If u want 2 renounce ur US citizenship DO NOT believe those who say u can be refused entry ever again-IT IS NOT TRUE https://t.co/I7K58J2jzd
— Patricia Moon (@nobledreamer16) June 2, 2016
I have become very tired and once again, extremely irritated at claims “if you renounce for tax reasons, you can be refused entry into the United States-ever again.” This is simply not true. It is late and am finally sleepy so am just going to copy/paste from set of tweets created after seeing a volley of tweets between Keith and 2 other individuals. I hope it makes sense. Please, please, please, make sure you become familiar with this information in an accurate way and pass it on every time the issue comes up.This is the only way to offset the way this information is aggressively used to frighten people. There is no excuse for it. I hope someday, someone who fell for it realizes the deceit and sues the damned compliance person who is responsible for it
MYTHS ABOUT THE REED AMENDMENT & THE ExPATRIOT ACT
No would-be US renunciant/relinquisher should ever believe an advisor 2 making claims about Reed Amendment preventing ability to enter the U.S.1/11
Willard Yates on why the Reed Amendment is unworkable. “There was a little problem from the outset. It’s called section 6103 of the IRC.” http://bit.ly/1ud93xP 2/11
S 6103 prohibits disclosure of “return information,” by the IRS, subject to criminal prosecution under Title 18 of the U.S. Code” http://bit.ly/1ud93xP 3/11
How was the IRS going to tell INS that a taxpayer’s expatriation was tax motivated? Ruling procedure eliminated in 2004. http://bit.ly/1ud93xP 4/11
Whole idea of the mark-to-market tax section 877A was 2 eliminate “motive” element of prior version of S 877 http://bit.ly/1ud93xP 5/11
IRS does not make rulings on whether or not expatriation was tax motivated. In 2002, authority switched to DHS. http://bit.ly/1ud93xP\ 6/11
DHS has never issued regs bc unless former citizen admits given up due to tax, no way to enforce. From 2002-2015 -only 2 refused entry. http://bit.ly/2850Le8 7/11
Implementation of section 212(a)(10)(E) of the Act has been hindered by numerous policy, operational, and legal complexities and challenges. http://bit.ly/2850Le8 8/11
Confidentiality laws prevent disclosure of tax information to DHS or DOS absent a voluntarily signed disclosure from the renunciant. http://bit.ly/2850Le8 9/11
Congress since amended the tax code to eliminate a direct connection between expatriate tax liability and a renunciant’s intent. http://bit.ly/2850Le8 10/11
There is no law called the ExPatriot Act. Claims in 2015 that it would pass since attached to immigration bill incorrect. Has failed twice to be passed into law. 11/11
To recap, the Reed Amendment, passed in 1996 has to date, twenty years later, resulted in only two people being refused entry into the United States. And only because they chose to explain that they renounced for tax purposes. NO ONE has been stopped at the border and refused entry because a CBP agent suspected they renounced “for tax purposes.” There is NO CONNECTION between an expatriate’s tax liability and a renunciant’s intent. NONE!
Good to know.
Thanks!
If it’s a myth, how is it two people were denied entry because of it? Perhaps it’s only relevant to the extent that you shouldn’t mention taxes when renouncing.
how can it be a myth if it’s right there in the law?
not being enforced is a different matter…fbar penalties hadn’t been enforced for nearly a decade …and then they were
@Putin and Poutine
There is a difference here. The US government’s approach to writing and trying to implement the Reed Amendment limits the ability to apply it. Congress themselves removed the connection between expatriation and intention regarding taxes. I believe it might be called “last-in-time-rule?”
The point of the post is to address the endless fear mongering based on exaggeration of the facts.
DHS on this matter: https://web.archive.org/web/20160322190133/https://www.dhs.gov/sites/default/files/publications/Departmental%20Management%20and%20Operations%20(DMO)%20-%20Policy%20-%20Inadmissibility%20of%20Tax-Based%20Citizenship%20Renunciants_0.pdf
@Bubbles
It is a fair word when evaluating the way the tax compliance industry uses this concept. If all the information were included, would a client/the general public walk away being terrified that by renouncing they would be denied entry to see their sick or dying parent? If one were told two people were denied entry because they told the DHS they renounced for tax purposes, would one worry about this?
One wonders really, given the fact that Congress themselves removed the connection between expatriation and intention regarding taxes, if DHS made a mistake denying entry. I believe it might be called “last-in-time-rule?”
