Just Saying No: Not Renouncing/Relinquishing Nor Complying
Some people cannot afford to renounce (or relinquish and get a CLN) and some people will not renounce or relinquish because they do not consider themselves to be US citizens.
This thread is a place for people in this situation to share information and experiences. Thanks for sharing — your stories will be very helpful to others!
I just want to kick off this thread with what I think is an inspiring song …
https://www.youtube.com/watch?v=k2h9HPZhqHE
Unfortunately my story is not inspiring because it only demonstrates how to do everything wrong. (No need to repeat it since it is available in the Profiles.) After stumbling naively through that phase I failed at an attempt to get an I-407 application approved. It was then that I decided there was no acceptable (to me) solution so I walked through the doorway marked Willfully Non-Compliant. I’ve never held any citizenship other than the one I was born with (Canadian) and I do not accept that the USA can arbitrarily hang something called “US person” on me simply because decades ago I spent a small percentage of my life living there as what it then called a “resident alien”.
Well, I did not say “no”, but am inspired by those who continue to. Power to you.
I believe Gwen and Ginny would be in this category. Are there any others?
Does anyone remember the old nursery rhyme and game called “The Farmer in the Dell”?
https://en.wikipedia.org/wiki/The_Farmer_in_the_Dell
I FATCAcized the farmer and put FATCA in the center of the ring to illustrate what it takes from the world … LCUs, savings, sovereignty, citizenship … even, sadly, life itself.
The FATCA in the dell
The FATCA in the dell
Hi-ho, the scary-o
The FATCA in the dell
The FATCA takes a toll*
The FATCA takes a toll
Hi-ho, the weary-o
The FATCA takes a toll
* The toll taken in LCUs and savings in order to comply with US tax laws.
The FATCA takes a state*
The FATCA takes a state
Hi-ho, betray-e-o
The FATCA takes a state
* The loss of sovereingty of every state signing a FATCA IGA.
The FATCA takes a ship*
The FATCA takes a ship
Hi-ho, unfair-e-o
The FATCA takes a ship
* The loss of US citizenship through relinquishment in order to be IRS free.
The FATCA takes a life*
The FATCA takes a life
Hi-ho, the teary-o
The FATCA takes a life
* The life of Jonathan Prince. May he R.I.P. May there be no others.
The cheese* stands alone
The cheese stands alone
Hi-ho, defy-e-o
The cheese stands alone
* All those who are cheesed-off by US tax hegemony and choose to defy FATCA.
Gwen and Ginny lead the way.
I am one of those people who came to Canada to seek refuge from the Vietnam war. Canada welcomed people from both sides of that war, Vietnamese and Americans. I was part of the American contingent. I have lived in Canada for my entire adult life, for 45 years to be exact. When I moved to Canada, I was vaguely aware of the requirement to file US taxes, and I’m pretty sure we did file for a couple of years, but when we bought our house in 1977, it immediately became clear that the two tax systems didn’t mesh because mortgage interest was not deductible in Canada and there was no way to make the numbers work in a way that made any sense. So we stopped filing. We knew we lived in a high tax country and that the likelihood of ever owing anything to the US was slim to none, and even back then it was costing us $400 a year to tell the IRS that we owed nothing. Time passes, assets accrue, houses appreciate, life unfolds. I am a saver, not a spender, and I have done a pretty good job of saving up for my old age, despite some extremely challenging life circumstances. So now I find myself with a house in downtown Toronto and enough money to last me to the end of my days. Another way to paint that rosy financial picture is to say that I am a covered expat with the most toxic portfolio imaginable : a house bought decades ago and a whole slew of mutual funds. These are assets that were earned solely in Canada, fully taxed in Canada, and there is not one dime of it that will be going down to the US. I will not file, I will not pay, I will lie to my FIs if I have to, and I will do whatever it takes to make sure that what is rightfully remains just that, rightfully mine. I will not betray myself or my children by sending my life’s savings and their inheritance to a foreign country. It’s not going to happen. Period.
