Liberty and justice for all United States persons abroad

The Isaac Brock Society

Posted on by Posted in Issues regarding US persons abroad 48 Comments

cross-posted from the citizenshipsolutions dot ca blog

A recent post (July 7, 2016) on this blog began with:

Prologue – U.S. citizens are “subjects” to U.S. law wherever they may be in the world …

Yes, it’s true. In 1932 (eight years after the Supreme Court decision in Cook v. Tait), Justice Hughes of the U.S. Supreme Court, in the case of Blackmer v. United States ruled that:

While it appears that the petitioner removed his residence to France in the year 1924, it is undisputed that he was, and continued to be, a citizen of the United States. He continued to owe allegiance to the United States. By virtue of the obligations of citizenship, the United States retained its authority over him, and he was bound by its laws made applicable to him in a foreign country. Thus, although resident abroad, the petitioner remained subject to the taxing power of the United States. Cook v. Tait, 265 U.S. 47, 54 , 56 S., 44 S. Ct. 444. For disobedience to its laws through conduct abroad, he was subject to punishment in the courts of the United States. United States v. Bow- [284 U.S. 421, 437] man, 260 U.S. 94, 102 , 43 S. Ct. 39. With respect to such an exercise of authority, there is no question of international law,2 but solely of the purport of the municipal law which establishes the duties of the citizen in relation to his own government. 3 While the legislation of the Congress, unless the contrary intent appears, is construed to apply only within the territorial jurisdiction of the United States, the question of its application, so far as citizens of the United States in foreign countries are concerned, is one of construction, not of legislative power. American Banana Co. v. United Fruit Co., 213 U.S. 347, 357 , 29 S. Ct. 511, 16 Ann. Cas. 1047; United States v. Bowman, supra; Robertson v. Labor Board, 268 U.S. 619, 622 , 45 S. Ct. 621. Nor can it be doubted that the United States possesses the power inherent in sovereignty to require the return to this country of a citizen, resident elsewhere, whenever the public interest requires it, and to penalize him in case of refusal. Compare Bartue and the Duchess of Suffolk’s Case, 2 Dyer’s Rep. 176b, 73 Eng. Rep. 388; Knowles v. Luce, Moore 109, 72 Eng. Rep. 473.4 What in England was the prerogative of the sov- [284 U.S. 421, 438] ereign in this respect pertains under our constitutional system to the national authority which may be exercised by the Congress by virtue of the legislative power to prescribe the duties of the citizens of the United States. It is also beyond controversy that one of the duties which the citizen owes to his government is to support the administration of justice by attending its courts and giving his testimony whenever he is properly summoned. Blair v. United States, 250 U.S. 273, 281 , 39 S. St. Ct. 468. And the Congress may provide for the performance of this duty and prescribe penalties for disobedience.

It’s that simple. If you are a U.S. citizen, some would argue that you are the property of the U.S.government.

On the other hand (and this will be the subject of another post), the Supreme Court decisions in Cook v. Tait and Blackmer v. The United States were decided in an era where there was no U.S. recognition of dual citizenship. It is reasonable to argue that these decisions have no applicability in the modern world.

There will be those who will say: Come on! Get real! The United States would never rely on these old court decisions. Well, they still do cite Cook v. Tait. Mr. FBAR lay dormant until it was resurrected by the Obama administration as the “FBAR Fundraiser“.

Dual Citizenship: What is the “effect” of a U.S. citizen also holding the citizenship of another nation?

The State Department description includes:

However, dual nationals owe allegiance to both the United States and the foreign country. They are required to obey the laws of both countries. Either country has the right to enforce its laws, particularly if the person later travels there. Most U.S. nationals, including dual nationals, must use a U.S. passport to enter and leave the United States. Dual nationals may also be required by the foreign country to use its passport to enter and leave that country. Use of the foreign passport does not endanger U.S. nationality. Most countries permit a person to renounce or otherwise lose nationality.

The life and times of Boris Johnson – A United States taxpayer by birth

Assumptions about Mr. Johnson’s citizenship …

I am assuming that he became both a U.S. and U.K. citizen by birth. I also assume that he remains both a U.S. and a U.K. citizen.

