As the date for the summary trial for the Canadian FATCA IGA draws nearer, behind the scenes, various groups are contemplating other ways to attack USA’s extraterritorial overreach into the sovereignty of other countries, and its insistence that US persons abroad are Americans first and foremost, thus subject to US law. Republicans Overseas are expected to soon be announcing a legal challenge against FATCA from within the USA. Rumblings at the Isaac Brock Society, and at various forums representing Americans abroad, hint at a potential future legal challenge aimed directly at citizenship based taxation.
All these attempts at helping to save ‘US persons’ living outside USA from American laws, are laudable and worthy of support. However for the most part, no group has been talking about another obvious battle to be fought, which is the fight to help set people free from the chains of unwanted US citizenship. How many times have we heard from homeland Americans who don’t understand our pain, “If you don’t like it, why don’t you just renounce”? Unfortunately, relinquishing US citizenship is a mine field full of potential compliance nightmares (ex’s: PFICS, foreign trusts), possible penalties, and an outrageous renunciation fee (currently $2,350 USD), thus rendering it a near impossibility for many.
Yet to be free from US citizenship would mean freedom from FATCA, and freedom from citizenship based taxation(CBT), and ultimately freedom from ANY AND ALL US LAWS imposed by USA against those it considers ‘US persons’ NOW AND FOREVER MORE.
Of course not everyone wants to give up US citizenship, and for those who do not, their interest is naturally directed more towards the particular US laws that cause harm to Americans living outside USA – currently FATCA and CBT. Some think that FATCA would be fine if USA were to operate on a residence based taxation system like 99.9% of the rest of the world. They argue that citizenship based taxation is the root cause of all US persons’ problems worldwide and therefore is the dragon to be slayed: freedom from CBT is freedom for everyone, whether that person considers themselves to be an American Abroad, or just a Canadian who happens to have been born in the USA.
Others worry and wonder what the USA will dream up next to inflict on its persons living outside USA. Some see US citizenship as the root problem, particularly those who have never identified as American or who are fed up with US imperialism and have fully embraced the nationality of the country they now live in, and are citizens of. Freedom from US citizenship would relieve a US citizen from FATCA and CBT and from all extraterritorial US laws aimed at US citizens.
Unfortunately, so far no one is championing a fight against this particular battle – the right to be able to easily rid oneself of unwanted US citizenship. It could be argued that the Canadian government should intervene and help Canadians rid themselves of clinging US nationality. Canada has the most US persons numerically and per capita in the world. In addition, Canada is unique in that it shares not only a border with the USA, but also a very similar culture. Canadian US persons, unlike US persons elsewhere in the world, don’t have the distance between them and the ‘home country’ that tends to make the heart grow fonder. US persons in Canada look and act and sound for the most part (minus an accent perhaps) like every other Canadian. They blend in. They assimilate more readily than say for example Americans who expatriate to Japan or Germany or Sweden or Australia.
Canada, should be saying to the USA, “These people you call ‘Americans living in Canada’ are Canadian. They live in Canada. They don’t belong to you. Make it easy for them to cut the ties and formally renounce a citizenship that they don’t want. We don’t care about your FATCA laws or your CBT laws or any other US laws. Do not apply your laws to Canadian citizens living in Canada. If you are going to insist that those you deem US citizens obey your laws while living in Canada, then give Canadians the freedom to choose whether or not they want to be US citizens”. The governments of all countries should be saying this, but they are not. The Canadian government should be leading the way, but it is not.
Maybe it’s time for some legal action from Canadian citizens with ‘boots on the ground’, to insist that the USA let people who do not want to be US citizens, go free. As with the Canadian FATCA IGA lawsuit, Canada with its unique position as neighbour to the USA is the obvious country to lead the way towards freeing people world wide from the chains of unwanted US citizenship. But so far, this has not happened. Is anyone up to the challenge?
I am curious what people think with regard to the following two options. And since we all have different backgrounds – some are Canadian, some identify as American, some are US tax compliant, etc – those differences will impact our choices.
If you are deemed a ‘US person living outside USA’, and you were to be presented with the following two choices, which would you choose?
