Relinquishment and Renunciation Data (as reported on Isaac Brock), Part 2
US RELINQUISHMENT RENUNCIATION.m2
Above is a link to data we are compiling on Relinquishments and Renunciations — a work in progress.
(We are starting Part 2 as Part 1 has now over 1,000 comments.) Link to “Relinquishment and Renunciation Data (as reported on Isaac Brock), Part 1”
This Relinquishment and Renunciation database corresponds with the Consulate Report Directory, which tracks individual experiences for each Consulate, along with a timeline chart.
Note: We are using numbers instead of blog names for this public posting so there will be no compromise of private information. Your facts will help give a snapshot of relinquishment and renunciation activity and where that occurs.
Please submit information in the comments below (or someone can contact you privately if you leave a message).
This database and the Consulate Report Directory have proven valuable resources for those new to the subject of relinquishment and renunciation. They can see numbers for and read others’ experiences of relinquishment or renunciation at various US consulates throughout the world — as reported by participants of the Isaac Brock site.
Thanks for your addition to the Relinquishment and Renunciation database. Your input will definitely help others.
I should add that I have never lived in the UK, and only ever visited there a few times, so there is no question that my resident home is NZ.
I believe then that your taking NZ citizenship would qualify for claiming that as your act of relinquishment. Your US passport was renewed after that though? That could be your downfall. There are a couple of successful instances for claiming relinquishment where the person was *coerced* into getting a US passport to be able to travel to the US.
It looks like claims to relinquishment are getting more difficult and the experience in one US consulate will not necessarily match that in another US consulate / embassy. Take your time to build your case. There are some here who will be able to offer better advice on that than I can.
(I am one that applied for my first US passport because of what I now recognize as intimidation at the border, saying that I could go over this time, but the next time it must be with a US passport. Knowing what I know now, my actions would have definitely been night and day to what I actually did. In 2012 I renounced, as my chance to claim to relinquishment by becoming a Canadian citizen in 1975 and being told that I would be losing my US citizenship by doing so then, was now null and void having applied for my one and only US passport.)
It appears that your mother and father, residents in NZ, will have the same issues as you and your husband do unless they have known all the requirements and have been properly in compliance with their US tax and reporting requirements.
I think it is wise to squash your son’s application for US citizenship. He should be able to do that himself as an adult when he can make that decision for himself.
Your anger is justified. Learn about the Canadian litigation at http://www.adcs-adsc.ca/. Consider donating to that cause as success to the suit in Canada will set the stage for similar actions in other countries. And, of course, stay in tune with and support any possible change, as remote as it may seem, of US citizenship-based taxation to residence-based taxation as the rest of the world. You can keep up to date with what is happening on those fronts right here at IsaacBrockSociety.ca.
Well the funny thing is that my Father has never filed a return since being in NZ apart from when he applied for his entitlement to his US pension a few years back, so for some 30 years! (I presume the pension is payable to him being as he paid into Social Security and was in the military). Now apparently he just fills in a basic form each year and receives his US pension no problem, but prior to that nothing…. And no mention of past non filing of returns when he applied to IRS for his entitlement….. That gave me some hope in that maybe they genuinely only had interest in the ‘big fish’ who are clearly evading taxes rather than Jo Bloggs who is paying taxes in resident country and just ignorant that they are US liable (though he wouldn’t have owed anything anyway, apart from penalty for non filing I suppose). One would hope the IRS use their discretion wisely but I wouldn’t bet my life on it!
My Mother being a UK/NZ citizen/resident doesn’t have any liability as far as I know, not a US citizen or a green card holder. She went to the US way back in the early 70s with her then English husband, divorced and then met my (US) Father, then they married and came to NZ together, so possibly she went there originally on some sort of visa…(?) I must ask her, but in any case at 80 years of age and on a UK and NZ pension I’m sure she wouldn’t lose sleep over the IRS hunting her down!
Though I suppose there is Estate tax to consider with my Dad when the time comes, God!
Has anyone heard of anyone who has actually been found and prosecuted (other than high profile very rich people)….?
The hardest call is exactly which path to take. As soon as I apply for the relinquishment, sign the forms etc then bam, that is me well on the radar, regardless of whether they accept it or not. If they don’t then I guess I would need to file sooner rather than later. But the next best option is to file 3 years of back taxes and then renounce, but of course that will all take time. Currently I wouldn’t think I’d be raising too many red flags…. It seems tax is not the Consulates main concern, though I have no doubt they have been briefed on the increase of renouncements and reasons why…. I’m just scared if I do nothing the amnesty will be removed, and then I’d have horrific penalties for non filing, which would bankrupt me in all likelihood if they go back a full 20 years from when I was 18. Surely they couldn’t do that to someone…?!
