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
“They aren’t going to make it easy for you to lose the shackles of your US citizenship and many are even having to prove relinquishment was their actual intent back in the old days.”
There’s no need to prove one’s intent. A simple statement that you voluntarily committed the expatriating act with the intention of losing US citizenship is sufficient. The onus is on the government to prove a lack of requisite intent by examining your subsequent conduct to see if you behaved in any way like a US citizen.
One way or another, its going to cost $2350 and the person will walk out of there an ex-US citizen. They know damned well that if they try to make things difficult, the person can demand to swear the oath of renunciation right there on the spot
maz – “There’s no need to prove one’s intent. A simple statement that you voluntarily committed the expatriating act with the intention of losing US citizenship is sufficient. The onus is on the government to prove a lack of requisite intent by examining your subsequent conduct to see if you behaved in any way like a US citizen.”
Unfortunately, the onus is on the party asserting that US citizenship has been lost: be it a former USC or the USG wanting to deport a USC.
“One way or another, its going to cost $2350 and the person will walk out of there an ex-US citizen. They know damned well that if they try to make things difficult, the person can demand to swear the oath of renunciation right there on the spot.”
I don’t think so. They might let you renounce on the spot, or they might say you have to make another appointment and pay another $2350.
Have we had any reports of a double fee bring demanded?
No idea, but it’s clearly up to the consular officer to decide. The person doesn’t have a right to demand.
For those who are trying for a backdated relinquishment, it’s important to ask at the Consulate if another fee will be charged for renunciation if the reliquishment is denied.
It’s important to consider how asking such a question might influence the consular officer’s decision on whether to recommend approval of the relinquishment claim.
“I’m not a USC because I took a second citizenship back in 2003, intending to lose US citizenship. In case you don’t believe that, can I renounce without paying again?”
@plaxy
It’s ultimately the State depts decision whether to approve or not, theyconsider all the evidence presented and have often overuled the Consulates negative (as seen on our reports.)
Its a simple question
“what happens if they don’t approve this, do I have to pay again to renounce?”
There is nothing to suggest you may be undermining your case.
“It’s ultimately the State depts decision whether to approve or not”
Yes but it’s not going to be the DoS deciding whether a person can renounce on the spot without paying another fee, if the consular officer decides not to recommend approval.
“theyconsider all the evidence presented and have often overuled the Consulates negative (as seen on our reports.)”
Yes, if the consular officer decides not to recommend approval, the person can
a) contest that decision, and wait for a ruling, or
b) decide to renounce instead.
If they choose (b), and want to do it there and then without paying another fee, it’s up to the consular officer to decide
a) can they do it there and then
b) must they pay another fee
Re:
Those we’ve heard from at Brock who, upon meeting with the consul, opted to renounce instead of going for a relinquishment-based CLN, were offered the opportunity to renounce then and there. It’s actually less work for the consulate to have them renounce immediately (rather than have them come back for another visit) because the paperwork’s at hand and ready to go. They were not asked to pay twice. There’s no incentive for the consul to demand a second fee in this situation as s/he has nothing to gain by it.
pacifica – “Those we’ve heard of at Brock who, upon meeting with the consul, opted to renounce instead of going for a relinquishment-based CLN, were offered the opportunity to renounce then and there. ”
That’s a different scenario from the one maz suggested, isn’t it? If you decide to renounce instead of trying for relinquishment.
The scenario maz described was one in which the person asked for documentation for relinquishment, presented their evidence to the consular officer, was told refusal would be recommended, and then demanded the right to renounce without paying another fee.
Can you recall any reports from people who went for relinquishment, were told that the consular officer would recommend refusal, and were then allowed to renounce then and there without paying another fee?
That could be useful for a person who wants to try for a pre-2004 relinquishment. A consular officer who wasn’t sure of the rules, might feel more able to grant the person’s request to renounce then and there without paying another fee, if the would-be renunciant could show that it had been allowed by other consular officers. I know people who probably could have relinquished but chose to renounce for certainty.