A U.S. Centric Perspective: As a U.S. citizen, Mr. Johnson is defined primarily in terms of taxation. On the occasion of Mr. Johnson’s recent appointment as the U.K. Foreign Minister, the Washington Times published the following article.

The article referenced in the above tweet provides an interesting summary of the Mr. Johnson’s adventures with the U.S. tax system. The article demonstrates how U.S. “place of birth” taxation is used to extract capital from other nations and transfer that capital to the U.S. Treasury. (As always the comments are of great interest.)

A non-U.S. Centric Perspective: Mr. Johnson is a “poster boy” for the problems of the U.S. “place of birth taxation” (AKA “taxation-based citizenship”). Mr. Johnson’s “IRS Problems” resulted in raising the profile and awareness of U.S. tax policies. A particularly interesting article written by Jackie Bugnion and Roland Crim of “American Citizens Abroad”.

At a minimum, Mr. Johnson is subject to IRS jurisdiction, IRS reporting requirements, IRS threats and penalties and IRS assessments.

Boris Johnson has now been named the U.K. Foreign Minister …

How does his United States citizenship impact on this situation? Is it possible for him to be both a U.S. citizen and the British foreign minister? The “logical answer” is “Yes he can”. That said, having a U.S. citizen as the U.K. foreign minister raises many questions.

These questions include:

1. What effect (if any) does Mr. Johnson’s acceptance of this position have on his retention of United States citizenship as a matter of U.S. law?

2. If his acceptance of the position were a “relinquishing act” (under U.S. law) would Mr. Johnson be subject to the United States S. 877A Exit Tax?

3. Assuming that Mr. Johnson were to retain “dual” U.S./U.K. citizenship, how would his “divided loyalties” impact on this ability to serve as the British foreign minister?

4. Assuming that Mr. Johnson were to retain “dual” U.S./U.K. citizenship, how does the fact that the IRS has the jurisdiction to threaten him with fines and penalties impact the situation? What about the reporting requirements?

5. Should Boris Johnson formally relinquish his U.S. citizenship in order to avoid the conflict of interest that would arise because of divided loyalties?

Each question will be considered separately. Here we go …

1. What effect (if any) does Mr. Johnson’s acceptance of this position have on his retention of United States citizenship as a matter of U.S. law?

The law – S. 349(a) – Immigration and Nationality Act

(a) A person who is a national of the United States whether by birth or naturalization, shall lose his nationality by voluntarily performing any of the following acts with the intention of relinquishing United States nationality—
or

(2) taking an oath or making an affirmation or other formal declaration of allegiance to a foreign state or a political subdivision thereof, after having attained the age of eighteen years; or

(4)
(A) accepting, serving in, or performing the duties of any office, post, or employment under the government of a foreign state or a political subdivision thereof, after attaining the age of eighteen years if he has or acquires the nationality of such foreign state; or (B) accepting, serving in, or performing the duties of any office, post, or employment under the government of a foreign state or a political subdivision thereof, after attaining the age of eighteen years for which office, post, or employment an oath, affirmation, or declaration of allegiance is required; or

(5) making a formal renunciation of nationality before a diplomatic or consular officer of the United States in a foreign state, in such form as may be prescribed by the Secretary of State; or

 
It appears that by accepting the position of Foreign Minister that Mr. Johnson has voluntarily committed an “expatriating act”. The “expatriating act” would be a “relinquishing act” if it were performed with the intention of relinquishing U.S. citizenship. (Of course, if he lacked the intention to relinquish U.S. citizenship by becoming the British foreign minister he could still formally renounce U.S. citizenship.)

The interpretation of the law – the State Department Foreign Affairs Manual

Normally the State Department works with an “administrative presumption” that a U.S. citizen who commits an expatriating act does so with the intention of retaining U.S. citizenship. In other words, although the United States does not like “dual citizenship”, it accepts that dual citizenship exists.

The “administrative presumption” that one intends to retain U.S. citizenship does NOT apply when a U.S. citizen accepts a “policy level” position in a foreign government. As “Foreign Minister” Mr. Johnson has accepted a “policy level” position.

