When it comes to compliance there is a lot of confusion as to:
- what day does loss of citizenship occur and
- what roles do f8854 and a
- Certificate of Loss of Nationality play?
The filing requirements are explored in two posts by John Richardson.
BRIEF SYNOPSIS
Before June 3, 2004 (before the creation of the “Tax Citizen”)
The date of your “expatriation”was determined solely by the provisions of the Immigration and Nationality Act.
June 3, 2004 – June 16, 2008 (after the creation of the “Tax Citizen”)
You continued to be treated as a “U.S. person” for tax purposes UNDER THE INTERNAL REVENUE CODE until you gave “notice” of your “relinquishment” to a government agency. For this period part of the “notice” was filing Form 8854 with the Internal Revenue Service. In other words, there was no way to cease to be a “U.S. person” for tax purposes until you had notified the IRS.
After June 16, 2008 –
A.The issuance of a CLN is confirmation that the State Department has agreed that you have relinquished U.S. citizenship. A CLN is a confirmation that you have met the “notice requirement” under the Internal Revenue Code.
B. The CLN is one way (a self-certification is also possible) to satisfy “foreign banks” that you are NOT a U.S. person for tax purposes under the Internal Revenue Code. (In other words, a CLN is a “sufficient” but not a “necessary condition” to prove non-USness.
Read more HERE
*****
1. Is the loss of U.S. citizenship for nationality purposes dependent on having a Certificate of Loss of Nationality (“CLN”)?
The answer is absolutely not.
349(a) of the Immigration and Nationality Act specifies conditions under which one relinquishes U.S citizenship.
2. Is the loss of U.S. citizenship for tax purposes dependent on having a Certificate of Loss of Nationality (“CLN”)?
Prior to June 3, 2004 – NO for either immigration or tax purposes
June 3, 2004 – June 16, 2008 – NO for either immigration or tax purposes.
After June 16, 2008 – No for immigration purposes – It is necessary as a confirmation of having met the “notice requirement” to end U.S. citizenship for tax purposes
3. What is the role of a Certificate of Loss of Nationality (“CLN”)?
For Immigration and Nationality Purposes – no relevance whatsoever
For Tax Purposes – The Internal Revenue Code
The accusation of U.S. citizenship is triggered by various indicia (U.S. place of birth, U.S. residence, U.S. phone number, etc.). The U.S. “place of birth” is the most dangerous indicia. Those with a U.S. place of birth can rebut the accusation of U.S. citizenship with either:
A. The CLN; or
B. A “Self Certification” (that must meet specific requirements) documenting why:
– the person has relinquished U.S. citizenship; and
– does NOT have a CLN.
A denial of U.S. citizenship will generally require proof.
In general, those who have relinquished U.S. citizenship under the Immigration laws of the United States prior to June 3, 2004 are more likely to be able to “self certify” that they are NOT U.S. citizens even though they do NOT have a CLN. This position is consistent with the August 2015
4. Why is the Certificate of Loss of Nationality (“CLN”) of value?
It’s simple. Unless you live in the United States, life as a U.S. citizen abroad, in a FATCA, FBAR and CBT world, will be an endless source of anxiety and difficulty. A Certificate of Loss of U.S. Nationality is becoming one of the most sought after documents in the world today.
5. What is the role of a Certificate of Loss of Nationality (“CLN”) in a FATCA inquisition?
June 16, 2008 – Present
IF (you relinquish U.S. citizenship under the Immigration and Nationality Act) THEN
You continue to be treated as a “U.S. person” for tax purposes UNDER THE INTERNAL REVENUE CODE until you give “notice” of your “relinquishment” to a government agency. The “notice” requirement is NOT to the IRS, but to the State Department. (See S. 877A(g)(3) and S. 877A(g)(4) of the Internal Revenue Code.) Once “appropriate” notice is given to the State Department you cease to be a U.S. taxpayer from the date the notice is given (on a prospective basis).
Read more HERE
Thanks to you and John for this info.
@Bubbles 😉
“3. What is the role of a Certificate of Loss of Nationality (“CLN”)?
For Immigration and Nationality Purposes – no relevance whatsoever”
So that is why State can get away with charging for the paper, which flies in the face of the Expatriation Act 1868.
“Once “appropriate” notice is given to the State Department you cease to be a U.S. taxpayer from the date the notice is given (on a prospective basis).”
So the Form 8854 has nothing to do with that aspect.
—-
Thinking now, would there be value to someone giving notice to State and then getting the CLN much later, far later in the future? I would think so…..
So when someone relinquishes they need to promptly give notice to State. and then take their sweet old time, years if necessary, to decide on getting the CLN.