My point is to stir this up based on recent news items. As far as I am concerned, it is a myth in the way it is presented. And after nearly 5 years of watching this continue, I think its a good time to respond. Why not a measured attempt to put the scare tactics into perspective?
I see that Roy Berg recently did a seminar in Calgary where AGAIN this question was raised. For the record, he is annoying! If the majority of US citizens living abroad are right next door (Canada and Mexico), I think the question needs to be “why would the US deny all those people entry?” They stand to lose economically. All those people travelling to the US for holidays and spending those tourism dollars. All those people and cross border shopping. Have you ever watched BC news and seen pics of the line ups at the Peace Arch? It’s like cutting you nose off your face just to spite yourself. I think too much money is involved. Think of all those retailers in those malls and hotels yelling their faces off. And some border crossings are still allowing individuals to enter on a Canadian passport when they should be using an American passport.
Tricia, this link may already be on Brock, but a google search on the Reed turned up the name of a “Alexander Marino JD LLM (US tax)” working for a Canadian company called “Moodys Gartner”.
I am guessing that Moodys is one of those tax compliance companies that charges its clients for services related to U.S. tax law compliance, etc.
Anyway, this is a small part (it is a long article) of what Mr. Marino has to say in 2013 about the Reed and being barred (inadvertently?) from entry into U.S.
He gives Canadians some “smart money” advice:
“…While the failed passage of this amendment is a clear victory for those looking to renounce their US citizenship in the near future, the fact that Congress has already attempted to bring legislation before the floor in an effort to make the penalties associated with renouncing even more severe, should send a loud and clear message to all those looking to renounce their US citizenship…“GET OUT NOW”….
… The Reed-Schumer Amendment recently failed to become US law, but the danger of inadvertently being barred from the US while also being hit with the US exit tax may still be of real concern for those considering renouncing in the near future and beyond. It is fairly safe to say that Congress is aware of the renunciation problem they are facing, and smart money would be on another amendment or bill attempting to become law in the near future…”
The Moodys article was posted on July 4 (a nice touch).
http://moodysgartner.com/renouncing-your-us-citizenship-new-law-may-keep-you-out-forever/
I don’t know how much of a dent anyone renouncing without being tax compliant would put in the US economy. A penny change in the dollar would probably do more damage.
I don’t believe there are many people renouncing without being tax compliant – why would you bother? As for those who would – they’ll likely avoid the US anyway. Just as those who don’t renounce would do if they’re worried about the IRS. Self-imposed banishment is more likely than the Reed Amendment being enforced.
I was disappointed to read this on SKL, especially the part about having to be tax compliant in order to renounce:
“Giving up your US citizenship is one way to rid yourself of a US tax headache. To be allowed to renounce your citizenship, you have to be caught up on five years of US tax returns. Even then, if your total net worth is over USD $ 2 million, you may be subject to the exit tax when you finally relinquish your citizenship. This exit tax is levied on the difference between what you paid for your assets and their current value.
The advantage of renouncing your citizenship is obvious – no more US tax problems. The downsides are less obvious, but very real. You can no longer vote in US elections, rely on US consular services abroad, or live and work freely in the US. You might also be subject to future problems at the border. The 1996 Reed amendment gives the US Attorney General the power to deny entry to former US citizens who have renounced their citizenship for tax reasons. This law has rarely been applied but it remains on the books. Some US lawmakers have tried, without success, to pass harsher versions of it. It’s hard to say what the future holds.
SKL can help you navigate these issues and figure out whether this big decision is right for you. To get started on giving up your US citizenship get in touch with Steve Katz or Max Reed.”
http://www.skltax.com/services/give-us-citizenship/
My thinking is that these US tax compliance firms have to give full disclosure on what / anything that COULD happen. Along with that comes the opportunity of subtle or not so subtle fear-mongering to vulnerable persons thinking of expatriation. I have no trust or pipe dream that the exceptional US would not have any qualms about continuing to put forward for passing continued versions of punitive legislation to eventually bar those *US slaves* who have left the homeland — keep trying until they are successful in legislating such punishment.
