The Quarterly Publication of Individuals Who Have Chosen to Expatriate for Q1 2018 has just been placed on public inspection for printing in Tuesday’s Federal Register, eight days later than required by 26 USC § 6039G(d). This is the seventh quarter in a row in which the IRS has been late with the list.
This quarter’s IRS expat honour roll has the names of 1,100 people who gave up US citizenship, by my count. (Andrew Mitchel counted 1,099. My initial count was 1,102, because I accidentally counted two very long names as four entries.) Meanwhile, the number of records in the “renounced US citizenship” category of the FBI’s National Instant Criminal Background Check System (NICS) increased by precisely 1,100 during the first three months of the year, from 42,693 to 43,793. (The FBI added another 341 records in April, bringing the total to 44,134.)
The IRS list is known to be incomplete. It’s supposed to be much larger than the NICS list, not exactly the same size, let alone smaller. Per regulations, NICS only contains people who terminated their US citizenship by swearing an oath of renunciation at a US embassy or consulate. In contrast, the IRS’ list is supposed to have the names of all people who obtained Certificates of Loss of Nationality from the State Department, either by swearing an oath of renunciation or by reporting any other relinquishing act specified in 8 USC § 1481(a). The preamble of the IRS list even misleadingly implies that it includes some of the tens of thousands of people who give up their green cards every year.
Demonstrating the point, this quarter’s IRS list still failed to include some public figures who gave up US citizenship more than a year ago, including Japanese legislator Kimi Onoda and Ghanaian Deputy Minister of Finance Charles Adu Boahen. However, Homelanders and their chieftains don’t care about that. They’re dissatisfied with NICS instead, so there’s some provisions in the new spending bill imposing penalties on heads of upstream agencies, including the State Department, if they fail to certify semi-annually that they’re providing NICS with all the records they should be. More about that below.
Increases in NICS transparency coming soon?
For the past five years, we’ve been relying on NICS to provide a baseline for comparison to the IRS’ expat honour roll, to try to see if the latter is honestly reporting the names of all ex-citizens. However, the State Department’s reporting of renunciants to NICS hasn’t always been particularly timely either: for example, in October 2012, State added more than three thousand renunciant records to NICS, but when Patrick Cain at Global News asked them about it, they explained that the State Department was clearing a backlog of about 2,900 records (though it wasn’t explained how long the backlog had been running). The FBI spokesman’s explanation of another large jump in the number of records two years later was even terser and less informative: State was “working on updating this file”, he said.
In short, up until now we’ve had no guarantee that NICS statistics are any more reliable than IRS statistics. But that might change, because chief spy diplomat-to-be Mike Pompeo’s bonus is on the line if it doesn’t. Section 602 of the Fix NICS Act of 2018 (Title VI of the FY2018 spending bill that got signed into law in late March) requires State to certify to the Department of Justice every six months, starting from 31 July of this year, the total number of renunciant records they have, the number they’ve submitted to DOJ for inclusion in NICS, and their plan to make sure the second number doesn’t fall too far behind the first number. The DOJ will also be required to make public a “summary of the data, broken down by department or agency, contained in the certifications”.
And, much unlike the toothless 26 USC § 6039G(d), which the “Internal” Revenue Service violates with impunity, there’s some actual penalties for not obeying this new law:
(I) NONCOMPLIANCE PENALTIES.—For each of fiscal years 2019 through 2022, each political appointee of a Federal department or agency that has failed to certify compliance with the record submission requirements under subparagraph (C), and is not in substantial compliance with an implementation plan established under subparagraph (G), shall not be eligible for the receipt of bonus pay, excluding overtime pay, until the department or agency—
(i) certifies compliance with the record submission requirements under subparagraph (C); or
(ii) achieves substantial compliance with an implementation plan established under subparagraph (G).
Conclusion
Formally relinquishing citizenship has become difficult to such an absurd degree that other countries’ legislators have started complaining. But actually complying with the US tax code while living abroad is impossible — and there is no reward for trying, only punishment.
Most self-identifying Americans abroad just pretend to comply by skipping the hardest forms and filing only the easy ones, which have the wrong numbers on them as a result. Some of these people will get very angry if you even inform them of the existence of those harder forms, and accuse you of lying about how hard it is to comply. The only way for them to preserve their faith in their civic religion is to ignore its more absurd doctrines.
