Closely following on the heels of their previous announcement that the $2,350 fee for renunciation — twenty times as high as in other developed countries — “protects” the human right to change nationality, the folks at the State Department have announced that they’ll be extending that “protection” to people who relinquished U.S. citizenship under 8 USC § 1481(a)(1) through (4) and seek to obtain Certificates of Loss of Nationality documenting that fact as well.
In the latest Schedule of Fees for Consular Services to be published in the Federal Register on Tuesday (80 FR 53704, 53707), Under Secretary of State for Management Patrick F. Kennedy or one of his ghostwriter minions proclaims:
Currently, nationals who renounce nationality pay a fee of $2,350, while nationals who apply for documentation of relinquishment of nationality by the voluntary commission of an expatriating act with the intention to lose nationality, do not pay a fee. However the services performed in both situations are similar, requiring close and detailed case-by-case review of the factors involved in a request for a Certificate of Loss of Nationality, and both result in similar costs to the Department.
In the past, individuals seldom requested Certificates of Loss of Nationality from the Department to document relinquishment. Although the Department was aware that an individual relinquishment service was among the most time consuming of consular services, it was rarely performed so the overall cost to the Department was low and the Department did not establish a fee. Requests for a Certificate of Loss of Nationality on the basis of a non-renunciatory relinquishment have increased significantly in recent years, and the Department expects the number to grow in the future, causing the total cost of this service to increase. At the same time, the Department funds consular services completely from user fees. The Cost of Service Model continues to demonstrate that such costs are incurred by the Department when accepting, processing, and adjudicating relinquishment of nationality cases; therefore, the Department will collect a fee from all individuals seeking a Certificate of Loss of Nationality. Taking into account the costs of both renunciation and non-renunciation relinquishment processes, the fee will be $2,350.
If you do not need a CLN in the first place, nothing in the Immigration and Nationality Act requires you to obtain one to document your loss of US citizenship, and people who relinquished before 4 June 2004 did not have to report their relinquishment to the State Department in order to end their status as U.S. tax subjects either. However, FATCA regulations and IGAs require people with U.S. indicia to show their banks a CLN or provide a “reasonable explanation” of why they do not have U.S. citizenship.
See this earlier post for discussion of what banks might accept as a “reasonable explanation”, and let us know if you find a bank which will accept the absurd price-tag as an explanation of why you don’t have a CLN.
The value of CLNs just went up.
@WhatAmI
” If you are saying that a Canadian FI will get the 30% sanction if they don’t comply with FATCA, that’s the only thing that I disagree with!”
I don’t know that anyone knows the answer to that. What I am saying is that I believe the threat of financial sanctions breeds fear and can lead to bad behavior on the part of those who work for the government and financial institutions.
I should have said So what if Canada retroactively makes it clear that registration of birth abroad, a child born in Canada who resides in Canada for XXX years, etc etc. are acts of naturalization.
I am a bit late to this board, and I certainly do not defend the $2350 fee for any form of relinquishment, including renunciation.
However, even when the fee for renunciation was a lot lower and there was no fee for relinquishment, it always struck me as rather strange that they charged a fee for renunciation but not for relinquishment. If you accept for sake of argument their contention the fee has to pay for their cost of processing the CLN, it has always seemed to me that a relinquishment application (for other than renunciation) required a lot more processing and checking than did a simple renunciation, to ensure that you hadn’t ever done anything after your expatriating action that might be interpreted as an assertion of US citizenship and hence rebut your claim you intended to relinquish when you performed the relinquishing act.
So this particular change in their policy, charging the same fee for a relinquishment as for a renunciation, isn’t a surprise. Though by their logic arguably they should charge even more for a relinquishment. But then, logic doesn’t enter into any of this FATCAcrap at any stage of the process IMO.
@Schubert, “it always struck me as rather strange that they charged a fee for renunciation but not for relinquishment. ”
It is not odd at all when you read it together with the Expatriation Act 1868.
I suspect there has been employee turnover.
A few moons ago, State gave deference to the Expatriation Act, now they are not paying due deference to it.
A legal attack on this just became immensely easier because the relinquishment fee plus FATCA requirements is NOT compatable with the Expatriation Act of 1868. Something has to give….