I think I will pay out the whopping $450 per hour for a specialist consultation and see what the supposed ex pat tax experts suggest the best route is. I will ensure any information that may be of help/interest to anyone else is posted here.
@ Colleen, there is always the option to relinquish, or renounce, get the CLN, then do nothing. If you have no intent to re-enter the US ever, the CLN is your proof for your financial institutions that you should not be FATCA’d. You can follow your country’s laws, you don’t have to follow the laws of my country, or the UK, or the US.
There are options. Four years ago, when this mess hit me squarely on the head, it paralysed me. As a law-abiding Canadian, my first horrific thoughts were like yours. “Comply! COMPLY!!,” my brain screamed. Fortunately, I am a rebel and a procrastinator. 🙂 I renounced two years ago, angry as hell that they would not let me relinquish. Last year I sent the exit tax form, completed on my own terms. I also sent it late (ooooo, penalty, penalty! LOL), with a snarky statement as to why I had no SSN, or ITIN on the form, and why I would NOT be getting one. No taxes filed. I have heard not a peep from them.
Relax, and consider ALL options. And I mean ALL…not just the ones the US government gives you.
@ Colleen i called emailed several US accountants in US and Canada. Almost all of them gave me a free 1/2-1 of questions pricing. Does and don’ts.
I determined to try to relinquish after speaking to them. And reading lots of Brock pages.
I also decided if I failed to get my back dated CLN. I still would not file anything to the US. I would just never try to travel there or through there again. I opened a bank acc in September no one asked where I was born. My regular bank has never asked. Other than my Canadian passport stating i was born in the USA and a few close friends and family. I was not worried that they could do anything to me if I don’t travel there.
Don’t file anything to quickly. Do your research and try to get as much free help as you can. I did google searches and emailed several accountants. Some called and spoke to me. Others emailed good info.
I am just relieved that Washington approved mine even though yhe Calgary vise counsel denied my request.
Again, thanks for the feedback. I am of similar thought. Get the citizenship burden rid of and then in reality, what can they really do once you are a non citizen (apart from ban you from entering the country if you refuse to pay/file back taxes). I am a minnow in the scheme of things to them, and I wouldn’t have thought I’d be worth too much effort to chase…. I already have bank accounts and citizenship was never discussed, and I can quite legally claim my NZ citizenship anyway if they ask the question later on.
It is just such a shock when you first find out this incredulous information, then the outrage kicks in and now I guess I am becoming a bit more logical and philosophical about the way forward!
Also keep in mind the IRS is struggling big time, even claims they will start having periodic shut downs due to lack of funding and resource. I read an article on this a few days ago: http://www.politico.com/story/2014/12/irs-possible-temporary-shutdown-113681.html <—-does this sound like an organisation with resources to chase minnow expats? Hell, it sounds like they can't even muster the resources to go after big fish living inside of the USA.
@pukekonz
Once our country’s taxing authorities pass our banking information on to the IRS, how difficult would it be for them to automate their response?
Coleen. Welcome. You will get good advice here.
You can try to say you relinquished when you became a KIwi. This may or may not be accepted depending on when you got your US passport and if you renewed it or not after Mar 2004.
If they accept that you relinquished in 2004, there is no tax filing requirement. This is not a loophole.It is the law.
Lets say for the sake of argument , that you are turned down. Then you renounce and pay the exorbitant fee.
Then do nothing further. As the Mom implied, there is nothing they can do.
They won’t know if you would have had a tax liability or not. Therefore they won’t bother you. You are a tiny fish living in NZ. They are interested in big fish. They are starved for resources. They don’t have the time to go after you.
At most, you could possibly get a computer generated letter saying ‘do you think you might owe us some money? if so please file” You can ignore it in which case you might eventually get another letter. So what? There is nothing further they can do.
We have no reports of accidentals getting into problems because they refused to file taxes or the exit form.
we have no reports of accidentals who renounce being detained if and when they visit.
You don’t need a fancy lawyer or accountant. There is enough info. here for you to relinquish or renounce and there is no need to file anything with the IRS.
A US estate is taxed at the level of the estate. Your Dad’s estate will be settled with regard to US estate taxes irregardless of your status. There is a 5.25 million exemption. You will receive the same share in any case. Good luck
Pukekonz Why bother?
Thank you so much, feel a little better! It sounds like the consensus is that getting rid of my citizenship by either renouncing (or relinquishing in the first instance if I can) is the most important factor. In terms of if I cannot relinquish and have to go down the renouncing track, how do I deal with the potential exit tax? I believe there’s a form 8854 that has to be completed, and if you are not able to claim you are under the specific income amounts (which I should be able to), AND/OR that your taxes are filed last 5 yrs up to date, then you are classed as a covered expatriate and required to pay exit tax…. How would one deal with this scenario..?