“B. The CLN is one way (a self-certification is also possible) to satisfy “foreign banks” that you are NOT a U.S. person for tax purposes under the Internal Revenue Code. (In other words, a CLN is a “sufficient” but not a “necessary condition” to prove non-USnes”
The Canadian FATCA does not use USA person for tax purposes they only use USA citizen and resident individual. So once you gone to consulate and renounced you are done with FATCA
If you have not completed the 8854 exit tax (depending on when you renounced or relinquished) the USA still consider you a USA person. Crossing the border may be a problem. In addition certain country FATCA may require 8854 (exit tax). I think the Swiss use this method.
“Generally, it is the CRA’s view that an explanation demonstrating a relinquishment of U.S. citizenship (other than by a renunciation before a U.S. consular or diplomatic official) before June 4, 2004, and in accordance with the U.S. Immigration and Nationality Act (Title 8 of the U.S. Code) as it existed at the time of relinquishment, is sufficient to demonstrate a reasonable explanation as to why an account holder does not have a CLN. Financial institutions are not expected to be experts in U.S. nationality law; any such explanation accepted by a financial institution is accepted for the purposes of Part XVIII and the Agreement only and is not finally determinative of tax or nationality status.
Other reasonable explanations as to why an account holder does not have a CLN despite having relinquished U.S. citizenship include:
they applied for a CLN or formally renounced their U.S. citizenship before a U.S. diplomatic or consular official and are waiting to receive the CLN;
they applied for a replacement copy of a previously issued CLN that they lost and are waiting to receive it; or
they made and are waiting to attend an appointment with a U.S. consular office to apply for a CLN in respect of a relinquishing act performed after June 3, 2004 (other than a formal renunciation before a U.S. diplomatic or consular official)
Once an account holder receives a CLN in one of these circumstances they are expected to provide a copy to the financial institution. Financial institutions should follow up with account holders who have given an explanation described in this paragraph in order to ensure that a full documentary record as described in paragraph 8.27 is maintained.”
http://www.cra-arc.gc.ca/tx/nnrsdnts/nhncdrprtng/gdnc-eng.html
In addition if you are a rare person who gave the Bank account your birth place and it does not say USA you are safe. Detroit, Michigan can be located in Mars. You need a provincial ID and birth plate is not shown for bank account. Of course this also may not apply to other countries FATCA.
http://www.cra-arc.gc.ca/tx/nnrsdnts/nhncdrprtng/gdnc-eng.html
“8.28 In the context of an electronic record search, an “unambiguous indication of a U.S. place of birth” must include identification of the U.S. as the country of birth. Identification of a city and/or a state as the place of birth, without identification of the country of birth as the U.S., is not considered to be unambiguous.”
Reading all this…it is surreal.
@ George It’s like Halloween…full of demons chasing you… except it’s real. There are no treats, just very bad tricks.
@2terrified2sleep, this post inspired me to print some crap and show it to a Chartered Accountant I know where I live.
The response was when do they ask you to put a goldfish in your ear, stand on one leg and then sing the hokey pokey song…………..
As more and more people find out about this, they are going to openly refuse to comply because its impossible to comply.
I just reread the instructions for 8854 and I was lost, no wonder compliance condors can demand tens of thousands in payment. Regardless, who knows if its right.
A hostile state is shaking down millions of local nationals worldwide and those citizens deserve protection.
When those who would like to comply can not comply because its unintelligible the law has lost its bite.
They have jumped the shark.
@ George
I’m afraid of the consequences of asking my accountant anything since every question I ask costs me 180 euros. I’m at the point where I think the only way to get anyone to realize our stress in this cbt and fatca world is to stand in front of the US consulates and embassies in our underwear with NO CBT written in marker across my stomach and chest and NO FATCA written on my back. Then maybe, just maybe a news station will broadcast our story!
I’m in 2t2s.
Whether or not an affected person obtains a Certificate, discrimination by birth will persist in all financial institutions across the world until this mad law is abolished. And if it abolished at some point in the future, many financial institutions will be reluctant to deal with the tainted ones. Just my opinion…
@2terrified2sleep: excellent idea. It would be great to have this happen every week in front of a different US Embassy. We could be waving, and draping ourselves in, American flags. I suspect demonstrations are not tolerated outside the US embassy here in Brussels, which sits on a busy thoroughfare.
That said, an anti-discrimination lawsuit in the EU might have traction. We need people who were turned down when opening a bank account. It would need to start in one (or more) countries and use locally available anti-discrimination agencies.