1. You may remain a US citizen, but citizenship based taxation will no longer apply to you. You will no longer have to file US tax forms while living outside of the USA, and USA will forgive you of any prior non filing. Note however that you may or may not be subject to FATCA (that hasn’t been worked out yet, as you are still a US person), and the same goes for FBARS since technically your accounts are foreign (not in the USA). There is of course no guarantee that additional US person rules will not be imposed on you in future but rest assured that CBT is history.
2. You may renounce US citizenship with no strings attached. It doesn’t matter if you never filed a US tax return or FBAR in the past. There will be a small, administrative fee (approx. $200), to process your request, but there will be no past compliance issues to deal with. You will receive a Certificate of Loss of Nationality for your records.
In order to help understand the choice you make, it would be appreciated if you would also answer the following questions:
1. What country do you live in?
2. Are you a citizen of the country you live in?
3. How long has it been since you left the USA?
4. Do you plan to return to the USA to live at some point in the future?
UPDATED June 20/2016 (thanks to Char for the suggestion): For a person with a disability rendering him/her incapable of making a decision for himself/herself, his/her guardian can make the decision between choices 1 and 2 above on his/her behalf.
WK and Charl,
That proviso is helpful, but the issue goes much deeper than just legal *guardianship* which is too restrictive. See Alberta’s Adult Guardianship and Trusteeship Act: http://p.b5z.net/i/u/10086419/f/AdultGuardianshipAndTrusteeAct.pdf
Perhaps the US Department of State could reconsider some of this more up-to-date information on who, since there are the unfair consequences of US citizenship-based taxation and actual entrapment to *accidentals* / *non-meaningfuls* not able to renounce an acquired citizenship (without choice), should or should not be able to renounce without the help of a parent, guardian or trustee.
@Char, thanks for explaining your reasoning. If all this FATCA BS had been going on 8 years ago when your parents were still alive, then perhaps you could have just hung on to your US citizenship awhile longer, as there was no timeline on the options I presented.
@WhiteKat
This is all making my head explode….again. If indeed these conditions existed 8 years ago I would STILL have been in one ugly mess. Because my stay would have been temporary I would still have had assets in Canada. This would have given me all the headaches current immigrants/workers in the US are having. The US is just causing untold, ridiculous, unwarranted misery on everybody for absolutely NO reason. They need to just stop.
Another vote for Option 2 in a heartbeat. I’m working on renouncing/relinquishing at the moment, so #2 would be a dream come true.
And yet if it weren’t for FATCA and other instances of the increasing overreaching of the U.S. government, and “Homelanders” denigrating Americans abroad at every turn, showing me what a very unequal relationship the US and I have, I’d probably choose Option 1. But after the past number of years, I find the thought of remaining a U.S. citizen exceedingly unpleasant.
1. What country do you live in? Canada
2. Are you a citizen of the country you live in? Yes, naturalized.
3. How long has it been since you left the USA? 21 years.
4. Do you plan to return to the USA to live at some point in the future? No. Never. This is home.
My answer between the two options would depend if the decision was made by the US Supreme Court or by the other branches (congress and president). The S.C. justices, while chosen by politicians, are not inherently politicians and they ultimately write their opinions based on their understanding of the Constitution. (Although the president swears to uphold the Constitution, he mainly upholds his political agenda.) The prevailing consensus of the S.C. does not quickly change because they only handle so many cases per year. If the S.C. ruled that it is unconstitutional for the IRS to impose FATCA and associated FBARs on Americans living abroad (as Bopp hopes to prove) AND the S.C. essentially overturns CBT, then I would keep my nationality. In other words, if having dual citizenship with the U.S. would be comparable to Canadians having dual citizenship with their (benign) nation of origin, then I would see no need to renounce it. OTHERWISE, I would pick option #2 provided I am not disallowed from entering the U.S. to see extended family on my Canadian passport even though I wasn’t born here in Canada. (If I was disallowed, I could not renounce yet due to elderly relatives–like my mother–who cannot travel to Canada to see me.)
ANSWERS:
1. Canada
2. Yes
3. 24 years
4. Probably not
1-Canada
2-yes
3-accidental, left in diapers. few months old. dual@birth, never lived there, no us passport
never voted, no ssn. Relinquished pre-2004 with intent to rid US and worked for CDN FED
government briefly. I’m neither a US citizen nor a TAX citizen but I STILL DO NOT DO NOT
DO NOT TRUST THEM.