@Portland PLC I haven’t bothered yet and maybe I won’t as I am broke. I do have the data together but have not done anything to file it yet via a proper tax specialist (it’s over my head and not something I could dream of doing). I had my relinquishment visit about 14 months ago. My main concern is there seems to be no end to this lunacy and many countries seem more than willing to throw their own citizens under the bus if the USA asks them to. One scenario is to do nothing and as a minnow hope they leave you alone. Worst case scenario (and I’m speaking as an I.T. geek here) is they implement machine learning/deep learning systems that can suck up data in a variety of ways, understand that data and then act on it by spitting out billions in fines to expats all over the world. The fines don’t get paid of course because minnows can’t afford it and said minnows then become fugitives of the USA living abroad. Agreements are then made that New Zealand or other governments will extradite any fugitives of the USA. I’m not sure I want to always be looking over my shoulder. As ridiculous as all this is it may be best to play the stupid game and get it over with.
Colleen. That’s just the point. What we are saying is that if you choose to ignore the 8854 and tax filings after you relinquish/renounce there is nothing they can do to hurt you. renouncing is not dependent on filing.
Filing 8854 or tax returns is up to you whether or not to bother but it is US law which cannot be enforced in NZ.
You may be a covered expat in their eyes. So what?
A-ha. Now I understand. You renounce, and then it is up to you to fill out the ‘required’ paperwork after the fact. Got it.
@Coleen, don’t bother with lawyers or accountants yet as you may well not need them at all. Try the relinquishment route and see if that is successful first. If so, your filing requirements are gone anyway so you won’t need to consult anyone. And yes, many people here have claimed backdated relinquishments. If the relinquishment fails, you can renounce instead and then do any necessary tax filing after that IF that’s what you decide to do.
If you think you want to file returns then firstly you need to find out from your parents whether they applied for an SSN for you when they were in the States. If not you may have the hassle of getting one before you can even start filing.
But as Portland PLC says if you don’t file you become a “covered expat” in their eyes – so what? The IRS is being swamped with people frantically trying to become compliant so they have more than enough paperwork to keep them going for decades. They’re not going to be chasing that hard for someone they don’t even know owes them anything. And if you don’t return to the States in future there’s no way they can reach you, even if they imposed penalties. Your bank should be happy with just a CLN if they ask about your nationality so they’re unlikely to query your US tax status.
Gather the documents for a relinquishment and study this form:
http://www.state.gov/documents/organization/97025.pdf
which the embassy/consulate will use to determine whether you lost your citizenship or not. Dig out your New Zealand citizenship info and make your case. If the embassy/consulate say they’re going to recommend refusing the relinquishment, insist on them sending your file to Washington for a final decision. This has been used successfully by some Brokers here so may also work for you.
Fantastic. Thank you all. I spoke to the Consulate here and they advised me I could just scan the DS-4079 form through and they’ll asess it and get back to me straight away with whether or not they deem I qualify under relinquishment.
I note the line on the form – do you file US taxes….. Is this a trick question…!?
@Coleen, no it’s not. The DS-4079 form is really for people who are trying to determine that they may have inadvertently lost their American citizenship and want to hang on to it. It’s not really designed for people relinquishing/renouncing. That’s why the questions can seem strange. The answer for you is just “no” and leave it at that.
By the way, the embassy/consulate should only remind you that you may have tax filing obligations still to meet once you’ve relinquished/renounced. They shouldn’t say anything else about the tax side because it’s not their business to know your tax status. The two things are completely separate and if anyone does ask tell them they have no need to know as it has nothing to do with the matter in hand – your relinquishment/renunciation.
Coleen –
A person
(1) with a pending application for US citizenship for son
(2) who maintains a US passport
can with a straight face claim to have intended to lose US citizenship back in 1994?
Lotsa luck. Sauve qui peut.
Seems like a good time to post my blurb about why renouncing without being compliant is not necessarily a bed of roses. This version was revised to take into account Duke of Devon’s comments about travel to the US. Note that the blurb is aimed at Canadians. So some things will be different for non-Canadians (e.g. RRSP, mutual collection agreement).
=============
If you renounce without being compliant, there is no statute of limitations on those unfiled returns, because they’re unfiled. So 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. I don’t know what the ramifications of that are, but I don’t see how it could be a good thing. FWIW, 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 have 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 IMO.
