cross-posted from citizenshipsolutions
Update January 2018: This post has been updated with some new links and discussion
Part I is here.
Part II is here.
Part III is here.
*****
PART IV
U.S. Citizenship law of the present – Breaking The U.S. Connection – Relinquishment
Relinquishing acts – How to lose U.S. citizenship – S. 349 of the Immigration and Nationality Act
Once upon a time, the U.S. would “strip citizens” of their U.S. citizenship for voluntarily becoming naturalized citizens of another country. Like many aspects of U.S. nationality law, this was considered to be a “punitive measure”.
Prior to the U.S. Supreme Court decisions in Afroyim and Terrazas, S. 349 of the Immigration and Nationality Act, mandated an automatic loss of U.S. citizenship for those who became citizens of another country. S. 349 now clarifies that, U.S. citizens who become citizens of another country, will lose their U.S. citizenship only if they intended to relinquish their U.S. citizenship by becoming naturalized citizens of the second country. In other words, U.S. citizens have the right to NOT (absent their consent) be stripped of their U.S. citizenship even if they maintain neither ties nor “connection” to the U.S.
U.S. citizenship law of the past – The requirement of a voluntary connection
Conditions Subsequent – Automatic Loss of Citizenship For Those Born In The U.S.
Conditions subsequent to the retention of citizenship – Retention requirements for those born in the U.S.
In the past, U.S. nationality law has included provisions which resulted in the automatic loss of U.S. citizenship for those born in the U.S., and find themselves in the circumstances described in Categories A and B above (born in the U.S.). This was reflected in the old S. 350 of the Immigration and Nationality Act (which has been repealed) and pre-1986 S. 349 of the Immigration and Nationality Act. The general principle was that children who:
– acquired U.S. citizenship as children; and – subsequently left the U.S., and – did nothing to assert a VOLUNTARY connection to the U.S.,
would lose their U.S. citizenship. This was a clear recognition that “citizenship” was more than a “legal status” and required a “voluntary affirmation of citizenship” and/or “connection” to the community.
Automatic Loss of Citizenship For Those Naturalized in the U.S
Interestingly the old S. 352 of the Immigration and Nationality Act mandated the loss of U.S. citizenship (in some circumstances) for naturalized U.S. citizens who left the U.S. after becoming U.S. citizens.
To use an analogy to contract law, there were “conditions subsequent” for certain 14th Amendment citizens to retain their U.S. citizenship.
Conditions Precedent to Citizenship – Inability To Gain Citizenship For Those Born Outside The U.S.
American Citizens Abroad was a pioneer in fighting for the rights of “American Citizens Abroad”. Much of their early work was aimed at ensuring that children born outside the United States to Americans abroad would become U.S. citizens. At one time the U.S. had laws which required those born abroad to U.S. parents to establish residence in the U.S. or lose their U.S. citizenship. As Phyillis Michaus author of The Unknown Ambassadors notes:
“It all started back in 1961, when Phyllis Michaux, an American woman married to a Frenchman and living in France since 1946, found a friend in a similar situation. They began talking about the future of their children, their American and French citizenship and wondered whether there were other women “out there” in a similar position.
They had a question and an idea. The question was, “How many people are affected by the citizenship law 301(b)?” At the time under section 301(b) of the Immigration and Nationality Act of 1960, children born overseas of one American parent would lose their American citizenship unless they lived five consecutive years in the United States between the ages of fourteen and twenty-eight. Essentially, the children would have to move to the United States sometime before their twenty-third birthday to retain their American citizenship. The idea was to find out how many families were affected. This they did. And they did a lot more along the way.”
For this reason, I submit that the problems of Americans abroad, may be more rooted more in the laws of citizenship than in the law of tax.
U.S. citizenship law no longer based on the assumption that “citizenship” requires a voluntary connection to the community. Combining “citizenship” with “taxation” means that the U.S. claims the right to tax large numbers of people with no connection to the U.S.
Significance of U.S. citizenship law of the past …
There was a time when a voluntary affirmation and connection to the U.S. was required to retain U.S. citizenship. One would lose U.S. citizenship without the voluntary affirmation – an “citizenship opt in”. This ensured that those without a connection to the U.S., would NOT be subjected to U.S. taxation.
The repeal of Sections 350, 352, 301(b) (of the 1960 law) and the 1986 amendment of S. 349 of the Immigration and Nationality Act, mean that, it is NO longer a requirement that the children described in Categories A, B and C, affirm a connection to the U.S. in order to retain U.S. citizenship. Absent an “relinquishing act”, the circumstances of birth will be sufficient to establish (under U.S. law) citizenship and a lifetime of tax obligations.
U.S. citizenship law of the present. A relinquishing act is now required to terminate U.S. citizenship – an “citizenship opt out” (with all the horror of the possible S. 877A United States expatriation taxes)
“For those who had no choice of where or to whom they were born, surely there should be an “opt-into” US citizenship – rather than an “opt-out” of US (or any other country’s) citizenship. Anything else is ENTRAPMENT. I find that very punitive.”