UKRose:
My impression is that the State Department isn’t opposed to a USC losing citizenship as long as the criteria are met. The IRS of course just wants to fleece you as you go.
Also, I don’t think there’s two types of citizenship. You lose citizenship when you commit the “expatriating act” intending to lose citizenship. The IRS doesn’t have the power to decide that you are still a citizen.
They do have the power to ask for revocation of a CLN. Personally I doubt if they’d try that unless they had evidence of criminal tax evasion but obviously I’m only guessing.
@ Plaxy,
Re:
Sorry I wasn’t clear. That’s the situation I was referring to. People who were told by a consul at their relinquishment meeting that they didn’t have a case for relinquishment or that it looked shaky, and in light of that they opted to renounce on the spot and were not charged an extra fee. It was done as one process.
Then I stand corrected. Thanks for that clarification.
Worth trying for a pre-2004 date in that case.
IRS wouldn’t ask for CLN revocation because DoS cannot revoke a CLN because a person hasn’t filed or paid taxes or is supected of having been engaged in or been convicted of tax evasion, because citizenship status, or lack of it, is not dependent on these matters. They’re not a ground for loss or reinstatement of citizenship.
According to the penultimate paragraph of the document at https://www.gpo.gov/fdsys/pkg/GPO-CPRT-JCS-2-03/pdf/GPO-CPRT-JCS-2-03-7-2.pdf the IRS can ask for revocation. Perhaps that’s been superseded?
@ Plaxy,
Perhaps. It’s not clear where the author of that document got his information from, as that particular passage is not footnoted. There’s no mention of the IRS in the current 7 FAM 1230, which dates from 2009, FWIW. So, I don’t know if they can or how they’d go about it. At any rate, the CLN can’t be revoked for not filing or not paying taxes or suspicion of or conviction on tax evasion – revocation would have to be based on lack of voluntariness or lack of intention or fraud in obtaining the CLN, not tax fraud, things which would be difficult for a third party.
“…the CLN can’t be revoked for not filing or not paying taxes”
There’d be no point in any case.
“…or suspicion of or conviction on tax evasion – ”
I’ll bet it could be revoked if there was good evidence of criminal tax evasion, given that that’s a felony and potentially grounds for extradition, not to mention that where there’s tax evasion there may be money-laundering and terrorist financing.
But for us common-or-garden renunciants who’ve never done anything more evil than fail to file an fbar, I wouldn’t think they’d bother, even if they could.
I seem to remember several Consulate reports here on Brock where the former US citizen asked for a back-dated CLN based on a past relinquishment. When the consular officer balked at the request due to lack of knowledge of US expatriation law, the individual requested that the file be sent on to D.C. anyway, even with the knowledge that it would be accompanied by the officer’s negative recommendation. Persistence paid off, and the back dated CLNs were issued with no problems. I think this was back when processing a relinquishment was still free.
Now that it costs the same either way, it would take nerves of steel (and supreme confidence in one’s knowledge of US law) to make such a request. Nowadays, such a situation would be far less likely to happen. Whether its by way of a present-day oath or a past relinquishment, loss of US citizenship is now such a common occurrence that the consular staff all know the drill. Our go-to resource Pacifica would know about this.
Re: Who has to prove what: I have to stand corrected myself because: “Whenever the loss of US nationality is put in issue, the burden of proof is on the individual or party claiming that a loss of citizenship has occurred to establish, by a preponderance of the evidence, that the loss occurred.” https://www.gpo.gov/fdsys/pkg/GPO-CPRT-JCS-2-03/pdf/GPO-CPRT-JCS-2-03-7-2.pdf
@plaxy
When I said two types of citizenships, I meant back in the 90s one could renounce and never have to inform the IRS and no CLN was needed and they would cease to be a citizen for nationality purposes and for tax purposes.
