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.
@swisscookie,
I would agree with that, but to be clear we’re talking about Line 6 of Part IV (which is the Section A). You should look at the instructions that go with the form.
http://www.irs.gov/pub/irs-pdf/i8854.pdf
@Duke, good catch (tax paid, not income earned)!
Also, if you were born a dual-citizen then the tax and net worth thresholds do not apply, only the certification of being tax compliant for the previous 5 full tax years.
I have been looking at this form too. As I read it, if you don’t meet the two monetary thresholds to be liable for exit tax, you still will be if you haven’t filed 5 years back. But there is an exemption on the first $680k of your monetary worth for exit tax, so effectively if you don’t own assets to take your value to that amount, then theoretically you wouldn’t owe exit tax anyway…. so it wouldn’t matter (and would save the hassle and expense of filing back the 5 years)…. Am I right in my thinking on this….?
@Coleen, it doesn’t matter whether or not you owe any exit tax. It’s quite clear on the form that you must be able to confirm that you’ve met your tax filing obligations for the last 5 years. I can only give you my example. I’ve been out of the States for over 40 years and never knew about needing to file tax returns. As I have no income I needed to filed 6 back years of FBARs to come into compliance using the Streamlined program. My tax preparer attached a statement to the Streamlined form to state that I didn’t have any income to report. I was then able to confirm that I had met my US filing obligations as outlined on the 8854 form.
As the 8854 instructions say:
“If you expatriated after June 16, 2008, the expatriation rules apply to you if any of the following statements apply.
1. Your average annual net income tax liability for the 5 tax years ending before the date of expatriation is more than $157,000 for 2014.
2. Your net worth was $2 million or more on the date of your expatriation.
3. You fail to certify on Form 8854 that you have complied with all federal tax obligations for the 5 tax years preceding the date of your expatriation.
You are a covered expatriate if at least one of the statements in paragraphs (1), (2), or (3), set out above (under Who Must File) applies.”
If you cannot certify on the 8854 form that your tax obligations have been met then you will be a covered expatriate.
And that $680,000 is only if you are a covered expat in the first place. It doesn’t apply otherwise.
“Taxation Under Section 877A
If you are a covered expatriate in the year you expatriate, you are subject to income tax on the net unrealized gain in your property as if the property had been sold for its fair market value on the day before your expatriation date (“mark-to-market tax”). This applies to most types of property interests you held on the date of your expatriation. But see Exceptions below.
Gains from deemed sales are taken into account without regard to other U.S. internal revenue laws. Losses from deemed sales are taken into account to the extent otherwise allowed under U.S. internal revenue laws. However, section 1091 (relating to the disallowance of losses on wash sales of stock and securities) does not apply. For 2014, the net gain that you otherwise must include in your income is reduced (but not below zero) by $680,000.”
Thanks, I guess what I’m asking is if someone doesn’t want the hassle/expense of filing back 6 years, can they not tick the box (have not filed/complied with taxes), become a covered ex pat for that reason, but being as theoretically they wouldn’t be worth the $680k anyway, (which as I understand it is the exit tax exemption amount and you only pay any tax above that), effectively the exit tax payable would be nil…..(?) it seems the only down side of being a covered ex pat is the exit tax, but if that was nil anyway it wouldn’t matter and you wouldn’t have had to file the back taxes….(?)
I’m really just asking the question (Devils advocate!), could be totally wrong but this is how I read it….
@Coleen,
This might help:
http://hodgen.com/deliberately-choosing-covered-expatriate-status/
Hmmmm. Interesting! Many thanks for that. Maybe not a good option…. It’s difficult being at the start of all this fiasco, I think we all might have some indication of what type of approach the powers that be are going to be taking in another couple of years, right now it’s like trying to see in the dark. Maybe it will take someone to fight back (assuming one of us minnows is reeled in), and turn their case into a high profile media worthy story and then hopefully people would understand and see the outrageousness and unjustness of all this.
For me I have decided to give relinquishment a shot ( but not holding out too much hope due to my inadvertent renewal of passport), but I live in hope!