Although the following situations are different, they all lead to being either denied opening an account, or only granted a basic account (no investments possible) because of a form of national origin:
– US citizen legally resident in the EU
– Dual EU-US citizen: even worse
– EU citizen with US birthplace and no CLN
their birthplace and lack of CLN, or even on the basis of being a US citizen).
Hello, firstly thank you all for the wonderfully helpful website and forum.
This questions is specifically directed to those who have renounced their US citizenships and who had never lived or worked in the US, never had a US SSN, and never filed a annual return.
Four Q’s:
1. Has anyone renounced and NOT filled in the 8854 form?
2. Has anyone renounced and NOT filled in their IRD income tax year forms?
3. Has anyone filled in 8854 and IRD income tax forms without an SSN?
Most important, has anyone who had not filed a 8854 form or the annual returns directly been contacted by the IRS or been chased? what happened? what consequences?
Thanks in advance so much
JJ
Great questions. Looking forward to the answers. Whales should worry; minnows have little to worry about.
1. Renounced and filed 8854
2. No income tax returns filed.
3. 8854 filed without a SSN / ITIN
Have heard nothing from IRS. Even after including nasty letter to them with 8854.
Hope this helps.
@DukeofDevon – how does the IRS know you are a whale or a minnow?
@theMom – thank you for sharing. May i ask when you filed?
Hope to hear from others.
Many thanks
JJ
@justjj
Some considerations
Filing the 8854 enables you to check out of the system. If you have never filed us taxes then the 8854 would determine if you are a whale or a minnow, a covered or uncovered expat.
There is no statue of limitations on unfiled returns
Do you have any intention of travelling to the US in future. Do you expect any inheritance from US relatives.?
You may wish to ask your questions again under the ask your questions, “expat taxes and fbar”section of this site. You may get more response.
justjj, 2013.
@justjj and Mom.
1. I self relinquished Dec. 2012. No CLN.
2. Although I had panicked and filed for a few years previously, I then stopped filing anything.
3. Took one look at the obnoxious Form 8854 and swore I would never file that form either. Why give the bastards a shopping list?
4. Have heard nothing from the IRS and don’t expect to.
5. Way to go Mom!
LOL @ maz57.
There was a good reason I was grounded about 3/4 of the time I was in high school. I’m not much of a follower. I’ve been certain to instill that in my kids. 😀
justjj . If you are not in the system, they have no idea. Whales are former US citizens or US citizens or residents who have been in the system or who are public figures who have lots of cash. It has to be worth their trouble to do something. Think Eduardo Saverin or Boris Johnson. Think a US taxpayer living in the US with a million or so stashed with UBS.
“I’m not much of a follower. I’ve been certain to instill that in my kids.”
Luckily they know not to follow you.
As a logician, I’m getting a headache now.
Form 8854? I don’t need no stinking Form 8854 to check out of the system!
@Justjj
No one can really advise, it all depends on the amount of risk you are willing to take.
The State Dept will have your address from when you renounced. This will be forwarded to the IRS.
You may receive a letter demanding you file. What else can they do, send another, and another?
They are really short staffed and as D of D says their focus should be on the whales.
Extradite? That’s very expensive and they would want to know it would be worth it to them, also depending on your country of residence, the onus is on the irs to prove the ‘crime’ you committed would also be a crime in your country of residence. You pay all your taxes in your country of residence.
Collection? Unless you have money in the US it would be difficult for them to collect any penalties imposed unless your country of residence has an agreement to do this.
If you decided to file you need 5 yrs of back 1040’s + a partial for the year you renounced(unless you qualify for the FEIE foreign earned income exclusion) which now stands at 10,800/yr also 6 yrs of FBARS and the 8854. You would have to apply for a TIN as you would not qualify for a SSN as you are no longer an American.
You must weigh up all your options, then decide if you want to enter the hornets nest.
Hi Heidi
Yeah – i’m weighing the tradeoffs. But i really want to find out if anyone on the forum has been chased for not filing a 8854 form or the past 1040s forms. Has anyone received a letter? been chased? had assets seized? (etc).
(and no – i have no US assets/etc).
All – please keep your feedback coming – very helpful.
Thanks
JJ
Went in today to the local US Embassy for my second and final rennunciation interview, but only proof I was able to get I was there was the receipt of the USD 2,350, and the promise that in aprox 6 months I would get the CLN in the post, even after polite but firm arguing with the consular staff.
As I will have to file my final 1040 and 8854 next year, but only from Jan 1st through March 22, I am worried I might not get CLN in time, as I have been reading many posts of log delays in processing them.
@justjj, as heidi said, its a question of risk tolerance. I am going for the clean and legal way out, as I do not want to risk being stopped at JFK in the future