@Cheryl
I also was thinking about why our countries are not doing anything to help us from being crushed by the US and I just couldn’t figure it out!! I thought that maybe they just didn’t know or our number is insignificant….then it dawned on me why they haven’t stood up to the US or don’t come up with some help for us. I think it’s because all countries are trying to get back the millions that people have in offshore banks and they are united in the effort to get this money back. I know that a lot of people in my country took money out for personal protection in case things went bad here but maybe for tax reasons too…who knows. Since this recession just keeps going on and on they all want this money to be brought back home to bolster their sagging economies and will not thwart any actions being taken by other countries doing the same. Anyways….just a thought (imo)
‘You apply for a passport and tell the truth, “I became a Canadian Citizen voluntarily with the intention of relinquishing my US Citizenship and have done nothing since to discredit that.”
You could add, “A border guard told me I had to apply for this travel document.”
Seriously what are they going to do? There are only two options;
1.) Deny the application to someone who is not a citizen and issue a letter of some sort.
2.) Issue a US Passport to someone who upfront stated they were not a US Citizen.’
The answer is 2. They already do that to US non-citizen nationals in American Samoa.
Next question: Is a US non-citizen national, who also has no green card, a US person for income tax purposes? American Samoans aren’t. I don’t know how to figure out the answer for others.
Next question: Is a denial letter (in case the answer to the first question turns out to be 1) the same as a CLN to terminate US personhood for income tax purposes? Unfortunately the answer is no, instructions for Form 8854 or something related to it already say a CLN is needed. (Though even if a CLN is delayed 50 years, the date of termination of US personhood is still 1 day earlier than the date when the relinquisher notified the State Department of the relinquishing act.)
Canada should clone the Expatriation Act of 1868. Designate it as a US law that Canada will treat as an IGA and enforce on Canadian soil, solely with respect to former US citizens. Canadians can relinquish US citizenship for a fee of C$75 for the relinquishment, plus an optional C$25 for a certificate proving it.
“Undocumented Relinquishant”
“Illegal Emigrant”
This is an awful sign of desperation from the US Government. Does anyone really want to retain US citizenship after this fiasco, even if nostalgic? “Proud to be an American” sounds like an anachronism nowadays…
Should our banks not allow the prohibitive cost of attaining a CLN as a reason for not having one, then essentially the U.S. is extorting money from another country’s citizens to allow those citizens to bank in those countries. Add this to the fact that the IRS now has the last word on who gets to open an account in other countries, I’d say it’s the US’s world and we just get to live in it.
@George,
Not just FATCA. A CLN is required to fill out Form 8854. From the 2014 Instructions for Form 8854:
http://www.irs.gov/pub/irs-pdf/i8854.pdf
So one cannot check out of the US tax system without a CLN. (Unless you were a US citizen by naturalization, in which case a court order would work.)
So a CLN really is required for US government purposes, it seems. (I had previously thought it might not be.) Does the combination of this fact with the $2,350 fee constitute a clear-cut violation of the Expatriation Act?
Perhaps some US ex-pats may want to write Mr Kennedy or ring him direct.
4604 26th St N
Arlington, VA 22207-4110
703-525-7946
Shame on Mr Kennedy. Both him and his wife have long Diplomatic service to the US, and his wife has had posting in several countries and she speaks Spanish and French as well.
Both of them personally know what problems FATCA is causing US ex-pats, but they both don’t seem to care.
Please note this address is his home address. Perhaps if several hundred postcards drop on the in the post box, it’ll remind him that the US expat community is well and alive and watching.
Don’t write anything hostile, but a friendly reminder these people don’t live in isolation.
@Cheryl,
I don’t think the DoS is swayed by our laws. They go by their own. Expatriating acts in the area of naturalization have to be performed by an adult with knowledge and intent at the time, and have to result in a change of citizenship of the person in the other country. So far, your examples are cases of people who are already Canadian citizens.
The example of a person born and lived here for XXX years, that used to be INA 350 but it was repealed in October, 1978. One has to have been born before Oct 10, 1953 to try to claim that today. I was born a few months later so it didn’t apply to me.
Imagine the look on Mr Kennedy’s face if he received several hundred anonymous or even a few thousand postcards from the four corners of the world at home?
@foo
There is nothing in law that requires an expat to have a CLN. I just researched this (again) by reading INA 349. What the law says is that the Consulate should issue one. That is not at all the same.
I hate to make this worse, but be careful when putting your trust in credit unions as well. I called the CEO of mine and she said they were fully compliant with FATCA rules despite being eligible for the local exclusion! She also said that accounts over 10k were reportable…not the 50k that I thought the maximum was. I told her I was a shareholding member for 25 years. The gist of her answer was “it sucks to be you.” Good thing my call was anonymous from the last payphone on the planet!
