-U.S. financial institutions are not responding to FATCA by spending their time and money doing in-depth studies of the history of United States nationality legislation in order to make sure that they don’t mistakenly report people’s accounts to the IRS when no reporting is required by law; instead they’re just kicking out all customers with any sign of U.S. taint, whether those customers be “practicing” U.S. citizens, non-citizen nationals, citizens of other countries with no connection to the U.S. beyond a parent or a place of birth, or even people who already went to a U.S. consulate to report their relinquishment of U.S. citizenship & get a CLN.
And while the State Department takes great care to ensure that American Samoan “non-citizen nationals” — whether at home or in other countries — aren’t mistakenly granted any of the benefits of American citizenship unless they’ve paid that US$680 naturalisation fee, it is doing absolutely nothing to prevent foreign banks and governments from discriminating against them on the mistaken assumption that their unusual legal status is equivalent to American citizenship.
Conclusion
In short, under FATCA, American Samoans are going to suffer the same harm to their freedom of emigration as other Americans. The issue here is not taxes: American Samoans living outside of the United States don’t have to pay any taxes to the U.S. government under the Internal Revenue Code, but other Americans born in the fifty states, Puerto Rico, USVI, or Guam who reside abroad rarely end up owing actual taxes to the U.S. government either.
Instead, for most members of the American diaspora, the primary injury from the U.S.’ ideology of “citizenship-based taxation” is not the tax but the ridiculous reams of IRS paperwork filed every year (and the draconian penalties for errors on that paperwork) to demonstrate that you owe no tax, and the discriminatory refusal by local financial institutions to offer you the same services that they offer to all your neighbours, for fear of what the IRS will have to say about it — and now, American Samoans abroad are suffering the latter fate along with the rest of the American diaspora.
Everyone be sure to thank Carl Levin for piling one more injustice on top of American Samoans — who can’t even get redress by trying to vote him out of office.
Part of the problem is semantics. In many countries, the colloquial definition of a national and citizen is synonymous.
@ Eric
Interesting post as always.
It has often be pointed out that Fis will likely be making errors in their determination of who is a U.S. person for FATCA purposes. The rules are complex and confusing, especially when considering the status of persons born to a U.S. citizen. The Samoan example just adds another complication to the mix.
And don’t forget about Swains Island, population 17.
http://en.wikipedia.org/wiki/Swains_Island
I had been interested in the situation of those born in the Philippines during the time it was an outlying possession of the U.S. Similar to Samoa, those born there were nationals, but not citizens. Will some FI somewhere decide that older Filipinos are also U.S. persons?
FATCA is a geographically limitless and instantaneous expansion of American jurisdiction through its non-resident citizens and nationals. What could go wrong?
I`m guessing there are no fat cats there to fleece?
Is it of any significance that in the second Marianas Variety quote they mention that the Samoans are “passport-holding Americans”?
The reason I ask this is because one of the criteria the US has relied upon in asserting CBT against accidentals and others with similarly tenuous links is that they benefit from their US citizenship. Any action undertaken by such a person at any point in their lives that is deemed to avail oneself of any such benefit (e.g. obtaining a US passport) justifies the imposition of CBT. This isn’t the legal position in the US tax code, which doesn’t require any such action to be taken to impose CBT, rather the comments of Congressmen (Carl Levin I think) when asked about accidentals. It’s a rather self-serving comment, because dual U.S. Citizens are required to leave and enter the US on a US passport (a common requirement in many countries). Accidentals born on US soil would have to, by law, depart on a US passport. Of course in the past, that rule wasn’t strictly enforced, with the result that only accidentals who broke the law might be viewed sympathetically by Congress.
However, if Samoans are entitled to a US passport, but only subject to RBT, that would certainly undermine any argument put forward by Congress that acquiring a US passport is justification for CBT.
It’s somewhat ironic (but understandable) that Samoans want to be considered full-fledged US citizens and not only US nationals; “Shadow Raider” was aiming at achieving just the opposite for US citizens abroad, i.e. getting them classified as US nationals instead of US citizens. Haven’t heard much on that recently, however.
Comment on another thread about conflicting definitions of “U.S. Person” in different laws made me go check, out of curiosity, and I confirmed: Executive Order 12333 does not prohibit the NSA from spying on American Samoan non-citizen nationals, whether they are at home or abroad., only on US citizens & LPRs. That’s right: green card holders have greater rights than American Samoans.
http://www.archives.gov/federal-register/codification/executive-order/12333.html#3.4
@Eric
In June last year, Obama addressed the nation in response to Snowden’s revelations that the NSA was monitoring US phone calls. His words were: “This does not apply to US citizens, nor to people residing in the US.”
My reaction at the time was: “Nonsense. I’m a US citizen abroad. How would they know to exclude me from such monitoring?”. Ultimately I reasoned that as there are only around 7 million US citizens abroad among a population of 7 billion, there is only a 0.1% chance that the NSA might be monitoring a foreign American. Presumably this threshold is sufficiently low as to not require the NSA to make any such determination before collecting telephone metadata. I guess if I advised them of my US status, they’d be precluded from monitoring my telecommunications. On the other hand, such advice might allow them to elevate my risk status, whereafter they could legally monitor me. Perhaps all US citizens abroad should advise the NSA of our existence so we can either avail ourselves of our privacy rights, or waste their time monitoring us. Either works for me.
