Relinquishment and Renunciation Data (as reported on Isaac Brock), Part 2

1,470 thoughts on “Relinquishment and Renunciation Data (as reported on Isaac Brock), Part 2”

1. I’ll probably be contacting my banks. I am not sure if NZ IRD will be forwarding info to the IRS like the CRA will, so I guess I might need to contact them as well. That being said.. as an I.T. dude I am pretty confident that all account information of all citizens “US Persons” or not will be sent to the IRS, or banks will give back doors directly into their systems. It is much easier for the IRS to have full and unhindered access to the data of all accounts and THEN they can scan ALL the info at will for names of US persons or partners/spouses of US persons. They’ll of course not tell anyone that they are turning over all financial data of their citizens to the US or allowing access by back doors.

2. I wish to make a belated congratulations to both @Pokeknz and @Em (her husband) for finally receiving your CLNs! You must feel so relieved. And, like myself, am pleased that you’ll continue to be a part of this community. 🙂

3. The nightmare continous.
   Thanks again everyone for the great comments. Hope some of you can help me. I’m really in need.
   @AtticusinCanada and @pukekonz i feel your pain.
   My situation, I’m a US and NZ citizen by birth. I’ve lived in NZ, Australia, and Germany. Never in the US.
   I’ve (mistakenly) never filled in a US tax return – i never knew i had to. I’ve always paid my taxes in the country where i lived.
   So now i find out i must register to get a IRS Social security tax file number and fill in my “US” taxes for the last 10 years. It’s a horrible horrible nightmare. Why – i doubt i will owe the US a penny but to fill this in is a nightmare. Im dealing with different tax years, assets, and income from multiple countries, different tax rules/claims, etc, etc…
   So i have renounced and luckily i got my CLN with 2 months.
   Now i am faced with the delima – do i fill in the 8854 form or just leave it.
   Has anyone been in my situation and renounced and never filled in the 8854?
   I do travel to the US regularly and want to continue to.
   I see to fill in the 8854 form, i would first need to
   a) apply to get a temporary IRS Social security tax file number
   b) fill in “my” US taxes for the last 5 years – this would cost me easily over $2K to do, probably more like $5K (to hire a specialist accountant).
   c) fill in for the 8854 form.
   d) rest easy.
   If it helps my net worth is under 2 million.
   Do i spend weeks doing the above weeks of work and spend several thousand dollars doing this (to also likely find i owe nothing to the US).
   Or do i chance it that they won’t come after me?
   Anyone been in my experience?

4. @Michael Putman, re;
   “…I filed for relinquishment in September (Toronto) and am still waiting on the CLN. I haven’t tried calling the above number in Washington/DoS and don’t know if it will do any good to try. Do you actually get to talk to anyone? Hard to believe in this day and age…”

   You can email the consulate in Toronto and ask for and update on when your CLN can be expected. You then will the probably receive an unhelpful email that says they don’t know, blah blah blah. It may be coincidence only, but after that useless response, a notice followed shortly that the CLN was ready to be mailed. Try it and see if it works as a prod if they are sitting on yours in a batch they haven’t processed yet.

5. @justme
   You may want to repost your letter/question on the section “ask your questions about expat taxes and Fbar” section to get some more input. (found on the bar on the Rt)

   I can give you a standard answer (cribbed from Tdott) but we must all decided what is best for us as individuals depending on our own situation and amount of risk we are prepared to live with.

   If you renounce without becoming tax compliant, there is no statute of limitations on those unfiled returns, That will hang over your head for the rest of your life.
   By not filing returns, you have probably moved into the wilfully non-compliant category.
   If you don’t file 8854, then you’re subject to a $10K penalty, and 8854 specifically asks about those 5 years of returns.
   By not filing returns (or not submitting 8854), you will definitely become a covered expat.
   That means, among other things, that you are subject to the exit tax. You will be taxed on mark to market capital gains, subject to a $663K (2013) exclusion. As well, you will be taxed on the total (not gain, total) amounts in any RRSPs and, I believe, pensions that you may have, and there is no exclusion. RRSPs/pensions are, I believe, taxed at the highest marginal rate. The RRSP/pension tax is a major issue for covered expats.
   Unless you like to live dangerously, travel to the US is out – that would include plane connections though any of the major hubs.. You would always be concerned when flying over the US to, say, Mexico if the plane made an unscheduled landing in the US. Note that increased inter-agency and inter-country data sharing means there’s a reasonable chance that in the future US border people will be aware of all former USCs’ tax status.
   Another thing to consider is any investments or assets you may have in the US will also be at risk of forfeiture.
   On the other hand, as a dual, if you go ahead and file back taxes and 8854 you are automatically exempted from being a covered expat.
   Many here do not trust the IRS to honour their latest offer of an amnesty from fines if you file streamlined as a non willful participant, but it is out there (albeit with a lot of paperwork)
   It’s a big decision, so please take time to read thoroughly before making it. Others here may like to add anything I may have missed. Good luck