“There is nothing in law that requires an expat to have a CLN.”
True but you’ll be taxed until you get one, except for the question of retroactivity.
https://www.law.cornell.edu/uscode/text/26/877A
Section 877A(g)(4) Relinquishment of citizenship:
A citizen shall be treated as relinquishing his United States citizenship on the earliest of-
(A)the date the individual renounces his United States nationality before a diplomatic or consular officer of the United States pursuant to paragraph (5) of section 349(a) of the Immigration and Nationality Act (8 U.S.C. 1481(a)(5)),
(B)the date the individual furnishes to the United States Department of State a signed statement of voluntary relinquishment of United States nationality confirming the performance of an act of expatriation specified in paragraph (1), (2), (3), or (4) of section 349(a) of the Immigration and Nationality Act (8 U.S.C. 1481(a)(1)–(4)),
(C)the date the United States Department of State issues to the individual a certificate of loss of nationality, or
(D)the date a court of the United States cancels a naturalized citizen’s certificate of naturalization.
Subparagraph (A) or (B) shall not apply to any individual unless the renunciation or voluntary relinquishment is subsequently approved by the issuance to the individual of a certificate of loss of nationality by the United States Department of State.
Off-the-wall crazy talk, strongly not recommended for the faint-of-heart: 8 USC 1481(a)(6) renunciation at a domestic USCIS office.
I’ve summarised the relevant recent case law over on Wikipedia, but in short: “Authorization for Use of Military Force” means US is in “state of war”, and USCIS is telling people they have to show up in person at a USCIS office for an interview and prove they have the “the ability and intention to depart the [United States] immediately upon having [their] renunciation request”. (Not clear whether this is just something they made up to get prisoners to stop asking, or actual policy they’ll also apply to an ordinary emigrant or accidental who shows up asking to renounce).
https://en.wikipedia.org/wiki/Renunciation_Act_of_1944
Giant caveat: this does NOT end your U.S. person status for tax purposes (see 26 USC 877A(g)(4) and 7701(a)(50)). However, for those of you whose only concern is FATCA, if you succeed (which will not be easy, no one has succeeded since the end of WWII) you’ll get a nice letter from USCIS saying you’re no longer a US citizen and you can show it to your bank. Also as far as I know USCIS don’t charge any fees and don’t have a 10-month lead time for appointments. Finally, 26 USC 6039G(d) does not require USCIS to notify the IRS of 1481(a)(6) renunciations.
@Tricia,
Yes, I was talking about what Norman said. It may still be legally possible to expatriate without a CLN, but that doesn’t take one out from under “citizenship-based” taxation. So I suppose in some super-narrow interpretation of the law, a high CLN processing fee could be argued not to interfere with the right of expatriation itself.
In practice, though, how would a CLN-less expatriation work for State Department purposes — i.e., crossing a US border? Take another citizenship with intent to relinquish, notify the nearest embassy by registered mail or something that you no longer consider yourself a US citizen, without paying the CLN fee? Then, what? They probably toss it in the round file or mail it back to you with a note saying, “nice try.” Even if not, if you try to enter the US again, they will probably consider you a US citizen still — and you’ll be on their soil, in their jurisdiction, trying to argue your case. I just don’t see good outcomes here.
Note that I’m not talking about prior relinquishments, I’m talking about what happens going forward from now. I just don’t see the mechanism for getting a CLN-less relinquishment recognized, not to mention the tax problems that still remain. (I’ll assume 8 USC 1481(a)(6) is not a realistic option, as Eric warns.)
Someone should move @LakeSuperiorGuy comment into the banking experience section about the credit union. This is important info to know…
Lake Superior Guy….I REALLY need to know which CU this was. I may be affected (Infected!)
as far as I understand, the requirement for a CLN for the IRS is not in the Internal Revenue Code, only in the 8854 form.
@Tim,
See Norman’s post above. He quotes the section of the Internal Revenue Code where the CLN requirement is spelled out.
So in summary, a CLN is not needed to document the loss of citizenship, but is needed to complete the loss of “tax citizenship.”
Which means that if one tells a bank “I don’t have a CLN because I couldn’t afford one,” the bank could retort, “then you’re still a US taxpayer.” That would not constitute reasonable reason. You’d have to either assert that you relinquished before “tax citizenship” was created, or else claim that you got one, but it was lost to a house fire/elephant stampede/hungry dog/whatever.