7 FAM 1281 INTRODUCTION

(CT:CON-285; 03-06-2009)

a. This subchapter addresses the subject of development of loss-of-nationality cases involving persons who:

(1) Have accepted, are serving in, or performing the duties of any office, post, or employment under the government of a foreign state or political subdivision thereof;

(2) Have attained the age of 18; and

(3) Have the nationality of the foreign state or have taken an oath of allegiance to the foreign state.

b. The U.S. Supreme Court has ruled that a person cannot lose U.S. nationality unless he or she voluntarily and intentionally relinquishes that status (Vance v. Terrazas, 444 U.S. 252 (1980)). The Supreme Court underscored in Vance v. Terrazas that “expatriation depends on the will of the citizen rather than the will of Congress,” and the Department gives great weight to the expressed intent of the individual. However, the Terrazas Court also recognized that intent may be “expressed in words or found as a fair inference from proved conduct,” and the Department has taken the view that actions inherently inconsistent with allegiance to the United States may be more probative than words. See 7 FAM 1285 for a fuller discussion of the subject.

c. The presumption stated in 7 FAM 1222, paragraph a, found in 22 CFR 50.40, that a U.S. citizen/noncitizen national intends to retain U.S. nationality applies when he or she accepts nonpolicy level employment in the government of a foreign state. (See 7 FAM 1285 for a discussion on what constitutes a policy-level position which the Department now construes as meaning a head of a foreign state.)

d. If a consular officer becomes aware that a U.S. citizen/noncitizen national accepted a nonpolicy-level position in the government of a foreign state and the individual does not advise you that his or her intent was to relinquish U.S. nationality, the administrative presumption of intent to retain citizenship applies. You should:

(1) See 7 FAM Exhibit 1223 and prepare the Consular Officer Attestation of Non-Loss;

(2) Enter case in ACS System; and

(3) Send attestation to Passport Records for filing attached to Form DS-11, Application for a U.S. Passport, Form DS-82, Application for a U.S. Passport by Mail, or Form DS-4085, Application for Additional Visa Pages, or other passport service. If the person is not applying for a passport, use Form DS-4085, which has been modified for this sort of purpose.

e. If the person indicates that he or she did intend to relinquish U.S. nationality in accepting a nonpolicy-level position in the government of a foreign state, follow the procedures outlined in 7 FAM 1220 for development of a loss-of-nationality case.

f. The presumption of intent to retain nationality is not applicable to a policy-level job, but that said, the intent to relinquish nationality must always be established, including for a foreign government policy-level position. Much depends on the nature of the position. Many policy-level jobs involve relatively mundane duties, e.g., health, education, etc., which do not have implications for allegiance. Additionally, even higher-level positions with a foreign government may not be inconsistent with loyalty to the United States. In Vance v. Terrazas, the U.S. Supreme Court recognized that intent can be expressed “in words or found as a fair inference from conduct.” (See 7 FAM 1285 for a discussion of the Department position that for the purposes of INA 349(a)(4) (8 U.S.C. 1481(a)(4)) a policy level position constitutes a head of a foreign state.) Development of a loss of nationality for a person in such a position is explained in 7 FAM 1286.

Therefore, the State Department would be required to explore whether Mr. Johnson accepted the role of British foreign minister with the intent to relinquish U.S. citizenship. If Mr. Johnson agreed that he intended to relinquish U.S. citizenship by becoming the British foreign minister, it is likely that the State Department would determine that he had relinquished.

2. If his acceptance of the position of “foreign minister” were a “relinquishing act” (under U.S. law) would Mr. Johnson be subject to the United States S. 877A Exit Tax?

Why is this important? Isn’t this a private matter? NO, this is NOT a private matter. The U.S. “Exit Tax” found in S. 877A of the Internal Revenue Act is a way in which the United States exercises control over individuals. (Obviously the British foreign minister cannot be subject to control by a foreign nation.)

The S. 877A Exit Tax In General:

Whether by “accident” or whether by “design”, it’s application is particularly punitive in relation to Americans abroad. To put it simply: The S. 877A Exit Tax operates to virtually confiscate the non-U.S. pensions and the non-U.S. assets of Americans abroad. The Exit Tax is designed to create disincentives to relinquish U.S. citizenship. Of course, by remaining a U.S. citizen, Mr. Johnson as Britain’s foreign minister, would remains subject to U.S. jurisdiction.