And the other US tax subjects who don’t identify as “Americans abroad” — people who never realised they might be US citizens in the first place, and people who thought they’d stopped being US citizens long ago — are just doing their best to hide.
This quarter we have 1,102 names of people who couldn’t hide and couldn’t pretend to comply. Nearly $2.6 million of fee revenue for the State Department. But that $2.6 million is dwarfed by what accountants and lawyers — the privatised Inquisition of the Homeland’s civic religion — are earning from this whole mess.
Thank you for posting 2018’s first Liberty List.
“Most self-identifying Americans abroad just pretend to comply by skipping the hardest forms and filing only the easy ones, which have the wrong numbers on them as a result. Some of these people will get very angry if you even inform them of the existence of those harder forms, and accuse you of lying about how hard it is to comply.”
Yup, seen that one many times.
And incredibly, from people claiming to do these forms professionally! The fact this CPA thought there were no issues if you earned below the FEIE said it all really.
It’s interesting reading the comments on the French article.
Many people complaining about the injustice and then with a predictability that transcends all languages and cultures, along come the ignoramus who claims these French citizens were “enjoying the benefits” of their US citizenship until the time came to pay the piper.
Clearly the only benefit was the possibility of living in the USA, and they didn’t want it or they wouldn’t be in France, and they never asked for it in the first place.
Same old same old…..
Eric, thanks for continuing to provide this information.
I’m in the list (they got the names wrong however)
Looks to me like its mission accomplished by the US State Department. They have successfully managed to limit renunciations to slightly over 1000 per quarter with their dual strategy of charging an outrageous fee and severely restricting available appointments. They are most likely acting on instructions sent down the chain by higher level officials.
By limiting renunciations to this level, they can continue to claim that only the lunatic few would renounce their precious US citizenship and that there is absolutely nothing about US overseas policy which is causing ordinary people to resort to such drastic action.
My first thought was: are these the people who got out in time to avoid the transition tax?
For those who renounced in 2016 or earlier, yes. They filed their final paperwork in 2017 before the transition tax came into existence and are done for good.
For those who renounced in 2017, who knows? I’m not sure how a partial year filing for 2017 would interact with the transition tax. I’m willing to bet the IRS doesn’t know either. If their renunciation date is before December 2017 it seems to me they beat the arrival of the transition tax and should be OK. If I were in that situation (which I’m not) I’d ignore it, file the final paperwork, and assume I’d never hear from the IRS again.
@Eric Thanks for providing the list.
We all know the list is a mishmash of names from different quarters and does not reflect the real names or numbers of that specific quarter and is most definitely under estimated. We also know many people continue to ignore the whole mess which keeps the list numbers down. I myself stopped a few people of making the mistake to file.
And in many cases it isn’t because people could not hide, it is because people were duped into filing by scaremongering and sadly afterwards when they realised compliance was impossible only had one course of action left, which is renounce.
@Eric
As always, you do great work which is much appreciated! There is simply nothing like it anywhere and obviously is important. I can’t tell you how many times I have directed folks to your posts in order to demonstrate how dishonest the U.S. is about this phenomena.
Thanks again!
UKRose:
“…in many cases it isn’t because people could not hide, it is because people were duped into filing by scaremongering and sadly afterwards when they realised compliance was impossible only had one course of action left, which is renounce.”
Indeed.
Though not in all cases sadly. For those with no desire to continue as duals, renunciation is liberation.
“(I) NONCOMPLIANCE PENALTIES.—For each of fiscal years 2019 through 2022, each political appointee of a Federal department or agency that has failed to
CERTIFY
compliance with the record submission requirements under subparagraph (C), and is not in substantial compliance with an implementation plan established under subparagraph (G), shall not be eligible for the receipt of bonus pay, excluding overtime pay,”
Just like tax returns, Form 8854, declarations by IRS settlement officers, and certificates of service declared by DOJ personnel, these things are supposed to be CERTIFIED but not to be true. I don’t think any government employee will have trouble CERTIFYING what they have to CERTIFY.