6. @justme
   Here is link for info and comments on new streamlined, if you chose to go that route.

   http://isaacbrocksociety.ca/2014/06/18/is-the-irs-finally-doing-the-right-thing-new-simplified-simplfied-ovdp/comment-page-2/#comments

7. relinquish or renounce, which one should i choose

   I am a canadian born here in Canada, my mom is American and we applied for US citizenship sometime when i was a teenager. never lived or worked in US and never voted.

   lawyer says the only true way to prove you are no longer a us citizen is to renounce but i would prefer to relinquish if that is a viable option for my situation (to avoid the fee and it seems less harsh too) but on the forums here it looks like relinquishing you can still get a CLN correct which i assume is proof.

   ive filed the last 4 years of taxes and fbars etc.. 2014 would be year #5

   I would very much appreciate anyone who can help advise what the best route is i should take in my situation.

   thanks!

8. @ john
   I believe your lawyer is correct. Your only choice is to renounce. You’ve filed US taxes so you are in the system. The fee isn’t that bad when you consider the years of freedom ahead of you after you get that CLN. Yes, relinquishing and renouncing both beget a CLN but you need to have a specific date and event to qualify for relinquishing. For instance, when my husband took an oath at his Canadian citizenship ceremony he did it with the intent of giving up his American citizenship and he got a witnessed letter to verify that intent. Therefore he was able to relinquish (no fee) and his CLN is effective on that date.

9. john,

   It sounds as if you were born a dual US / Canadian citizen (US from your mom having been born and having lived in the U.S. for the requisite number of years and Canadian from being born in Canada). If you were born as a dual Canadian and US citizen, you will have to renounce unless you took an oath of office for a government office or something related. The good news is that you will not be deemed a “covered expatriate” by the U.S. no matter if your net worth is over $2 million — UNLESS (a big UNLESS) you fail to file the final Form 8854, certifying that you are in compliance with your U.S. taxes for five years (plus the portion of the year in which you will renounce). (An option would have been to do nothing at this point, but you’ve already filed four years of returns and FBARs so you’ve committed yourself.)

   See the link http://isaacbrocksociety.ca/consulate2/for information on differences between renunciation and relinquishment, forms required, experiences of others at various U.S. consulates / embassies worldwide.

   Good luck on your final steps. Stay tuned here and ask any further questions you have. Your support would also be welcome in our challenge — see http://www.adcs-adsc.ca/.

10. thank you both… well i had wondered if i never should have done anything! but their big scare tactics of penalties etc got us nervous so i guess that worked lol! thanks for your replies and advice, this board is a trove of knowledge! I will post back updates when i get them. I will take a look at the challenge too thanks.

11. If it helps anyone on this path, here’s is my plan and progress so far….

    I was born to two Canadian parents in the U.S. We moved back to Canada when I was 1.5, and I’ve never lived nor worked in the US since.

    Around 3 years ago, I was stopped at the customs counter of the Toronto airport while taking a flight to the US. The border guard noted the US place of birth on my Canadian passport. He insisted that I needed a US passport to enter the US, which was news to me given that I had traveled into the US for decades without problems. He let me go after breathing threats of denying me entry to the US.

    I looked up the law later. He was correct, that if I was indeed a US citizen, I needed a US passport. I’d never known for certain if I was a USC (no birth certificate, no SSN), but having checked the price list on the consulate web site ($150 for a passport, $450 to renounce), I decided it was cheaper to get a passport, and hey, having US citizenship might be handy someday. Ah, foolish, innocent, naive man that I was. Little did I know….

    I’ll skip the details (not a biography thread, right?), but eventually I decided that renouncing was the best plan. My father is (now) a USC, but other than him I have no ties to the country. Indeed, after 6 years of Barack Obama, I barely recognize the place. But that’s a discussion for another time (and another website).

    I checked with H&R Block’s international tax division (informally … just a phone call), and I’ve read endless blogs and expat websites, and have decided to go ahead with Quiet Disclosure followed by renouncing. I desired to double-check my plans with a lawyer or tax accountant, but have found the money required to be prohibitive so far.

    So, I took several days, and now have put together my let-me-out-of-here tax and FBAR package. Assuming I can get my renunciation done this year, the plan is to file for years 2009-2013 the following: 1040 (main tax form), 2555-EZ (FEIE claim), Schedule A (just filled in, not submitted), Schedule B, 6251 (minimum tax: just filled in, not submitted as I didn’t meet the minimums), 8891 (RRSPs) and FinCen 114. I will also need to submit FinCen 114 (that’s the FBAR) for 2008.