The “Dual Citizen” Exemption From The Exit Tax:

Remember our assumption that Mr. Johnson was born BOTH a U.S. and U.K, citizen. This fact (along with additional circumstances found in the statute including U.S. tax compliance) allows him to relinquish U.S. citizenship and avoid the S. 877A “Exit Tax”.

3. Assuming that Mr. Johnson were to retain “dual” U.S./U.K. citizenship, how would his “divided loyalties” impact on this ability to serve as the British foreign minister?

Mr. Johnson is NOT just an ordinary citizen. He has lived a privileged and successful life. I am reminded of the wisdom:

“To whom much is given, much is expected.”

Since British foreign policy will necessarily diverge from U.S. foreign policy, Mr. Johnson simply cannot have allegiance to both nations and be the foreign minister of one nation.

(This topic reminds me of the “Christine Keeler” chronicles. Although not a perfect analogy, Ms. Keeler was a London socialite who had links to both the British and Russian governments.)

4. Assuming that Mr. Johnson were to retain “dual” U.S./U.K. citizenship, how does the fact that the IRS has the jurisdiction to threaten him with fines and penalties impact the situation? What about the reporting requirements?

It’s really about Mr. FBAR and the other “reporting requirements”. Under the current law, Mr. Johnson is required to report to the Financial Crimes Division of U.S. Treasury (FinCEN) information about accounts that he has:

– signing authority over; and/or

– can control the disposition of funds …

This is clearly an intolerable situation.

The attitude of the United States toward the obligations of Americans abroad to report on their “local” financial accounts in other nations is included in S. 6038D of the Internal Revenue Code as follows:

(g) Reasonable cause exception

No penalty shall be imposed by this section on any failure which is shown to be due to reasonable cause and not due to willful neglect. The fact that a foreign jurisdiction would impose a civil or criminal penalty on the taxpayer (or any other person) for disclosing the required information is not reasonable cause.

Congress is saying that: When it comes to the reporting requirements, and U.S. citizens living outside the United States, the laws of the United States take precedence over the laws of the country where the person resides. This is true even when the individual is a citizen of that other nation and has never lived in the United States!

5. Should Boris Johnson formally relinquish his U.S. citizenship in order to avoid the conflict of interest that would arise because of divided loyalties?

In my opinion the answer is: Yes, Boris Johnson must relinquish his U.S. citizenship upon his becoming the British foreign minister. This is NOT just a question of optics and the “appearance” of possible conflicts of interest. The U.S. claims the right to control the finances and lives of U.S. citizens abroad. U.S. citizens abroad are also subject to the threats of fines and penalties that are part and parcel of “Life In The Penalty Box“. (It’s very difficult for Americans to live abroad in a FATCA and FBAR world.)

(It’s fair to say that the United States (given its negative attitude toward dual citizenship) and the reality of “divided loyalties would be unlikely to allow a “dual citizen” to have a cabinet level position in the U.S. Government.)

I began writing this post without a title for the post. The title of the post will be:

“Why Boris Johnson must relinquish US citizenship on the occasion of his appointment as British Foreign Minister”.

His relinquishment may be accomplished in one of two ways.

1. He can relinquish U.S. citizenship by stating that he voluntarily assumed the role of British foreign minister with the intention of relinquishing U.S. citizenship; or

2. He can formally renounce U.S. citizenship.

Since he is now the British foreign minister, it is incumbent on him to inform the people of the U.K. how he is resolving the question of his U.S. citizenship. He simply cannot allow the United States to continue jurisdiction over him!

John Richardson

48 thoughts on “Why Boris Johnson must relinquish US citizenship on the occasion of his appointment as British Foreign Minister”

  1. @iota

    Thanks for the link. It makes sense that he did actually follow through on renouncing, as per all the reasons John outlines in his post.

    @Patricia Moon

    I very much doubt he’ll ever have trouble entering the US as long as he’s a high-ranking member of the UK government, even if the Reed Amendment (or something similar) passes, because the USG wouldn’t want to risk damaging diplomatic relations with the UK by turning him away.

  2. I expect Johnson renounced as preparation for a leadership challenge followed by a general election. Things didn’t turn out as planned, but renunciation does probably mean that he’ll have a slightly easier ride through vetting.

