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.
“Is the US Government chasing 7 million so-called “US Persons” for their nil declarations”
No, they’re chasing 7 million people for penalties.
Theoretically they could chase 50,000 people for declarations which wouldn’t be nil, but those 50,000 have the resources to fight back, and the IRS doesn’t have resources to fight with people who know how to fight back.
“A disproportionate amount of energy, resources and expense is being wasted to hunt down the wrong people”
They already know. The IRS already asked Congress “Why are we tormenting those people?” I wonder why the IRS had to ask though, because the IRS should know that penalties are the answer to everything.
“Right, for relinquishment the CLN is backdated to the date one got the other citizenship, if that was the expatriating event.”
Yes, but if 877A is ruled to be retroactive then tax filing will have to continue until the day before the relinquisher notified the State Department about the decades-old relinquishment. Of course it would be highly unethical for 877A to be retroactive but, again, the ethics classroom is that way ———>
Nowhere near the law classroom.
Speaking of nil declarations, I think I accidentally found an IRS revenue ruling making it illegal to have an amount of earned income lower than the Foreign Earned Income Exemption:
http://www.irs.gov/pub/irs-wd/0651015.pdf
The IRS and Tax Court didn’t use that revenue ruling against me, but I think the Department of Justice and Court of Federal Claims did.
usxcanada asked,
To which I erroneously replied,
Of course, re-reading the form 8854 rules, the termination date for tax purposes is the same for either relinquishment or renunciation: the date of the embassy visit. Slap myself on the forehead.
So there is indeed no advantage to relinquishment over renunciation, except for the Reed Amendment, which can probably never be enforced anyway.
Sigh, so easy to get confused about all this stuff. Think I would rather focus on something easier to understand, like calculating relativistic corrections to GPS satellite signals, or solving the travelling-salesman problem once and for all…
@foo, it’s still important to relinquish rather than renounce if one can make the case that expatriation occurred before 2004 or, even better, before 1995. That way the US tax laws that were passed in those years will not apply. See
http://isaacbrocksociety.ca/relinquishing-acts-performed-prior-to-2004/
@PierreD
I won’t say which one, but it is connected to the Ontario network of CU’s, which may explain the lockstep compliance. Call your local CEO from a payphone, and forget the underlings….they didn’t get the memo, which can be frightening if your life savings are at stake. If you are lucky enough to live in BC, PatCanadian drew up a list of smaller CU’s….also some in MB and SK, that are non-reporting. This may be in Maple Sandbox.
@osgood: “I paid US$450. At the time about NZ$520. Now that the NZD has depreciated somewhat, the new fee would be NZ$3760, an over 7x increase. At some point in the future I will probably have to pay for the freedom of my two children. Better put a savings plan together ……..stop this nonsense now!”
Good idea. Maybe this should become a news item — picture hundreds of thousands of U.S. citizens abroad/expats/emigrants opening savings or investment accounts specifically to try to be able to pay for their children’s freedom at a future date. Assuming one can open an account.
“Of course, re-reading the form 8854 rules, the termination date for tax purposes is the same for either relinquishment or renunciation: the date of the embassy visit. Slap myself on the forehead.”
I don’t think so. You can send a registered letter today to inform the State Department of the relinquishing act. Even though the consular visit and CLN will be delayed 30 years, the 8854 and related forms will be effective yesterday.
@Norman,
Somehow, I suspect they will find a way to disallow that interpretation.
Going back the text of section 877A that you quoted above:
I’m guessing their stance will be that the CLN constitutes approval of the notification that they received during the consular visit, not approval of any registered mail they received before then.
Would be nice to be shown wrong, of course.
@LakeSuperiorGuy
This is in the post on Maple Sandbox under:
“Are other Canadian Credit Unions Being As Responsible About FATCA as VanCity.”. It is in the comments.
I gave a list of most credit unions in BC. Others made some contributions about other provinces. This is a fluid landscape and I have suggested that everyone do their own checking as a precaution. What you did was the best, call and check yourself, anonymously, from a phone booth. Best to talk to a manager.
Some CU’s are fully FATCA compliant. Some are Local Client Based and do not report on Canadian residents. Some have low total assets, less than 175 million US$, and are totally exempt. Beware that if they grow in total assets, as they may go into the FATCA reporting zone.
“I’m guessing their stance will be that the CLN constitutes approval of the notification that they received during the consular visit, not approval of any registered mail they received before then.”
Hmm. Could we hear from some reader please, someone who first notified[*] the State Department two or three years ago about a relinquishing act, who subsequently had to do a second notification in a consular visit, but who used the date of the first notification on the 8854 and other forms?[**] Did the IRS accept the first date?
[* e.g. by making an appointment for a consular visit, or by registered mail, etc.]
[** Unfortunately not me. My registered mail contained my US passport but the embassy wanted to return it because they considered me to have not relinquished, so I made an appointment for renunciation. Since I accepted their decision that I had not relinquished, I didn’t think of trying to use the date I first notified them.]
@LakeSuperiorGuy
And as somebody else reminded recently, many CUs with Local Client Bases _still_ fully report Canadian residents to FATCA. A year ago I found only 2 out of 10 with local client bases that I chose were in fact FATCA-free. You could start with the websites and on-line application forms (looking for nasty questions) to reject the easy ones, then phone the ones that look promising. I used a throw-away email address when I enquired. It was before July 1 2014 and nobody knew the answers yet. Most should by now.