4-no, but winters are becoming increasingly difficult>>>IMPOSSIBLE here and I must
find an alternative. next closest would be mexico. have not set foot in the US for years and
have turned down invites to Florida during the winter because I don’t trust them.
Can anyone tell me how it is possible to have a CLN and still have an outstanding IRS bill???
someone posted here a few weeks ago that they are in that situation. it has me very confused.
CBTisLARCENY,
The process of expatriation / relinquishment (one way which is renunciation) at a US Consulate, which comes under Department of State, and getting one’s CLN has only to do with severing your US nationality/citizenship. After expatriation, depending on circumstances and the need or desire to ever again cross the US border, some choose not to file IRS Form 8854 as an attachment to their last 1040/1040 NR tax filing and sent to the Department of Treasury, which is certification that one is compliant with their US tax obligations.
This is a good explanation of that process and how one is deemed a *covered expatriate* if that form is not filed: http://hodgen.com/chapter-4-are-you-a-covered-expatriate/.
Have you formalized your relinquishment by having worked for the Canadian federal government and have your CLN? See: http://isaacbrocksociety.ca/relinquishing-acts-performed-prior-to-2004/.
To the American Pharaoh – LET MY PEOPLE GO!
My answers
1. What country do you live in? Canada
2. Are you a citizen of the country you live in? No, but I have applied. My citizenship test should be anytime now.
3. How long has it been since you left the USA? 3 1/2 years.
4. Do you plan to return to the USA to live at some point in the future? No. My wife, and life, are here.
If you are deemed a ‘US person living outside USA’, and you were to be presented with the following two choices, which would you choose?
At present, I will choose option 2. Before I would even consider option 1, FATCA, and FBAR will have to be non-existent, first. Also, would I even trust the government to not reimplement these laws in the future? Unlikely, which is why I would only consider option 1 if both FATCA, and FBAR, were rendered ineffective through litigation, so that it could never legally come back.
So basically, Option 2.
I would vote for Option 2, no question. I have no interest in US citizenship and have never wanted it. I have no attachment to the USA, no SSN, never had a US passport, never voted there, do not own property or investments there (never will), have never worked there and have no family there. I have no trust in the government of the USA. I always believed I was only Canadian and my US citizenship was purposely left unclaimed decades ago according to the US law in place when we left.
1. I live in Canada
2. I am a citizen of Canada from birth, born to two Canadian parents
3. I left the USA about 50 years ago as a child
4. I have no plans to ever live in the USA, all my family members are Canadian. At this point I have no plans to ever travel in the US again.
I am cursed with a US birthplace.
Oops!! I forgot to mention which option I would prefer. Well…it’s a tough one. I’ll probably have to go with # 1 just because of my family still living there and best friends. I will say however, that option #2 is tempting!! I will not be able to renounce until 2017. I’m hoping that something will change before then, but I’m a dreamer!!
This shows how my suggestion of signing up to be a poll worker is. As a poll worker, you relinquish U.S.A. citizenship if you’re already a Canada citizen. No fee, no consular appointment, and you don’t have to admit you ever were a U.S. citizen or that you’re signing up to comply with U.S. laws.
The whole problem is citizenship itself, the idea that you have this spirit like a guardian angel that follows you around everywhere you go, but really it is nothing more than documents embellished with autographs, instructing the gun-toting goons in bulletproof vests to do this or that. Lines on the map mean a lot to bureaucrats.
1. What country do you live in?
Japan
2. Are you a citizen of the country you live in?
No
3. How long has it been since you left the USA?
A couple decades
4. Do you plan to return to the USA to live at some point in the future?
No
Japan does not allow dual citizenship, so if I become a citizen, Option 2 is the only one that would work for me. There are some hurdles in the way of applying right now, but if they become cleared, I am already fully compliant with US filing requirements (I think!), and I have nowhere near enough income or net worth to trigger exit taxes, so Option 2 would be available via relinquishment.
Meanwhile, as long as I am in the present situation, then Option 1 is the only possible solution I could hope for. Unfortunately, I am feeling very low on hope at the moment.
1. What country do you live in?
An EU country
2. Are you a citizen of the country you live in?
Yes, now, but at birth I had citizenship of another (now) EU country – lost ~20 years ago on nationalising here – and that of the USA (the US Embassy lied to me by saying that nationalising here would have no effect on my US citizenship).
