What about non USC UP persons living in Canada? FATCA applies to them too.
Also, I believe the judge specifically included “country of origin” in her ruling.
Sorry, I don’t understand your questions.
FATCA applies to non USCs too. How do they escape the reporting burdens?
For example, according to the Japanese Bankers Association, Japanese FIs will share all the data (for the applicable tax years) they have on not only USCs but also any non USCs who met the physical presence test in the US. How do they sever ties with the US so that their FIs will not or stop sharing their data with the US?
The judge wrote in her ruling that “country of origin” could be used to determine who should be reported on. What meaning does a CLN have if this is not successfully challenged? Could one obtain a CLN yet be reported anyway due to the US being their country of origin?
“Could one obtain a CLN yet be reported anyway due to the US being their country of origin?”
Yes. It’s a problem with the treaty article, which only requires that the information be “foreseeably relevant”
to tax administration/enforcement issues. The residence countries should re-negotiate the mutual assistance article; but they probably won’t.
And also, of course, it’s a problem with US tax law. One of many.
Correction – it seems it’s the OECD that’s responsible for the wording.
26(1) The competent authorities of the contracting states shall exchange such information as is foreseeably relevant for carrying out the provisions of this Convention or to the administration or enforcement of the domestic laws of the contracting states concerning taxes of every kind and description imposed on behalf of the contracting states, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to this Convention, in particular, to prevent fraud and to facilitate the administration of statutory provisions against legal avoidance. The exchange of information is not restricted by arts. 1 and 2 of this Convention.’
Treaties in this form provide for information exchanged to a very wide extent. The OECD adopted the wide ‘foreseeably relevant’ threshold for disclosure in the 2005 model. Article 2 to the Additional Protocol of 11 September 2009 to the UK-Austria Treaty agrees that ‘the standard of ‘foreseeable relevance’ is intended to provide for exchange of information in tax matters to the widest possible extent and, at the same time, to clarify that Contracting States are not at liberty to engage in ‘fishing expeditions’ or to request information that is unlikely to be relevant to the tax affairs of a given taxpayer.’
“Correction – it seems it’s the OECD that’s responsible for the wording.”
Is the wording in the judge’s decision? If so, why as it a different agreement between different parties than than the tax treaty b/n Canada and the US.
Canada’s IGA legislation implements the US-Canada IGA; the legislation’s legal basis for the turnover of USP account information is the Mutual Assistance article in the US-Canada tax treaty; the wording of the article reflects the wording in the OECD Model Tax Treaty.
AIUI. ICBW,
The OECD is a tax cartel.
And the funny part is that their employees are exempt from paying income tax.
Has anyone had to apply for a US visa after renunciation? I travelled on an ESTA after renouncing, but the US had just ruled that anyone who has visited North Korea (I went as a tourist in 2016 on my British passport) can no longer use ESTA but must apply for a tourist visa.
I’d be grateful to hear of any experiences, good or bad, at the visa interview.
@birdperson
There was someone on Brock who had renounced and reported she had had to apply for a visa, I think it was because It was revealed she had been in possession of cannabis while a student but was never actually charged. I believe she reported that she had no problem with getting the visa. As a person of the church I doubt there would be any problems for you.
I’d hope not. I don’t even have a traffic offence to my name.
I do resent the fact that this has been backdated to any travel since 2011. I could understand the restriction going forward, but backdating just seems mean.
If one renounces his or her US citizenship without becoming tax compliant and is then a covered expatriate, will he or she become an uncovered expatriate once the exit tax is settled?
If you renounce without ever having filed anything, I’m not sure that you become a covered expatriate, because the IRS knows nothing about you except that you’ve renounced. I suspect that you only become a covered expatriate if you file an 8854 and either certify that you haven’t been compliant, or are worth too much money.
No idea if covered expatriate status goes away when an exit tax is paid. For what it’s worth, covered expatriate status seems to be fairly meaningless, unless one plans on leaving an inheritance to a particularly law-abiding US taxpayer.
Phil Hodgen discusses that situation on his website:
According to Phil, not filing a Form 8854 leaves the person in a state of limbo because the IRS then lacks the very information they need (supplied to them on the form) to classify a person as covered or uncovered. As usual, there is confusion and inconsistency in the law. There is a $10,000 fine for covered expats who file the form late, but no fine is specified for uncovered late filers. (I think its safe to assume never filing 8854 is would be a special case of late filing.)
I’ve never heard a report of anyone who skipped Form 8854 later being contacted by the IRS.
@Robin – As far as I know the exit tax only applies to covered expatriates and I don’t think you can become “uncovered”. If what you meant by “settle the exit tax” is that you file 8854 to confirm you’re not covered, then maz57’s comment applies.
“For what it’s worth, covered expatriate status seems to be fairly meaningless, unless one plans on leaving an inheritance to a particularly law-abiding US taxpayer.”
As far as I know , it’s pretty meaningless in this case too, as the “was the deceased a covered expatriate?” question isn’t yet asked on the ‘ gift and estate’ report form that the US inheritor must file with the IRS when receiving an inheritance.