“until the department or agency—”
(i) CERTIFIES compliance with the record submission requirements under subparagraph (C); or
(ii) achieves substantial compliance with an implementation plan established under subparagraph (G).”
Well no problem eh? If they forgot to CERTIFY the first time around, then this time choose option (i) not (ii). No one’s[*] bonus is at risk.
[* I am no one. That’s why I don’t get a bonus.]
“Most self-identifying Americans abroad just pretend to comply by skipping the hardest forms and filing only the easy ones, which have the wrong numbers on them as a result. Some of these people will get very angry if you even inform them of the existence of those harder forms…”
Not me 🙂
I’ll happily tell you I make it simple on purpose. KISS.
maz57:
“For those who renounced in 2017, who knows? I’m not sure how a partial year filing for 2017 would interact with the transition tax. I’m willing to bet the IRS doesn’t know either. If their renunciation date is before December 2017 it seems to me they beat the arrival of the transition tax and should be OK.”
They’re NRAs. There’s no need to give the IRS the opportunity to decide whether to assess them for US tax on imaginary income.
Since they haven’t in fact distributed all the earnings of their corporation since 1986, and haven’t cashed in all their worldwide assets the day before renouncing, they’re perfectly safe from both the Transition Tax and the Exit Tax as long as they don’t do any final filings.
Thanks, as always, for your tremendous work, Eric! Good to know there are 1,100 more free people in the world today. I’m just spitting mad that each of them had to pay a ransom for their freedom.
plaxy:
As usual, your logic makes perfect sense! However, for reasons unfathomable to either one of us, there will be some former citizens that feel compelled to file the final paperwork.
Logically, such people should still be OK as long as their last day of US citizenship came before the tax was legislated into existence. How could you be expected to pay a US tax that didn’t even exist until after you became a NRA and were no longer subject to ANY US tax?
maz57:
Yes, some will want to file in the hope of achieving a “clean exit,” and I wouldn’t try to dissuade them, as long as they understand and accept the potential cost. It would be a disaster for the former citizen to file, expecting not to be subject to the Exit Tax, only to find the IRS moving the goalposts. They would have renounced in vain, achieving not a clean exit but covered expatriate status and a huge Exit Tax assessment. Uncollectable, true, but surely very painful emotionally for a person who wished to leave the US in compliance.
How could you expect to be taxed on imaginary income at any time? All the IRS needs to do is send out a notice to the effect that for purposes of the Exit Tax the imaginary distribution will be deemed to have taken place on the day before renunciation.
Yes, logic and the IRS don’t really go hand in hand do they? And the expression “a clean exit” or” exiting cleanly” sounds to me a lot like “trying to get closure” after your loved one has been brutally murdered.
Or after learning that your loved one has been plotting to brutally murder your retirement. 🙂
Though I guess there’s various reasons a person might want to do final filings, including wanting trouble-free US visits, post-renunciation.
To me, a “clean exit” sounds like something you’d say about a bullet wound.
Zla’od: “To me, a “clean exit” sounds like something you’d say about a bullet wound.”
Now that’s hilarious! Good one.
But in my opinion, the cleanest exit of all would be to file nothing and simply vanish somewhere into the rest of the non-US world.
Got my appointment for the Ottawa embassy yesterday. I sent in my request for an appointment just one month ago, and they came back with a May 29 appointment, so they’re right around two months. I had to move it to three weeks afterward due to prior commitments, bummer. I was surprised to see they had appointments that soon.
With the slipshod accuracy of the Freedom List, I’m not even expecting to see my name in there during the next two quarterly lists. Truth be told, I don’t expect to ever see it in print.
Pity, I would have liked to have my final bird flip immortalized in the Federal Register.
Thank you again @Eric for both the continued compilation and crosschecking of these lists, as well as the complicated context and the analysis that makes it accessible to all of us. As Patricia said, “…. there is simply nothing like it anywhere…” .
I knew about the foot-dragging, but was pleased to only wait three quarters (I think?) to finally see my name! Yahoo!
Happy days, I’m free! Is all I thought! I actually kissed my CLN papers- lol.
😉
“Zla’od says
May 8, 2018 at 6:27 pm
To me, a “clean exit” sounds like something you’d say about a bullet wound.”
Perfect catch!