    Then, finally, for 2014 it’s presumably the same forms up to the date of renunciation, then 1040NR for the rest of the tax year, followed by the dreaded 8854. And hopefully that’s it.

    For timing, I don’t have a SSN, which makes life a bit more complicated. I need to apply for the SSN, get the thing, submit my tax forms, renounce at the consulate (they do the renunciation in one meeting now …. surprised they haven’t set up a drive-thru service), send off the 8854 with the final forms. Then, freedom! Hopefully.

    The guidance and even more the encouragement from Isaac Brock has been incredibly helpful. Every time I get tired of reading yet one more inscrutable IRS document, or seeing one more time the blood-thirsty threats attached to their forms ($10,000 penalty and your little dog Toto too!), it was so encouraging to come here and know I wasn’t alone. And I’ve sent any number of people over to this site over the years.

    Keep up the good fight! I’ll keep you up to date as I go.

12. Thank you @ OddlyName. Good luck with your efforts – sounds like you’ve thought it through as much as possible and considered your options. Good to know that information here has helped you and others. That and the support. Please let others know about the legal challenge too http://www.adcs-adsc.ca/ and the human rights appeal to an international body http://isaacbrocksociety.ca/2014/07/28/human-rights-complaint-on-behalf-of-all-u-s-persons-abroad-is-ready-to-submit-you-and-i-can-be-part-of-this-effort-by-lending-our-signatures-to-the-document/comment-page-1/ .

13. @OddlyName, before applying for an SSN check with the embassy/consulate who issued your passport to see if they have it on record. There will be a birth certificate somewhere in the system, even if it’s only one issued by the hospital. If you know where you were born you could check and find out.

14. Hi all!
    I’ve been reading many comments in this blog, very helpful! I am a USC with a 2nd passport (European), I am not a covered expat, I have managed to file my last 5 years of tax returns recently and did my last 6 years of FBARs before 30 June. So, I’m just a “simple” guy, who just wants to bow out of his U.S. passport ASAP without ill will to the U.S. due to the rising complications this passport carries. Could I ask a few questions I don’t have a clear understanding on yet:
    1. Is there a reasonable time period one should wait from when all the documents above have been filed until when making an appointment with the consulate? Perhaps so they can check if all the IRS documents have actually been filed? Or is this completely independent?
    2. What is the difference, if any, between “relinquishing” and “renouncing”? And what are the criteria and consequences for both – where can I find this?
    3. What if I need to/ want to travel to the U.S. after relinquishing/renouncing, but don’t have my CLN yet?
    4. Does anybody know by what criteria the State Department goes through the application before issuing the CLN? Assuming one has no tied to terrorism or anything like that, is it a formality or are there cases this is denied? I am trying to understand the real meaning/intention behind it.
    5. Are there any tips on how to speed up the CLN?
    6. Once the CLN is received, I presume the “Reed Amendment” is not applied or irrelevant if one doesn’t relinquish/renounce for tax avoidance reasons, i.e. there is not a 10 year period one has to wait to travel to the U.S.?
    7. I presume that filing form 8854 with the partial year 1040 has to be done in 2015 once the forms are available, one can not do it earlier to get it over and done with right away?
    8. Finally, presuming it is allowed on this forum, would any of you who have worked with a specialist lawyer in this field be prepared to share details? A lawyer who can answer some questions for the “regular guy” to put the mind at ease?
    Any input would be greatly appreciated, thank you!

15. @ Euroman,

    (1) DoS does not check with IRS. Loss of citizenship is not dependent on tax status and DoS is not required to deal with tax matters (nor is it in their mandate or field of expertise), so they don’t get into it. For info on the procedure, see DoS manual on Renunciation of US Citizenship.

    (2) Renunciation is one of the seven acts by which a person can relinquish US citizenship. Immigration and Nationality Act, s. 349(a) Also check out “New to This? Start Here” and “Relinquishment and Renunciation: What is the difference? Is there a difference?”

    (3) You will get a receipt for $450 from the consulate. Some consulates routinely issue a letter stating that you have renounced, but a lot don’t seem to. If you have relinquished, there’s no $450 fee. If they don’t issue an interim letter, you could ask for a letter, as Mr. EmBee did. (If this link is wonky and puts you in the wrong place on that thread, scroll to the comment at 2014.02.21 at 6:57.) The fact you have a CLN file in progress is also visible in a database used by officials at the port of entry.

    (4) Renunciation is pretty cut and dried. You perform the act. The consular officer sees you do it. You both sign documents that get sent to DoS HQ. It’s pretty routine. The consul sends in his/her report in the package, as mentioned in the Dos manual, linked above, and HQ basically acts on it.