For those with the “legal status” of U.S. citizens abroad, the evolution from the “opt in model” to the “opt out model” reflects a principle that citizenship is defined more in terms of a “legal status” (conferred by birth) than a “voluntary acceptance” of citizenship. This is neither desirable nor consistent with a world of increased mobility and multiple citizenships.
The problems of U.S. citizenship have been exacerbated by the twin principles that:
1. U.S. citizenship has become less and less dependent on the existence of a “voluntary” connection to the U.S.; and 2. U.S. citizenship is now a status imposed on the individual, rather than a status chosen by the individual. (Although the 14th Amendment may have been motivated by a desire to “end slavery” it is now being used as a mechanism to “create tax slavery”.)
To put it another way: U.S. citizenship has become less “something that one chooses to voluntarily connect to” and more something “one is through an accident of birth, chosen for”. This is of huge significance because the U.S. (under the guise of citizenship-based taxation) attempts to control the lives of its citizens living abroad.
What is the justification for “place of birth” taxation? The closest rationale that can be discerned is the idea that:
1. All U.S. citizens must pay taxes to the U.S.
2. U.S. citizens, regardless of where they live are still U.S. citizens.
Therefore, U.S. citizens regardless of where they live have to pay taxes to the U.S.
Interestingly, U.S. Taxation Abroad includes, but is not limited to U.S. citizens
A recent post on the Isaac Brock Society included:
“According to the 14th Amendment of the United States Constitution anyone born in the United States is a de facto US citizen regardless of whatever other citizenship they may hold in the course of their lifetime. Therefore, with the existence of CBT anyone with a United States birth certificate is forever taxable by the US even if they have never lived there as an adult or earned any money there.”
Are those “born in the U.S.” really doomed to a lifetime of U.S. tax servitude?
Plaxy,
Simple. To open a bank account in Japan, he must provide his My Number card. This number is the one and only number for any and all official documents he will need through out his life in Japan. With it, ALL his personal data will show on the screen. The documents we must routinely submit states clearly, the nationality of his parents, right there at the top of the page. When he gives his my number card to the bank, right after his name, DOB and sex are the names, ages, sex and nationalities of all the members of his household. Like I said, might as well have the flag tattooed across his face.
“That makes sense, in view of the treaty provisions. All USCs with pre-existing foreign accounts are already supposed to be reporting their accounts to the IRS, so no permission would be needed. That hadn’t occurred to me.”
Ah! I think we may have found a major reason for much of our earlier arguments.That had occured to me, but I lacked anything in writting until recently.
“And that’s why my bank, in a Model 1 country, felt free to ignore my CLN – because I didn’t have a CLN at the time FATCA began.”
And THAT is interesting as well.
“Interesting. Thanks, JapanT.”
Back at ya.
“…they will either report all possible US persons (including the odd poor soul that has absolutely no connection to the US)”
They may never know because in Canada the CRA doesn’t have to tell them. At least one Congressman, Posey, wants to know what the IRS is doing with this meta-data. Canada doesn’t seem to care.
I’ll have to check back in later. 1am here,
Thanks.
@Plaxy
“I think there’s some confusion. Only children who can prove their US citizenship can be registered at a US consulate. Registering or not registering does not affect a child’s status.”
Of course
My children were born in the US to British parents, their status was that they were both US and British, but they could not exercise their right to be British to travel freely and live in Britain as citizens until they were registered with the British consulate. The same should apply to children born abroad to US parents but the US treasury wants to exercise the right to tax them, even though they decline to take up that right to be registered as US citizens.
I think you are answering Heidi’s question, not mine. I imagine banks in Model 2 countries are careful to find out whether a new applicant is a USC, and require proof. They can’t afford to make a mistake.
“My children were born in the US to British parents, their status was that they were both US and British, but they could not exercise their right to be British to travel freely and live in Britain as citizens until they were registered with the British consulate. The same should apply to children born abroad to US parents ”
British citizenship law has nothing to do with US citizenship law.
@JapanT
Sorry to keep you up:-)
Can’t he give his Mom’s number card or wait til he is 18 and give his own?
“Ah! I think we may have found a major reason for much of our earlier arguments.”
I think you’re right! 🙂
Sorry guys, yes I get the names reversed.
As a minor, he gives nothing to nobody. Either I or his mother, under the circumstances, his mother has to give both his and her numbers. I would think it similar elsewhere, A legal guardian would provide both their SSN and the child’s SSN to open an account, or just the child’s.
The problem comes when he is 18. The age of majority in Japan is 20, not 18. Regardless, that is years down the road. He will either not be able to take any kind of employment before then or have to file tax returns to two countries. At 18 he can renounce a citizenship that was imposed upon him, but at what cost. The current price is outragous, what will it be in 5, 10, 15 years? Doubt it will be less nor even the same. Will renouncing even be possible then? It is a long dark tunnel we are on. While no one knows the future, not much in the way of a light has yet to show itself.
Now off to bed. Sorry, we’ll just have to pause my part of the conversation.
“At 18 he can renounce a citizenship that was imposed upon him, but at what cost. The current price is outragous, what will it be in 5, 10, 15 years? Doubt it will be less nor even the same. Will renouncing even be possible then? It is a long dark tunnel we are on. While no one knows the future, not much in the way of a light has yet to show itself.”