Since 2004 someone who renounces will cease to be a U.S. citizen for nationality purposes, but still be treated as U.S. citizen for tax purposes unless they check out of the system following the rules of that time period. The rules than changed again in 2008 with the exit tax. So there are two sets of rules, one between 2004 – 2008 and one after 2008 which incidentally includes the exit tax.
I would have had a good case of relinquishment if I had not renewed that US passport in 1997 because that was the only thing I did (i did not renew again when that one expired but it was already after 2204). However my intent at that time was to retain US citizenship so I decided to renounce years later to avoid any doubt.
UK Rose – yes I know that’s how the US/IRS see it. Out of touch with reality, as so often. They don’t have the power to treat non-US-resident non-citizens as citizens “for tax purposes.” (Very frank, aren’t they – “we want to keep you for awhile for tax purposes!”)
“According to the penultimate paragraph of the document at https://www.gpo.gov/fdsys/pkg/GPO-CPRT-JCS-2-03/pdf/GPO-CPRT-JCS-2-03-7-2.pdf the IRS can ask for revocation. Perhaps that’s been superseded?”
I also wonder where Congress gets their information.
ftp://ftp.loc.gov/pub/thomas/cp104/hr145.txt
’99 006
104 th Congress
Report
HOUSE OF REPRESENTATIVES
1st Session
104 145
EXPATRIATION TAX ACT OF 1995
June 16, 1995.–Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
Mr. Archer , from the Committee on Ways and Means, submitted the
following
REPORT
together with
DISSENTING VIEWS
[To accompany H.R. 1812]’
Maybe we need another War of 1812.
Also:
https://www.finance.senate.gov/imo/media/doc/Hrg104-795.pdf
‘APPENDIX
ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD
WRITTEN TESTIMONY OF THE STAFF OF THE JOINT COMMITTEE ON TAXATION
REGARDING ISSUES RELATING TO PROPOSALS TO MODIFY
THE TAXATION OF INDIVIDUALS WHO RELINQUISH
U.S. CITIZENSHIP OR RESIDENCY
FOR A HEARING
OF THE
SENATE COMMITTEE ON FINANCE
ON
JULY 11, 1995
PRESENTED
BY
KENNETH J. KIES
CHIEF OF STAFF
JOINT COMMITTEE ON TAXATION
U.S. CONGRESS
JCX-30-95
JULY 11, 1995’
Page number 12 in the appendix.
Page 51 of the PDF file.
The very idea that the US government would try to revoke a CLN is laughable. In their own language they claim that relinquishment of US citizenship is an irrevocable act. What would they say?
“First we agreed that if you paid us $2350 we would terminate your US citizenship but now we’ve changed our minds and decided we’re going to un-terminate it and force you to be a US citizen again. (Oh, and by the way, here’s your $2350 refund cheque and a new US passport which you must use when entering the US.)”
I know what my response would be if I got a letter from State Department demanding that I send back my newly minted CLN. “F-off and leave me alone”. That CLN is the ticket to freedom and once one is released into the wild, its not ever coming back. What are they going to do about it? Send a letter to every bank in the world warning them: “Be on the look-out for so-and-so because his CLN has been revoked”?
“The very idea that the US government would try to revoke a CLN is laughable. In their own language they claim that relinquishment of US citizenship is an irrevocable act. ”
Irrevocable by you. It’s not irrevocable by them. (DoS) The back of the CLN tells you how to ask for an administrative review, though personally I find it a little hard to envisage the circumstances in which this right would apply.
“What are they going to do about it? Send a letter to every bank in the world warning them: “Be on the look-out for so-and-so because his CLN has been revoked”?”
More or less, though not just to banks and not for former USCs trying to open a bank account. The watchlists are presumably for AML, anti-terrorist etc use. See https://fam.state.gov/fam/07fam/07fam1230.html
A while back someone commented on this blog that DoS (not IRS) told the person to return their CLN. I forgot what the reason was.