  3. “Being a dual citizen (under certain circumstances) can still be a disqualifier for a U.S. security clearance (if that’s what you were referring to)”

    Then so much more the reason why it would apply to cabinet positions.

    Canada, the UK, and France should restore Hillary Clinton’s citizenships without her knowledge or consent, so she won’t get a security clearance to send or receive classified e-mail.

    Germany should restore Trump’s citizenship without his knowledge or consent too, but please wait until he gets his walls built before disqualifying him.

  4. @WestCoaster
    I should have mentioned I brought it up only bc I found it in print…while obviously unlikely, still an interesting thought.

    Could someone give a brief description of this betrayal by Gove?I don’t follow British politics and haven’t seen an explanation I can follow……

    @Jonathan in BC Thanks!

  5. It was generally assumed Remain would win, until Johnson, suddenly switched sides and came out for Leave – whether from conviction or expediency is not clear or at any rate can’t be proved. Cameron’s close ally Gove then knifed his dear friend Cameron in the back by jumping ship and joining Johnson on the Leave side. The pair of them made use of Johnson’s popularity to present to the voting public a populist fantasy of what Brexit would be like: Britain “great” again, NHS flooded with cash saved by leaving EU, no more immigration etc.

    When Leave unexpectedly won, Gove and Johnson were as shocked as the rest of the country. It rapidly became clear they hadn’t expected to win and didn’t have a plan. Cameron promptly resigned, Gove went home to his busybody wife, and Johnson went to a barbecue. Power vacuum ensued. Leadership contest was announced. Instead of becoming Johnson’s campaign manager, as had been expected, Gove launched his own campaign without warning Johnson, pre-empting Johnson’s launch by hours and leaving him in a quite excruciating position, hastily rewriting the end of his speech to announce his withdrawal, while the assembled audience waited at the launch venue, wondering what was going on and where was the candidate.

    Thus the leadership contest proceeded without Johnson, Gove was dumped for having knifed one mate too many, and May was crowned as a supposedly “safe pair of hands”. She lost no time sacking the lot of them. Apart from Boris.

    How not to run a country. Don’t get me started on Labour.

  6. “When Leave unexpectedly won, Gove and Johnson were as shocked as the rest of the country. It rapidly became clear they hadn’t expected to win and didn’t have a plan.”

    The vote wasn’t for MPs, the vote was whether to remain or leave. No politician won. The voters won.

    “How not to run a country.”

    That’s how not to run a party. Referenda are the most democratic way to run a country.

  7. Well, the Brexit vote made the euro plummet somewhat, and is likely to cause some temporary havoc in the property market in the British expat ghettoes in southern Europe…which makes hubby’s and my dream of a Spanish or Portuguese Golden Visa–and a pathway, finally, toward detoxifying ourselves of US citizenship–slightly more viable. So, thanks, Boris!

  8. Boris seems to be trying to shed the pretend-shambolic persona and reinvent himself as a responsible politician. Be interesting to see if he can manage it. Old habits die hard.

    And yes, the Brexit uncertainties are certainly affecting property markets.

  9. @ Iota
    I think the London property market needed some adjustment. I just saw online a two up, two down terrace house on the once poor East End of London street where my Grandfather grew up, now priced at $1.1 million!

  10. “I just saw online a two up, two down terrace house on the once poor East End of London street where my Grandfather grew up, now priced at $1.1 million!”

    Wow, not enough to make a covered expat. Good thing the house isn’t in Toronto or Vancouver.

  11. @ Norman
    Ha, Ha. That should be 1.1 million GBP
    1.1 x 1.4 = $1.5, close 🙂

    London property has become an investment bonanza for foreigners. If there isn’t a correction soon, its infrastructure will disintegrate. It will not function as a city where ordinary people such as teachers, nurses can afford to live and work .

  12. @iota, “present to the voting public a populist fantasy of what Brexit would be like”

    Did you not miss the apocalyptic projections of what Brexit would create? Stock market crash, interest rates up, World War III, irreversible climate change…………..and the Osborne punishment budget if the people dared vote leave.

    We have already had politicians blame the coup attempt in Turkey on brexit and the failure of a shady discount travel agent that left the UK and redomiciled in Spain on brexit. I got a paper cut yesterday so I shall blame that on brexit.