Plus, even if that question eventually does make it onto the form, the inheritor could safely answer “no” if the deceased former US citizen never filed exit tax paperwork. The non-filing deceased would be neither covered nor uncovered because the IRS was never provided the information it needed to make such a determination.
I have never seen it officially stated anywhere that one who skips filing Form 8854 is automatically a covered expat. Whoever wrote 8854 apparently never imagined that an expat would decline to file the form. Its an undefined void in the law.
Hi, I could not find my early post. Please allow me to repost my question:
I am a green card holder and intend to renounce my green card before 8 years, not to become a Long Term US resident (IRS 877 (e) (2)) to avoid Exit Tax. I have read several websites on Exit Tax but I am still confused. I understand that ONLY long term Permanent resident (8 years out of 15 tax years holding green card) Subject to Exit Tax when expatriation. If I am not a Long Term US resident and my worldwide networth is more than $2 million, will I subject to Exit Tax or I will not subject to Exit Tax as long as I renounce my green card before 8 years?
I obtained my green card in June 2018, if I would want to renounce my green card before 8 years, that means I have to go to Consular or US Embassy at my home country to Surrender my green card not later than May 2023 as it would take few months to process? Is my calculation correct for the 8 years out of 15 tax years law?
Thank you
@ Eva,
Welcome, and sorry for the confusion. I moved it to the Renunciation Questions Thread shortly after you posted it (I’m a moderator). There’s a reply there. You can also reach them through “Recent Comments” in the sidebar.
Having read through the above threads, I am confused.
I recently renounced and I have always filed my returns using a CPA
Does that make me an “uncovered” expat?
I assume that sometime in early 2022, I will file my final 1040 for the time period in 2021 that I was still a citizen, PLUS a 1040NR for the remainder of the year.
Should I also file an 8854? And since my net worth, as of the day of renouncing, is no where near $2 million, will that be the end of it?
@Al
Some here have renounced and ignored any of the tax and net worth filing requirements with no problems especially if they have never filed are not on IRS radar, but if you are up to date with all the filing ( CPA or DIY) then there should be no reason not to complete the requirement to file the 8854 especially if you are below the $2,000,000 net worth. It should give you peace of mind.
That should be the last you hear, the IRS don’t send you anything to confirm ‘the end of it’
Al You can file 1054 and 1054NR early in 2022. you are meant to file 8854 as well.
Or not. Either way, if you have no US assets it won’t matter. The IRS hasn’t the means to bother you.
Just curious- where and when were you able to renounce during Covid?
Wasn’t sure where to ask, but I have a question. Tried searching IBS with no luck.
Has anyone ever tried to regain their US citizenship after having renounced? Is it possible? What steps might be necessary?
The answer is easy – You can get US citizenship as easily, or not, as any other foreigner. There are no special hurdles because you renounced previously and no fast track either.
I don’t know anyone that has tried it, mostly they had damned good reason to renounce and would not take it back if you paid them.
Another route might to to try and persuade the authorities that you renounced under duress and didn’t really want to do it, but I have never heard of that happening either.
What about non USC UP persons living in Canada? FATCA applies to them too.
Also, I believe the judge specifically included “country of origin” in her ruling.
Sorry, I don’t understand your questions.
FATCA applies to non USCs too. How do they escape the reporting burdens?
For example, according to the Japanese Bankers Association, Japanese FIs will share all the data (for the applicable tax years) they have on not only USCs but also any non USCs who met the physical presence test in the US. How do they sever ties with the US so that their FIs will not or stop sharing their data with the US?
The judge wrote in her ruling that “country of origin” could be used to determine who should be reported on. What meaning does a CLN have if this is not successfully challenged? Could one obtain a CLN yet be reported anyway due to the US being their country of origin?
“Could one obtain a CLN yet be reported anyway due to the US being their country of origin?”
Yes. It’s a problem with the treaty article, which only requires that the information be “foreseeably relevant”
to tax administration/enforcement issues. The residence countries should re-negotiate the mutual assistance article; but they probably won’t.
And also, of course, it’s a problem with US tax law. One of many.
Correction – it seems it’s the OECD that’s responsible for the wording.
https://library.croneri.co.uk/cch_uk/stt/29-400
“Correction – it seems it’s the OECD that’s responsible for the wording.”
Is the wording in the judge’s decision? If so, why as it a different agreement between different parties than than the tax treaty b/n Canada and the US.
Canada’s IGA legislation implements the US-Canada IGA; the legislation’s legal basis for the turnover of USP account information is the Mutual Assistance article in the US-Canada tax treaty; the wording of the article reflects the wording in the OECD Model Tax Treaty.
AIUI. ICBW,
The OECD is a tax cartel.
And the funny part is that their employees are exempt from paying income tax.
Has anyone had to apply for a US visa after renunciation? I travelled on an ESTA after renouncing, but the US had just ruled that anyone who has visited North Korea (I went as a tourist in 2016 on my British passport) can no longer use ESTA but must apply for a tourist visa.
I’d be grateful to hear of any experiences, good or bad, at the visa interview.