There have been no known reports of people who have renounced without filing being hassled about their non-compliance when attempting to enter the US. However, given increasing inter-agency and inter-country data sharing, it does seem possible that at some point in the future US border people will be aware of all former USCs’ tax status. Should that come to pass, unless you like to live dangerously, travel to the US is out – that would include plane connections though any of the major hubs. For some people, not a big deal; for others, a very big deal. And, you’d always be concerned when flying over the US to, say, Mexico if you’re a risk averse type of person, due to the (admittedly unlikely) possibility of the plane making an unscheduled landing in the US.
The US-Canada tax treaty will protect you (at least in Canada) from the IRS if you were Canadian at the time the liabilities were incurred. I don’t see how there is any guarantee that the treaty could not be changed for the worse in the future. And although it would clearly be unfair if the changes were retroactive, nobody has ever accused the IRS of being overly fair (and the FATCA fiasco has indicated how much we can expect the Canadian government to stand up for fairness).
So, IMO, you would have to have a really, really good reason to not file those returns and 8854. One concern people often have about filing those returns is the cost of getting someone to do it for them. A possible route is to DIY and just do the best you can. I’ll leave it to you to determine what “best you can” involves given that you’re almost certainly not a cross-border tax professional. At any rate, at worst you could be audited later and assessed some $$. If it’s a large amount of $$ that you are unable or unwilling to pay, you could then invoke your treaty right and not pay up; leaving you in more or less the same situation as having not filed. OTOH, at best you did a bang-up job on the returns that can withstand any amount of scrutiny, or, more likely, you can expect the IRS to not have the resources or inclination to worry about your piddly returns, leaving you home free (at least after the SOL runs out).
Thanks. I will let you know the outcome. They only ask if you have registered a child as a U.S. citizen, which I haven’t. So I see no need to mention the appln which I’m likely going to cancel anyway. The N600K went straight to the US, as the Consulate here doesn’t deal with them.
Agreed the passport thing could well be my downfall, as was only renewed in the last few months (before I was enlightened), however I’ll just have to reiterate that I was told that it was illegal to travel to the US on another passport if you held a US passport. So annoying if that’s the only reason I’m declined as I’ve not even used the latest one and I’ve only taken one 8 day trip in the last 10 years, surely they could use some discretion (sigh!)
It’s just seems somehow quite pathetic and desperate to see the US trying to grasp on so hard to their accidental ‘citizens’ who want to ex patriate, and using every little thing in their power to try and circumvent them from doing so. One could perceive it as a once great nation now just scrabbling to try and retain its status as a super power.
@Coleen, you ;asked
“I note the line on the [DS-4079] form – do you file US taxes….. Is this a trick question…!?”
If you were to answer “yes” to that, you would be indicating that you still considered yourself to be a U.S. citizen required to file U.S. tax returns. For one who is claiming prior relinquishment of U.S. citizenship, the answer would be expected to be “no”.
I was born in the US, lived there for two years then moved to Canada with my family. We all became Canadian citizens in the early 1970’s. My father wrote a letter to the US consulate requesting that our US citizenships be relinquished but never received any kind of official reply. Just wondering what kind of issues I may run into if applying for a TN work visa to do temporary work in the US. (My CDN passport lists Seattle, WA as my place of birth).
Jeannette,
They will tell you that you are a US citizen, which you are by birth, and will tell you that you must, instead, get a US passport. That may the least of your concerns. How old were you when you became a Canadian citizen as you could, though, likely claim relinquishment of that US citizenship (which comes with many gotcha’s) by becoming a Canadian citizen.
@Jeanette, the question is how old where you when you got your Canadian citizenship? Parents cannot relinquish or renounce for minors so, depending on the law at the time, if you were under 18 or 21 it would not have been accepted, even if it was for your parents.
You need to check what the US law was at the time of you gaining Canadian citizenship to see whether you have a case for a backdated CLN.
here is a link to an article i just read.
http://news.liveandinvestoverseas.com/us-exit-tax-renouncing-citizenship/
is this true? that one who has renounced, is under the $2million threshold and has not had income of $157,000 or more only needs to fill out 8854 up to line 6?
Under the new (and current) rules, every American must fill out and file a Form 8854 as part of the expatriation process. If you have a net worth of US$2 million or more or if you have had an average annual tax liability of US$157,000 or more (that’s the figure for 2014) for the five tax years prior to your expatriation date, then you have to complete the income and asset section of Form 8854. In other words, any American who wants to renounce citizenship must fill out Form 8854 up to line 6. Only if you meet one of the two criteria I reference must you continue beyond line 6.
Swiss cookie. Basically correct except that it’s not 157000 of income ; it’s 157000 of tax liability . Very very few people owe an average of more than 157K.
Shows you how wonky and out of touch the system is.
157000 in taxes is one threshold yet the threshold for FBARs is 10k
Also note question 6. You certify you have been tax compliant for 5 years.