    Canada and the UK signed on to IGAs to “protect access to the US Market.” Giving up sovereignty for “market access” because of my experience with FATCA is a red line hence I proudly voted Leave and do not regret the vote. Even IF market access is at risk, Sovereignty is and must be above all, if not ADCS in Canada should close up shop.

  13. @Heidi, “I think the London property market needed some adjustment.”

    “Some adjustment” is an understatement. I know people that voted Leave after Osborne declared property prices would collapse on a Leave vote. Sadly I think Gideon lied but he will have time to reflect on this now.

    @Iota ““When Leave unexpectedly won, Gove and Johnson were as shocked as the rest of the country.”

    The day of the referendum Populus polling operated by a crony of George O/Dave C, released a public poll in the media after they had been doing private polling for the In Campaign. The In Campaign was told by Populis that the results would be 60/40 a clear IN result. That polling data was “leaked” to Boris, Gove, Fargae, Others and financial traders.

    For several weeks I had been canvassing in northern Labour areas which were showing Leave at 60% to 80%!!!! My projection to the various Leave organizations as I was involved in data assembly was a low of 53% to a high of 62%. My low figure was spot on for England.

    In the end more British Voters voted to Leave than have ever voted for anything or any party in UK history.

  14. George,

    Re your mention of “sovereignty”, ADCS (the Client) and the Plaintiffs (Ginny, Gwen, and Kazia),

    Point #85 of June 2016 Amended Statement of Claim filed against Canada’s AG and MNR:

    “The Impugned Provisions also offend the unwritten principles of the Constitution in that Canada is forfeiting its sovereignty or denying US Persons the full protection of Canadian sovereignty by facilitating the extra-territorial enforcement of a foreign state’s taxation and tax compliance regime with respect to Canadian citizens residing in Canada.”

    AND

    Point 87#:

    “The Impugned Provisions breach s. 7 of the Charter in that they expose the Plaintiffs to a deprivation of their liberty and security of the persons and in particular the protection of Canadian sovereignty in manner not in accordance with the principles of fundamental justice, which includes the principles against arbitrary, overbroad and grossly disproportionate laws.”

    AND

    Point #94:

    “The distinction created by the Impugned Provisions causes the Plaintiffs disadvantage, including but not limited to the facts that the Plaintiffs:a. are denied the protection of Canadian sovereignty.”

    AND

    Point #95:

    “These disadvantages are arbitrary for reasons including that:…The failure to provide US Persons of the protection of Canadian sovereignty does not correspond to the capacities, needs or circumstances of being a US Person;”

  17. @ Iota,
    I remember reading about the Boris/Guppy connection but had not read the full dialogue!
    Boris should fit in well with the ethics of the folks at MI6.

  18. @Heidi – I think any halfway competent spy would make sure Boris was kept well out of the loop.

  21. @George
    Brexit hasn’t happened yet, and won’t for at least another two+ years, I will reserve judgement 🙂
    Let’s see how well the Brexitiers do with their negotiations.

  22. @All

    In case you didn’t know, the 2016 Platform calls for repealing FATCA and CBT. I have no specific information but I’m sure you can thank Solomon Yue and Republicans Overseas, who set the stage with their two RNC resolutions.

    Let’s make America great again, which means FATCA- and CBT-free!

    Text and link below:

    ‘The Foreign Account Tax Compliance Act
    (FATCA) and the Foreign Bank and Asset Reporting
    Requirements result in government’s warrantless
    seizure of personal financial information without
    reasonable suspicion or probable cause. Americans
    overseas should enjoy the same rights as Americans
    residing in the United States, whose private
    financial information is not subject to disclosure
    to the government except as to interest earned.
    The requirement for all banks around the world
    to provide detailed information to the IRS about
    American account holders outside the United States
    has resulted in banks refusing service to them. Thus,
    FATCA not only allows “unreasonable search and
    seizures” but also threatens the ability of overseas
    Americans to lead normal lives. We call for its repeal
    and for a change to residency-based taxation for
    U.S. citizens overseas.’

    See page 13 https://prod-static-ngop-pbl.s3.amazonaws.com/media/documents/DRAFT_12_FINAL%5B1%5D-ben_1468872234.pdf

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