@birdperson
There was someone on Brock who had renounced and reported she had had to apply for a visa, I think it was because It was revealed she had been in possession of cannabis while a student but was never actually charged. I believe she reported that she had no problem with getting the visa. As a person of the church I doubt there would be any problems for you.
I’d hope not. I don’t even have a traffic offence to my name.
I do resent the fact that this has been backdated to any travel since 2011. I could understand the restriction going forward, but backdating just seems mean.
If one renounces his or her US citizenship without becoming tax compliant and is then a covered expatriate, will he or she become an uncovered expatriate once the exit tax is settled?
If you renounce without ever having filed anything, I’m not sure that you become a covered expatriate, because the IRS knows nothing about you except that you’ve renounced. I suspect that you only become a covered expatriate if you file an 8854 and either certify that you haven’t been compliant, or are worth too much money.
No idea if covered expatriate status goes away when an exit tax is paid. For what it’s worth, covered expatriate status seems to be fairly meaningless, unless one plans on leaving an inheritance to a particularly law-abiding US taxpayer.
Phil Hodgen discusses that situation on his website:
https://hodgen.com/filing-form-8854-late/
According to Phil, not filing a Form 8854 leaves the person in a state of limbo because the IRS then lacks the very information they need (supplied to them on the form) to classify a person as covered or uncovered. As usual, there is confusion and inconsistency in the law. There is a $10,000 fine for covered expats who file the form late, but no fine is specified for uncovered late filers. (I think its safe to assume never filing 8854 is would be a special case of late filing.)
I’ve never heard a report of anyone who skipped Form 8854 later being contacted by the IRS.
@Robin – As far as I know the exit tax only applies to covered expatriates and I don’t think you can become “uncovered”. If what you meant by “settle the exit tax” is that you file 8854 to confirm you’re not covered, then maz57’s comment applies.
“For what it’s worth, covered expatriate status seems to be fairly meaningless, unless one plans on leaving an inheritance to a particularly law-abiding US taxpayer.”
As far as I know , it’s pretty meaningless in this case too, as the “was the deceased a covered expatriate?” question isn’t yet asked on the ‘ gift and estate’ report form that the US inheritor must file with the IRS when receiving an inheritance.
Plus, even if that question eventually does make it onto the form, the inheritor could safely answer “no” if the deceased former US citizen never filed exit tax paperwork. The non-filing deceased would be neither covered nor uncovered because the IRS was never provided the information it needed to make such a determination.
I have never seen it officially stated anywhere that one who skips filing Form 8854 is automatically a covered expat. Whoever wrote 8854 apparently never imagined that an expat would decline to file the form. Its an undefined void in the law.
Hi, I could not find my early post. Please allow me to repost my question:
I am a green card holder and intend to renounce my green card before 8 years, not to become a Long Term US resident (IRS 877 (e) (2)) to avoid Exit Tax. I have read several websites on Exit Tax but I am still confused. I understand that ONLY long term Permanent resident (8 years out of 15 tax years holding green card) Subject to Exit Tax when expatriation. If I am not a Long Term US resident and my worldwide networth is more than $2 million, will I subject to Exit Tax or I will not subject to Exit Tax as long as I renounce my green card before 8 years?
I obtained my green card in June 2018, if I would want to renounce my green card before 8 years, that means I have to go to Consular or US Embassy at my home country to Surrender my green card not later than May 2023 as it would take few months to process? Is my calculation correct for the 8 years out of 15 tax years law?
Thank you
@ Eva,
Welcome, and sorry for the confusion. I moved it to the Renunciation Questions Thread shortly after you posted it (I’m a moderator). There’s a reply there. You can also reach them through “Recent Comments” in the sidebar.
Having read through the above threads, I am confused.
I recently renounced and I have always filed my returns using a CPA
Does that make me an “uncovered” expat?
I assume that sometime in early 2022, I will file my final 1040 for the time period in 2021 that I was still a citizen, PLUS a 1040NR for the remainder of the year.
Should I also file an 8854? And since my net worth, as of the day of renouncing, is no where near $2 million, will that be the end of it?
@Al
Some here have renounced and ignored any of the tax and net worth filing requirements with no problems especially if they have never filed are not on IRS radar, but if you are up to date with all the filing ( CPA or DIY) then there should be no reason not to complete the requirement to file the 8854 especially if you are below the $2,000,000 net worth. It should give you peace of mind.
That should be the last you hear, the IRS don’t send you anything to confirm ‘the end of it’
Al You can file 1054 and 1054NR early in 2022. you are meant to file 8854 as well.
Or not. Either way, if you have no US assets it won’t matter. The IRS hasn’t the means to bother you.
Just curious- where and when were you able to renounce during Covid?
Wasn’t sure where to ask, but I have a question. Tried searching IBS with no luck.
Has anyone ever tried to regain their US citizenship after having renounced? Is it possible? What steps might be necessary?
The answer is easy – You can get US citizenship as easily, or not, as any other foreigner. There are no special hurdles because you renounced previously and no fast track either.
I don’t know anyone that has tried it, mostly they had damned good reason to renounce and would not take it back if you paid them.
Another route might to to try and persuade the authorities that you renounced under duress and didn’t really want to do it, but I have never heard of that happening either.