@ No Name
I will not file, I will not pay,I will not betray myself or my children by sending my life’s savings and their inheritance to a foreign country. It’s not going to happen. Period.
++++
I hear you. And the fact that at one time you were in the tax filing system may provide some assurances to others who still worry about the footprint which they may have left. Then again,some would argue personal information and disclosure is more circumspect now than then. To be seen. I have a feeling you are sleeping well.
I think Stephen Kish put it well when he said those who have taken this path are content.
@ Embee, thanks for the song and also thanks to No Name for sharing your experience.
I am already feeling less like a freak,lol.
Ginny, I experience ongoing outrage at the circumstances brought about by FATCA and Canada’s acquiescence to its demands, but then again I get outraged at all sorts of things these days. Time is shorter now and change is still a long way off. But you are right, I sleep well, and, as Stephen observed, I am content with my chosen path. Quite content.
The description provided by @No name is one more example of how those who have NOT entered the U.S. tax system are far far better off than those who have. It’s unlikely that @No name would be in the financial position he is in today had he been attempting compliance with the U.S. tax system.
He is now in a position where he is free (possibly with legal justification) to simply not participate in this madness.
One of the (many) tragic consequences of this situation is that those who attempted U.S. compliance and are in the U.S. tax system now have little choice but to renounce. Many of them will be subject to the S. 877A Exit Tax on the way out.
I have to say that I am otherwise content. But……
1.) I am mad as heck about the discrimination aspect.
2.) Though I am OUT (sans CLN), I am worried about my kids with both the costs AND the way it will affect them as young adults!! I did not nor ever wanted my kids to grow up being angry about something like this.
I have two children. Both USA born. I moved us to *** for a better life, but the relationship ended w/my partner.
We are all citizens here. I have my CLN.
How to advise my children? Dump the USA (I really, really despise the country now), or not? Their employment opportunities may suffer. When I die, they have no relatives here….
I HATE > FATCA!
Has the expat filing requirement and the whole concept of ‘citizenship-based’ taxation been contested in court? Logically (and yeah I know logic is not always involved in such matters) Logic would say that no obligation exists once you leave the territory of the USA. Also, once outside the borders of the USA I firmly believe that ‘ignorance of the law’ very much IS a defense.
It is not reasonable by any logic to expect someone to keep up with the laws of a country they do not live in.
Regarding the whole idea of a tax obligation by citizenship – where does an implied ‘contract’ exist? If you live in a country there is an obligation to follow its laws, this is logical. But there is no moral or universally recognised legal contract between the government and you by virtue of nothing more than being born there – this whole idea is crazy, unethical and I would think that legally it’s unenforceable. Essentially the US government is trying to assert ownership over its citizens and that is, by most standards, a form of slavery, which is universally condemned and abhorred by the civilised world.
Surely this has been tested in court?
@Robin
Yes, it was tested and upheld in 1924,Cook vs Tait.
Here is a history
http://www.renunciationguide.com/
@Robin
More specific link
https://www.law.cornell.edu/supremecourt/text/265/47
Thanks Heidi,
It doesn’t surprise me that a US court would have such a ruling. But they would have no jurisdiction to enforce anything unless the person was in a country where a specific agreement or treaty existed granting the US jurisdiction.
However, this concept of ‘benefit’ derived from citizenship has a fatal flaw which is that someone born in the USA had no choice in the matter. There would be some merit to the idea in the case of people that asked for citizenship. But it is not logical or ethical to assert that something is ‘given’ without any consent and then that somehow constitutes an obligation. And further scrutiny about exactly what these supposed benefits are would further erode that very frail argument.
I seriously doubt that such a tenuous assertion would hold up in an international court (of course, absent of some type of influence). It is an illogical and baseless argument, but it’s an interesting insight into the minds of the weasels that have slowly but surely eroded every conceivable avenue of whatever true freedoms existed. And it is most certainly, far and away beyond doubt, contrary to the ‘spirit’ of the constitution.