@canoe – “Good idea. Maybe this should become a news item — picture hundreds of thousands of U.S. citizens abroad/expats/emigrants opening savings or investment accounts specifically to try to be able to pay for their children’s freedom at a future date. Assuming one can open an account.”
Right, and maybe a future Canadian government could establish a RUSESA (“Registered US Expatriation Savings Account”) for such purposes, with matching contributions from the Federal Government, and try to make it exempt from FATCA/IGA reporting. 🙂
@PatCanadian and WhatAmI
Thanks, both of you. You can never be too careful!
Let’s hope that if we get a favourable ruling from the judge, the worker bees at FI’s will get the bloody memo!
@ LakeSuperiorGuy and all:
Credit unions with a local client base may or may not apply for that designation. VanCity in BC is an example of a CU which is legitimately LCB and says so on their website. One can’t be too careful.
I agree, let’s hope we get a favorable ruling from Justice Martineau!
Maybe someone has already commented on this, but originally one of the justifications for the higher renunciation fee was that it required two interviews with highly paid State Department people. OK, in some countries only one interview was needed, but that was the gist. For relinquishment there are no interviews. So why now are the two interviews with highly paid State Department people considered as costless? The sheer hypocrisy of the Americans is disturbing.
@dax, actually, it’s the other way around. Renunciation requires no interviews, though that doesn’t stop the embassy/consulate insisting on doing them. This is yet another myth put out by whoever to justify the horrendous increase in the fee. Relinquishment does tend to require at least one interview and sometimes two.
The only thing I had to do for my renunciation in Bern, Switzerland, was send all the documentation to them beforehand, check it over with them at the embassy on the day to be sure it was correct, pay the fee and swear the oaths. No interview as such whatsoever. It is your right to give up American citizenship if you want to and doesn’t need anyone interviewing/trying to persuade you otherwise.
I think renunciation really requires two interviews. When I renounced there were supposed to be three, but I think someone actually read my letters and decided the first interview could be omitted. The interview that is normally second absolutely cannot be omitted. Maybe my third interview didn’t have to be an interview, but the meeting is still required because a consular officer has to witness the signing.
Guys all credit unions will or should state they are fatca compliant so what do you do
The concern is compliant versus hyper compliant
Are they registered on the Irs giin website
What questions do they ask on their website and how will you answer them
In regards to questions if you relinquished andxare self documented what will you state for citizenship. There are brockers who adhere to you remain a citizen until you have a cln. I disagree with that based on the expatriation act 1868 and congressional reports.
Having said all that if a Canadian credit union has a giin and asks country of birth I might stay away.
Lastly and highly important if today you are not a us citizen regardless of documentation you have or do not have then do not bring old skeletons out of the closet.
Lets face it we all have skeletons one of mine is drinking
I now more start conversations that I had a drink problem then I had former us citizenship
My drink problem is equally or more embarrassing than my former Usa citizenship.
I only talk about my former drink problem and former citizenship problem with similar situated problem
My banker does not hear about either former problem as they are not her problem or concern
“My drink problem is equally or more embarrassing than my former Usa citizenship.”
No it’s not. If it were, the honour roll would be published in an AA newsletter instead of the Federal Register.
Duke of Devon abuses homebody. Not nice.
The material that homebody points to does not feel familiar.
So three basic questions.
1. How does Publication 519 (2014) Chapter 4 compare with, say, the 2011 version? [ Is more precise detail now provided in the section covering Expatriation before June 4, 2004? ]
2. Does IRS just love history for history’s sake, or is there a reason that all possible needed 8854 forms are provided at
http://www.irs.gov/uac/Form-8854,-Initial-and-Annual-Expatriation-Statement? All the way back to 1999. It seems that 1999 would be the form to use for any prior year.
3. If everybody is expected to file 8854, and IRS statement on “Expatriation before June 4, 2004” is not mere devonian “crap,” could this raise a then-and-now question about so-called “backdated” relinquishment versus in-the-present renunciation? One specific: working with a 1997 net worth level of 500,000 versus a 2014 level of 2,000,000. (Worth remark: there is no indexing of net worth for 2008 and after, which means that the ceiling gets lower every year.)
Background: This post-2008 renouncer did speak to a professional in the 1990s about the “letter” rigamarole in effect back then. If “backdating” means having to use old rules, that could be worse?
Bottom line: The way things are going, it is hard to believe that IRS is waving goodbye to the pre-2004 past while at the same time providing forms and instructions. I may lack due respect for authority, but that doesn’t mean I’d try to trump the IRS web site with Millerite gossip.
Do not fold, spindle, or mutilate this questioner.
Things US homelanders need to know about their country’s treatment of people who have the gall to want to live somewhere outside the “Greatest Country on Earth”. They should ask themselves why people should have to pay thousands of dollars to leave and why so many are doing so::
Land of the Free==> Land of the FeeYou can’t go away unless you pay.
The screen door will definitely hit you on the way out.
@usxcanada
The IRS publishes tax forms forever regardless of year.
Here is their form for 1864.
http://www.irs.gov/pub/irs-prior/f1040–1864.pdf
I don’t know anyone still alive who could fill one out though:
Their next form is for 1913: http://www.irs.gov/pub/irs-prior/f1040–1913.pdf
ButI guess the oldest living personnSusannah Mushatt Jones, at age 116, could theoretically have had a job at age 13 and need to fill one out…
Wow! Looks like I’m fucked no matter what now. To be this close to the exit, just to have the door slammed in my face?
I give up. I am undone. 🙁