American Samoa’s non-voting representative to Congress, Eni Faleomavaega, lost his seat to Republican challenger Aumua Amata Radewagen
http://www.samoaobserver.ws/editorial/12117-well-done-aumua-amata
Not sure whether the citizen vs. national debate played any role in this, but Faleomavaega is an opponent of Tuaua’s lawsuit and wants the issue to be settled by legislation (an “organic act”) instead.
Folks in the Virgin Islands (who are U.S. citizens) also seem to support Tuaua’s lawsuit and to have been angered by the Holder DOJ’s efforts to oppose it:
http://virginislandsdailynews.com/news/v-i-officials-lend-support-to-suit-fighting-for-citizenship-rights-in-u-s-territories-1.1687471
http://virginislandsdailynews.com/news/obama-citizenship-not-a-fundamental-right-for-virgin-islanders-1.1737355
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Tuaua and his fellow plaintiffs are asking the DC Circuit for a rehearing en banc
http://www.equalrightsnow.org/american_samoans_seek_full_d_c_circuit_review_of_panel_decision_denying_birthright_citizenship
I need help here.
If a US non-citizen national, “citizen” of American Samoa, resides in Canada or Japan for an entire year (calendar year = tax year here), they aren’t a US citizen and aren’t a US resident so they don’t have to file a US tax return unless they have income from the US government, right?
They probably have to file an American Samoa tax return, and of course Canada or Japan gets first crack unless a source country or territory already got first crack. But they don’t have to file a US return, right?
Second question:
An American Samoan gets a US passport that identifies the person as a US national not a US citizen. While the American Samoan is resident in Canada or Japan, a US consulate can renew that passport, right?
A US national doesn’t have to be a US citizen to get that non-citizen national’s passport from a US consulate, right?
Combination:
A person who gets that non-citzen national’s passport still doesn’t have to file a US tax return, right?
Although I only know people who “should” be in this situation an not anyone who actually is, I think this is more than a hypothetical question. If anyone knows, please say.
Here’s another plea for help.
If a US non-citizen national wishes to renounce US nationality, do they have to naturalize first?
Form DS-4080
http://www.state.gov/documents/organization/81606.pdf
“I, [Name], a national of the United States, solemnly swear/affirm […]”
So far, so good.
“That I formerly resided in the United States at: [Address]”
Hmm. That raises a question too, but not the question I’m asking today.
“That I am a national of the United States by virtue of:”
OK, that’s good too.
“[ ] Birth in United States or Abroad to U.S. Parent(s)
[ ] Naturalization [Date, court, address]”
The non-citizen national cannot check either of those boxes. Both of those possibilities confer citizenship, not non-citizen nationality.
If a person who was born in American Samoa is a national of the United States by virtue of birth in United States, the 14th Amendment makes the person a citizen by virtue of birth in United States. Since the 14th Amendment doesn’t apply to the national, the person’s birthplace in American Samoa wasn’t in the United States.
I think relinquishment of nationality is possible without first naturalizing, but renunciation seems impossible.
Sorry for two in a row, but here’s another one.
Did Afroyim v. Rusk overturn Rabang v. Boyd?
The 14th Amendment prevents loss of citizenship without consent, but the 14th Amendment is silent on the matter of loss of non-citizen nationality. In Rabang v. Boyd, Congress gets do decide who gains non-citizen nationality by birth and who loses non-citizen nationality without consent.
https://supreme.justia.com/cases/federal/us/353/427/
However, in Afroyim v. Rusk, the US Supreme Court uses the words citizenship and nationality as synonyms. The court seems to make the rule for nationals the same as for citizens.
https://www.law.cornell.edu/supremecourt/text/387/253
Tuaua filed for cert in the Supreme Court on Monday:
http://www.nbcnews.com/news/asian-america/american-samoa-birthright-citizenship-case-arrives-supreme-court-n510101
“Will some FI somewhere decide that older Filipinos are also U.S. persons?”
Also middle-aged. If the Supreme Court takes the case, and if the Supreme Court rules that US territories are part of the US, then older Filipinos were born in the US, lived in the US before Philippine independence, and gave birth to middle-aged Filipinos who might now find themselves cursed.
http://www.nytimes.com/2016/06/08/opinion/are-american-samoans-american.html?smid=tw-nytopinion&smtyp=cur&_r=0
Supreme Court won’t hear their case
http://www.supremecourt.gov/search.aspx?filename=/docketfiles/15-981.htm (“Jun 13 2016 Petition DENIED”)
Various articles
http://www.guampdn.com/story/news/2016/06/13/supreme-court-rejects-birthright-appeal/85846290/
http://www.inquisitr.com/3201057/supreme-court-refuses-american-samoan-citizenship-case/