I think this because I was definitely WARNED in 1975 when I became a Canadian citizen that I would thereby punitivey lose my US citizenship. When I started my journey of OFFICIAL expatriation, there was no fee for either renunciation or claim of relinquishment. It is clear (to me) that the US saw a trend and wanted to place a punishment on the road to freedom by changing the fee to US$450.00 and a few years later to US$2,350 for renunciation, followed by announcement that the fee would apply for getting a CLN through either renunciation or claim to relinquishment of US citizenship. I further think this because they keep in their arsenal the ability to deny expatriation to anyone with some *mental incapacity*. I would think that any country with a sense of morality and one who claims to be *The Land of the Free* would never entrap anyone into a citizenship that was without consent and the parent, guardian or trustee of a person without requisite mental capacity being able to act on that person’s behalf. If there are dire consequences on yearly cost of compliance for US citizenship based taxation, surely there should only be an informed choice, a claim to choose to become a US citizen if birth facts permit, never an automatic *gift* to that person that, for some, can never be returned.
For every *Accidental American* there should only be an OPT-IN to US citizenship at age of majority and with requisite mental capacity. Moral legislators in any country would surely not entrap anyone into those consequences of US citizenship, would they? In my mind, neither would they stop their punitive threats and versions of legislation so those persons who had the audacity to permanently leave the homeland would not be able to visit their US family in times of sickness and death, let alone just ordinary family visits.
Stephen. Moody’s is home to Roy Berg. They were at the Vancouver triall last year and seen jabbering with the gov. lawyers. They are pre-eminent among Canadian compliance condors.
@Calgary
My feeling is that what you have said is true but emphsizing the Reed Amendment in the way it is generally done is way, way beyond simply presenting full disclosure on what could happen.
I agree. The mention of the Reed Amendment, I think, should be a P.S., not used as the main selling point to vulnerable, scared people trying to figure out what has hit them.
@Bubble
I don’t believe there are many people renouncing without being tax compliant – why would you bother?
+++
I think you’d be surprised. If a person is not worried about being a covered expat and just wants to live their lives and retain their banking privileges why would they? Getting a CLN is often quite sufficient for many, albeit a lengthy process.
There are many Underground Railway tracks that lead to Freedom from the USA. My border city was in fact one actual terminal station and we also had a great history during Prohibition of supplying contraband for those that enjoyed a wee drop on either side of the border. To say nothing about our participation in the War of 1812. This is a very interesting border city. So much changed after 9/11 and yet somethings don’t. Every year we have a spectacular joint Fireworks display on both sides of the Detroit River, funded by our wealthier neighbors to to the north( yes, Detroit is actually north of us) as we celebrate together Canada Day and July 4th. I hope that never changes because it is representative of the days we were just plain good neighbors separated by a one mile river.We still have patients who need emergency cardiac care being transported to Detroit hospitals ( mind you now the USA requires ambulance first responders to have their passports checked while transporting patients); Detroit still receives support from our Fire Department and Coast Guard for their emergencies etc. anytime they request. That’s the true definition of reciprocity that required no Treaty to implement. Very few people are aware of it but it is ongoing because we deal with humanity not bureaucracy in times of mutual need.
Kind of kick myself for not doing it while the price was only $450. Still might do it.
But won’t get tax compliant ever.
Fuck the USA. My and my family’s finances are none of its business. But it sure would be nice to have one of those CLN papers.
Hmmmm….
“There are many Underground Railway tracks that lead to Freedom from the USA.”
Imagine if the US had threatened to withhold 30% of all payments to the UK if the UK’s colonies failed to return escaped slaves.
Hmm wait. Would the 19th century Reed Amendment bar entry by escaped slaves or compel entry by escaped slaves?
I agree with WhiteKat. What’s the point in being complient first? All you need is the CLN.
Maybe I’m missing something here, but if you’re under the radar in Canada, why do you need a CLN? Should you end up on your bank’s radar, still why do you need a CLN, when in Canada banks aren’t closing bank accounts of USP’s?
Voluntarily go on the IRS’s radar by renouncing, so you can show your bank a CLN so they won’t report you to the IRS?
One reason could be that if you renounce without complying, thus have a CLN to show your bank if necessary, USA never gets to find out through the bank via FATCA, or through you via self reporting, what gold you have. For those who have a real problem with the intimate details of their financial life being sent to a foreign country, this is incentive to get proof of ex-slavehood.
Another reason could be to get rid of the curse of US taint from here going forward so that one’s real country can stop treating one as less than.
Another reason could be a passive-aggressive ‘fuck you’ to the USA.
I wish everyone who had renounced had said ‘fuck you’ to the USA, and not bothered with the compliance part.
I think about 7 million people are saying just that, without the costly fees.