    (5) Tips to speed up the CLN? None that we know of. It seems to go faster in some parts of the world. Check out the Time Chart in the appendix of the Consulate Report Directory.

    (6) You can visit the US as soon as you want. Once you have the CLN, bring a copy with you. Until then, point (3).
    There’s a thread on entering the US where people write of their experiences.

    (7) That’s my understanding too. You can file the 8854 once the 2014 version of the 8854 comes out and that they usually come out around the end of the year.

    (8) Check out the Consulate Report Directory for people’s reports of their experiences.

    Also Links to Department of State forms and procedure manuals for renouncing/relinquishing are at this link.

16. @ euroman

    Pacifica’s reply is excellent. This is what I came up with but didn’t get posted as quickly.

    #1 Make an appointment as soon as possible. The waiting times for consulate appointments will not be getting any shorter and you’ll probably want to be a 2014 renouncer not a 2015 renouncer. The consulates do not check your IRS compliancy. They aren’t supposed to even ask you about it.
    #2 Relinquishing involves informing them of a relinquishing act. You will be renouncing because you are not claiming a relinquishing act, like intent to lose your US citizenship when you acquired citizenship in the country you reside in presently, “foreign” military service, etc. You are simply informing them that you no longer wish to be a US citizen (and paying $450 for the privilege).
    #3 You can ask the consulate for an “interim letter” to explain why you are travelling to the USA with a non-US passport. You have to hand in your US passport at the consulate so it can be cancelled and later returned to you with its ears cut off. My husband got such a letter when he asked for it.
    #4 Nobody really knows what goes on behind State Dept. doors. There have been only a handful of known “denials”. It’s not something for you to worry about.
    #5 No tips except make no mention of taxes at your interview. Speed is determined arbitrarily by the State Dept.
    #6 You presume correctly.
    #7 You presume correctly again.
    #8 I’ll leave that for someone who has experience with such a lawyer. Your situation appears simple enough to be a DIY project though.

    Ask more questions if you need to and GOOD LUCK! Most answers are already here at Brock but you’ve probably noticed it’s a big place and not easy to search through.

17. @EmBee and @pacifica777
    Thank you so much to both of you for your input – much appreciated! And it has given me the confidence I don’t need to bother with a lawyer, the quality and expertise here is of a high standard. Again, thank you for now – I may allow myself to bother this outstanding community with another question or two in the future. All the best for now.

18. i have applied to renounce my US citizenship. I tried to argue for relinquishment but they said I dont meet the required burden of proof. Its a bit scary cause the embassy’s paperwork asks if i file US taxes (and the answer is never, as i’ve never lived in the US). Will be interesting to see what happens, though my appointment isnt for months yet.
    They did tell me however, that the cost of renunciation (the $450) is very likely going up in the near future. Just wanted to mention it here as i’ve found this site very helpful.

19. Thank you for the “come stick your head in the noose” comment. fort ft lauderdale CPAs. Forgive me if I say “no f*ng way!”

20. Has anyone managed to relinquish based on 349 (a) or (b) of the INA? I’m interested because today I attempted to relinquish at the Vancouver consulate and was turned down. I had them send my request to Washington anyway. The reason Consular gave was at the time I made the oath to the Federal Government and accepted employment with the Feds I was already a Canadian having received my citizenship as a child in the 70’s. They encouraged me to renounce I refused.
    I would like to hear of anyone actually successfully relinquishing.

21. @Over the hedge,

    Benedict Arnold Be Me succeeded with what sounds like the identical claim that you describe. His story is in the Consulate Directory for Calgary.

22. @ Over the hedge,

    Yes, 4 Brockers have reported receiving their CLNs based on s. 349(a)(4)(A). Three of these four had the same situation as you – the consulate tried to tell them it was impossible, but they insisted the consulate send the file to DC anyway. A fifth person got a positive recommendation at his consulate this Spring, based on his fed govt employment, but is awaiting receipt of his CLN.

    There’s a post about s. 4(A), Relinquishment of US Citizenship by Persons Born Dual or Who Naturalised in a Foreign Country as a Minor, and it has links to these people’s reports. One or more of them will likely reply to your comment, but in the meantime you can take a look at their reports.

    349(a)(4)(A) is specifically for people who are already citizens of the country whose government they take the employment with.

    [emphasis mine] S.349(a)(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“;

    DC understands this. Some consulates apparently don’t.

23. I was successful in obtaining a CLN that was backdated to the day that I started work with the Canadian Federal Government in the late 1980’s. I was a dual citizen at birth. Toronto denied my request, but I insisted they send my paperwork to Washington anyway. They denied my request using the exact same reasoning that you were given.

    My story is in the Consulate Directory.

24. Thanks for the info Mykitty, pacifica777, and WhatAmI
    You have given me some hope.

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