@Robin Schell
“But it is not logical or ethical to assert that something is ‘given’ without any consent and then that somehow constitutes an obligation. And further scrutiny about exactly what these supposed benefits are would further erode that very frail argument.”
I’ve never heard an argument against CBT quite like that. So simple. Bravo.
Thanks 🙂 Regarding a ruling from 1924, the other point that could be made is that what may have actually been some kind of benefit in 1924 may not always be the case now.
There is only one line of argument to support the idea of CBT, only one. And that is IF the citizen intends to return and reside in the USA. If someone has left and does not intend to live there again there’s simply no logical basis for it. If there was any universally recognised justification for it you can be sure that there would be more countries doing it.
@ Robin
There has been some discussion about whether Cook Vs Tait and the so called ‘benefit argument’ would hold up if challenged today.
I do not even see any support for the argument for CBT in the case of someone who intends to return to live/work in the US. Every country that I have lived and worked have based their right to tax on the basis of living the requisite number of days in that country during their taxable year. There is no question of holding them hostage in case they wish to return.
The US also has a formula to work out tax residency which applies to citizens and non citizens alike.
https://en.wikipedia.org/wiki/Substantial_Presence_Test
Why can’t they apply this to asses tax residence and then let others leave when they wish?
@Robin
From a post by USCitizenAbroad
http://isaacbrocksociety.ca/2013/01/04/does-cook-v-tait-really-mean-that-citizenship-based-taxation-is-constitutional-in-all-cases/comment-page-1/
Thanks Heidi,
Yeah the idea of the intent of the citizen to one day return and reside in the USA is still a flawed argument but it is actually the only even remotely credible tactic. Even though, every other country in the world welcomes its citizens back from abroad whenever they want and obviously the idea is very unethical at the very least.
It is also generally accepted that citizenship (particularly by birth) is a right. A right does not have to be ‘given’ nor can it be revoked. So if citizenship was your right by birth then the government was never a party to conveying something, and in such a case it’s a bit nutty to say the least ‘hey I want some remuneration for something that I never actually gave you and you had anyway’. (And of course, once again the whole assertion of benefit has not been proven – and in 1924 the times were so different, perhaps people would accept the idea that it was a benefit, I don’t know – but the bottom line is he had a very inept defense to not challenge that aggressively)
@Robin Schell. I agree with your arguments 100%. However, I suspect that the reason there has not been a recent legal challenge to CBT is probably that any person who is personally caught up in this mess would rather devote their time and energy to ditching US citizenship ASAP and exiting the system permanently than footing the bill for an expensive court challenge. Why would anyone be interested in retaining US citizenship after being screwed like this, anyway? Going to court is always a crap shoot. Renouncing is a sure bet and way cheaper.
Besides the inherent immorality of CBT it has one basic fatal flaw; it is essentially unenforceable. I’m sure there are other countries around the world who would love to impose their own version of CBT but at least they realize that fact. Only the US has the clout to beat up other countries by imposing FATCA in what will ultimately be a futile attempt to make CBT functional. I hope I live long enough to see it come back to haunt them. The US lost its way a long time ago, and it isn’t likely to ever come back.
I think it’s important to clarify that “right of return” to the united states is a human right and not a benefit. Similar to the right to vote, it is a right of citizenship and not subject to taxation.
How important is the right of return on an international basis? Important enough that it was included in the UN Universal Declaration of Human Rights to which the United States is a signatory. With Citizenship Based Taxation and FATCA, the United States is leaving thousands of long-term US expats with no good choice but to renounce their US citizenship and forego their right to return.
Hi maz57, Yeah I’m sure it’s a matter of it not yet affecting someone with the means and desire to go into battle.
It is sad about what has become of the USA, it is so contrary now to what I thought it was growing up. Obviously that’s partly because I was totally conditioned just like everyone else. And it was really disappointing to see (and I only learned this recently) that Obama signed a bill that gives them the power to revoke or refuse to renew a passport for someone that owes 50K or more in taxes (and all it takes really is for them to have claimed someone has unpaid tax and a relatively small amount could grow exponentially with interest and penalties).