Indeed not. And what actually happens may be very different from one’s fears. We can only cope with the present, where US law is concerned.
Test
BB – “They may never know because in Canada the CRA doesn’t have to tell them.”
Does the Canadian legislation say that the holder of a reportable pre-existing account must be notified by the bank?
I haven’t been told whether my pre-existing account was reported; I assume that it was. I now feel sure (following the above conversation with JapanT) that if I delved into the legislation I wouldn’t find any requirement for the bank to notify me – after all, as I was a USC and tax-resident in both jurisdictions, both jurisdictions were entitled to information about the account.
@JapanT
The way I see it, two possible outcomes:
1. your children are condemned to a life of poverty and crime as outcasts in a dystopian, technocratic autocracy
2. your fears are excessive
If nothing changes for the better, then 1. is most likely.
All “halfu”, the Japanese term for biracial Japanese, have a hard enough time here as it is without the reporting requirements.
Japanese with naturally non jet black hair may still be forced to dye their hair black by their school, often done in the classroom in front of their classmates. JNs with non black pupils still may be discriminated against. Left handed JNs are often still forced to use their right hands. The grandmother of a JN I knew called him “dirty” and “immoral” for being left handed.
Japanese returning from extended assignments or schooling overseas have great difficulty as they have picked up non Japanese customs and not as quick with Japanese customs as society requires.
The Japanese word for “different” also means “wrong”.
My children have more than enough on their plate without the “special handling” by their banks and employers that FATCA requires. Japanese banks and employers HATE that.
And yet, they make such cute cartoons! Such a paradox.
@plaxy
Canada’s Privacy Commissioner would like Canadian residents to be notified, but the CRA will not cooperate:
Watchdog wants proactive notification:
“Privacy Commissioner Daniel Therrien has raised concerns about the information sharing, questioning whether financial institutions are reporting more accounts than necessary. Under the agreement, financial institutions only have to report accounts belonging to those believed to be U.S. persons if they contain more than $50,000.
Therrien has also suggested the CRA proactively notify individuals that their financial records had been shared with the IRS. However, the CRA has been reluctant to agree to Therrien’s suggestion.”
http://www.cbc.ca/news/politics/taxes-internal-revenue-service-fatca-united-states-1.3954789
I had to write to Canada’s a Revenue Minister to confirm that mine had.
“And yet, they make such cute cartoons! Such a paradox.”
Guess you’ve never seen the rape and murder scenes in the ordinary, run of the mill weekly comic books nor the anime with similar themes.
Oh, during the war there were plenty of cute comics here too.
We are discussing the info I gave above as if it were new. It is not. The letter given me by my bank last summer is dated June 2014.
A couple of weeks ago I met with a JN friend from college. They were in disbelief over what I told them about FATCA but did a very rare thing. After we parted they searched online and found the Japanese version online. “Here it is online. Easy to find. Why does no one know about this.” they asked.
What else lurks out there?
“What else lurks out there?“
Japan did invent tentacle porn. There is that.
Talk about crossing posts. Geeze.
BB –
Personally I think the more records the IRS gets deluged with, the better.
CRS has no threshold, but is many-to-many; each tax agency receives only its proportionate share of total records, and all the information received is about cross-border accounts.
Not only is FATCA many-to-one, but each of the many is sending great volumes of useless information about local accounts. The IRS is apparently drowning in annual FATCA reports about the local accounts belonging to 9 million individuals (some with SSNs, some with ITINs, some with neither); most of it telling them stuff they already know or don’t need to know or don’t want to know.
Which is good. The more noise, the less signal. The less signal, the less likely FATCA’s continued survival. It is a mess and deserves to die and it will. IMO.
“Therrien has also suggested the CRA proactively notify individuals that their financial records had been shared with the IRS. However, the CRA has been reluctant to agree to Therrien’s suggestion.”
I’ll bet. Notification might imply or create a legal right to be notified. Which could easily lead to the question “why not a right to say no?”
@Plaxy
“Ah! I think we may have found a major reason for much of our earlier arguments.”
Not sure to whom that was directed towards but that was what I had been saying to you a while back (maybe not too succinctly), that the banks were trying to pay catch up and report the accounts you had while you were still a US citizen before you received your cln.
The Swiss banks did this with me, only difference was I renounced even before FATCA started so they had no right to report my accounts pre FATCA, the reporting was all part of their non prosecution agreement especially tailored for the Swiss get out of jail (fines) free card. I didn’t see why I should help them out, especially as they had previously closed my accounts leaving me no way to pay my bills. So even though I had reported my accounts on FBAR and could prove it, I told them to get lost.
@ Duality
I read that the average debt in the UK is 10,000 GBP that’s excluding mortgages. So when it comes to a new car loan or a vacation, 2,000 GBP on a credit card seems a much more worthwhile purchase. Couldn’t you consider that? You could even get some bonus airmiles 🙂
@Duality
That’s 2,000 for a renunciation in case I am misunderstood!