3. How long has it been since you left the USA?
More than 40 years ago
4. Do you plan to return to the USA to live at some point in the future?
Never. I’ve become increasingly uncomfortable even visiting, which I now try to avoid.
As I have already renounced, I guess I can’t choose 1 or 2, but it would have been 2. When I was younger, having more than one passport felt like a kind of “insurance” against vague, undefinable future trouble. Now I know that having a US passport is a 100% guarantee of present and future trouble.
Being pragmatic, renunciation was for me the only rational choice. I haven’t regretted it for a single second (au contraire….), and cannot imagine ever wanting US citizenship ever again.
@TomAlcere, “This shows how my suggestion of signing up to be a poll worker is. As a poll worker, you relinquish U.S.A. citizenship if you’re already a Canada citizen. No fee, no consular appointment, and you don’t have to admit you ever were a U.S. citizen or that you’re signing up to comply with U.S. laws.”
But I do believe that it would be wise when you apply for such post/office/employment that you tell “Elections Canada” you are considered a USC and that you are taking said post/office/employment with the intent of relinquishing.
Then swear an affadavit to the effect before a lawyer!!
A little more thought on my prior Option thoughts.
Again, I have relinquisehed, no CLN but do have signed letters from the USG stating I relinquished and that the USG no longer considered me a USC. Very unique situation……..and costly…….$$$ and LCUs.
In theory, I am also Canadian thanks to knowledge gained here at IBS and changes in Canada law.
With respect to Canada would I renounce considering its cheap and non-intrusive? NO. I am not a bother to Canada and Canada is not a bother to me.
There is a single problematic other nationality in this world and that is the Exceptional States of America.
And…..I do believe that a future Supreme Court could reinstate USC against the wishes of many people under the guise that these thousands who got CLNs did so under duress!!!
1. What country do you live in?
Japan
2. Are you a citizen of the country you live in?
No.
3. How long has it been since you left the USA?
15 1/2 years.
4. Do you plan to return to the USA to live at some point in the future?
Not any more.
Sadly, neither of the two choices work for me. Regardless the difficulty leaving the U.S. I am not eligible for Japanese citizenship. But even if I could I would still have a katakana name and obviously non Japanese so my accounts would still be at risk through FATCA. Therefore option 2 is closed to me.
Option 1 is a good start but as long as FATCA and FBAR exist, my bank accounts and thus my ability to earn money are at risk. I need all three to disappear like last year.
1. What country do you live in? Canada
2. Are you a citizen of the country you live in? Yes
3. How long has it been since you left the USA? 30 years
4. Do you plan to return to the USA to live at some point in the future? No my wife hates the USA
1. What country do you live in? Australia
2. Are you a citizen of the country you live in? Yes
3. How long has it been since you left the USA? I last left the US 22 years ago – I have not set foot on US soil since then.
4. Do you plan to return to the USA to live at some point in the future? No, the last time I was in the US I discovered I was a second class citizen – I could not get health insurance. When you have epilepsy that is serious.
Oops I forgot to add – I would go for option 1. I can not afford option 2 if I have to pay a fee.
Whitekat:
I like your idea about a “Streamlined Program” for renunciation. This is what many of us (not all) really want. Don’t they get it? No they don’t.
@PierreD, “This is what many of us (not all) really want. Don’t they get it? No they don’t.”
Like the rest of the world provides?
@Brockers, step back for a minute and riddle me this……..
Do a word switch and change United States to Ireland.
If Ireland had been doing this and they have lots of expats and issued CLNs blah blah
Would anyone care?
I would opt for number #2. I firmly believe that we should have been given the option. How hard is it to run ads on American T.V. (since everyone in Canada gets some kinda US news feed) giving everyone a choice to renounce or keep citizenship? Really seriously, I don’t believe that the $2,350.00 covers the administration costs of reviewing (3) years taxes, (6) FBARS, the additional returns until one can renounce, the appointment to renounce or if you needed to file 3520A (goes to Utah). The bottom line, I believe those who are complying and renouncing are costing them money. I question if it’s actually generating anything once administrative costs are factored into the equation.
On second thoughts, I think it should not have to be either option 1 or 2 – those “US persons” living outside of the US should not have to deal with the US taxation system period. And the US government should not claim people as “US persons” who have little or no connection to the US.