Somewhere along the line the US government began slowly adopting an adversarial mentality with everyone, including US citizens. At some point government agencies began to take a ‘guilty until proven innocent’ mindset. They started seeing everyone as a ‘cheat’, a money launderer, a drug dealer, a terrorist, you name it. So it has become increasingly more intrusive, more heavy-handed. And what’s as bad or worse is that so much of the population will side with the government because they just don’t know what’s going on and only hear the heavily spun propagandised version.
Anyway, where I’m at with all this is that I was born in the USA and have now lived in the UK for 18 years. I am still a US citizen and I’m a permanent UK resident but have not yet applied for UK citizenship.
So this year I will be applying for citizenship here and I’m not sure yet what is the best approach to dealing with the USA. I have not filed a US return since 1996 and as far as I can tell I don’t owe them anything. I phoned and asked and was told they don’t show that I owe anything. Do you think they would lie in the hope I would be lulled into a false sense of security?
I need to renew my US passport because it expires in Sept of this year so if I don’t renew it or get a UK passport before then I won’t be able to travel.
I want to be extremely careful about what contact I have with any US gov entities.
@Robin. My advice: Get your UK citizenship ASAP because it will be your best defense against the US government. I waited far longer than I should have to apply for Canadian citizenship but it was a great relief when I finally did get it. In case you are not aware, acquiring another citizenship is one of the so-called “expatriating acts” according US law and you have a golden opportunity to relinquish US citizenship the day you become UK citizen if that is your wish. That doesn’t automatically get you off the hook for US taxes, but it is a major step towards freedom.
I doubt the IRS would purposely lie, but I certainly wouldn’t rely on anything a low level US based IRS employee told me over the phone. They know nothing about expat tax issues. Your caution about minimizing contact with US authorities is a good idea.
Yeah I am contemplating either renewing the passport via the Embassy here or as I really need to go back to the states to visit my parents I could renew it when I’m over there. I don’t really want to give them any new addresses for me but I suppose that’s kinda paranoid 😮 I will start the process of applying for citizenship, it requires that you first pass a ‘Life in the UK’ test, which you have to study for because a lot of the questions are arcane and irrelevant but so it goes.
I think the most likely scenario is that I’ll live in Spain or possibly South America and I’m not an organised person and don’t deal well with filing forms and silly stuff like that. I also just on principle dislike government intrusion into my personal life. Here in the UK if you’re an employee on a ‘pay as you go’ setup you don’t even file a tax return, you have no paperwork whatsoever. You don’t get a refund because they are sharp enough to calculate the witholding to match exactly what you owe (once or twice they have sent me a refund and it was a total (and very pleasant) surprise.
@Robin
If you have decided to apply for British Citizenship, I would do so sooner rather than later. I believe the process takes around 6months but as Brexit looms, I am sure the wait time will grow longer as there will be many UK resident EU citizens applying to make sure they have rights to stay in the UK,
The test isn’t that difficult and there is a dedicated book that you can study. You may then have your British passport before Sept and you can then relinquish your US citizenship, rather than renounce . Relinquishment carries less stigma. You can then travel to the US using your British passport and an ESTA visa waiver. If your CLN hasn’t arrived, you can take along the embassy payment receipt as proof.
If you apply for a US passport after obtaining British citizenship, then your only option is to renounce.
You have the choice of filing 5 full yrs of backdated tax returns + a partial year for the one in which you renounced and 6 yrs of FBARS and 8854 by June the year following your expatriation. You can include a letter saying that you had no knowledge of needing to file in the past.
Some here who are below the filing limit have filed nothing except the 8854 to avoid becoming a covered expatriate.
Some have renounced and filed nothing but they would be considered ‘covered expatriates’.
Read carefully before deciding your course of action.
Phil Hodgen’s Blogs are a good source of information and also the info here on Isaac Brock.
https://hodgen.com/category/expatriation/
Good luck.