Rather tragic we are having to discuss this on Xmas eve, (sigh!) Anyway thanks again all who have posted here and I hope you can all have a few too many drinks tomorrow, and try and forget about this situation for at least a few hours on Xmas day!
I’m poor and a minnow and do intend to file up and do the 8854 (I still have family in the US and do not want any dramas if I have to visit there), but I’m already overdue on the 8854 so am now a covered expat even though I’m poor. I guess not too worried as my net worth is hardly anything at all. I did want to file everything on time but due to financial issues haven’t been able to. One observation is how strangely hands off the IRS is when it comes to expats in-spite of the THREATS being HUGE. You would think that after a CLN is issued you would get a letter from the IRS requesting whatever data they need. Instead you hear nothing whatsoever. Not only is their tax code indecipherable even to specialists but they expect YOU to know what to do. Even eons ago when I did file from overseas I never heard anything from them or even a confirmation they got my filings. Coleen, you are realising what we all have.. that this is nothing more than a violation of human rights. A government claiming ownership of a person and stripping them of their free will. Seems like “US Persons” are nothing more than slaves.
duke of devon, i have filed american taxes for over 15 years and never had to pay a cent, so, yes, i am tax-compliant. my net worth is also way below $2 million. i renounced this year and filed the fbars for the last 5 years. even though i have read and re-read the instructions for the form 8854, i still am not totally clear. part V: who needs to complete part V (balance and income statement)? is the 877A referred to only pertaining to those who have deferred paying their taxes? since i never owed any, i had no need to defer..
from the form:
Part V.
Section 877A. If you expatriated in
2014, you must complete Part V.
thank you and everyone else on this forum!!
Nobody can blame you for being confused. On the form it says 1 thing and in the instructions another.
Fill in part IV. Section A. Skip section B and C
Fill in only column (a) of part V. This becomes a balance sheet to show that you are worth less than 2 million. You can write ‘not applicable- net worth less than 2 million’ across the other columns.
N.B. Formal evaluations are explicitly not required. There are no reports of audits for minnows. Hope this makes more sense than the instructions from the gov. Good luck.
I suppose you could fill in part V schedule B as well – income up to the day you expatriated.
@Duke of Devon
Although what you’re saying has a certain logic to it, AFAIK, nowhere in the instructions does it say you don’t have to fill in columns (b) and (c) if you’re not a covered expatriate.
@Duke, @tdott,
It’s clear to me that Part V is only required if Section 877/877a apply, which they don’t if you are under the thresholds and certify tax compliance.
The instructions for the Balance Sheet in Part IV Section A say “You can use the balance sheet in Part V
(Schedule A) to arrive at your net worth”. The word “can” doesn’t sound like “must” to me.
Having said all that, do you trust the IRS employee who reviews the submision to understand their own forms?
My mother’s accountant filled in Part IV Section A, as well as Part V Section A (columns a, b, c) and Section B. I didn’t argue. Maybe it’s better to be on the safe side even though it means giving that detailed info to the IRS. Sheesh, not only do we have to interpret the laws and forms, we have to interpret/guess how the IRS looks at these thing as well.
RE: form 8854, Part V
My husband didn’t fill in columns (b), (c) and (d) so he attached a note saying he didn’t because they did not seem relevant to listing the assets he held on his expatriation date. However, the only assets he had were cash, property (house) and other (car & household goods). For some of the other lines he didn’t even know what they were so he figured he didn’t have any of those things. He hasn’t applied for CPP or SS (and might never bother to apply) so he just added a note stating what those monthly payments would be if he does apply someday. His CPP is very small and he doesn’t really want to get involved with the USA ever again so we may try to manage without his SS which the US gov’t could end up yanking away like it just did for the old “Nazis”. Of course, we are notorious for doing everything wrong when it comes to satisfying US Form People.
@WhatAmI
With all due respect, I don’t think the instructions are clear at all. And, even though what you’re saying has some logic to it (as does Duke’s position), I don’t believe there is anywhere in the form or instructions that explicitly supports what you are saying.
In fact, Line 4 of Part I of the form specifically says re expatriation date:
“January 1, 2014 – December 31, 2014. Complete Parts IV and V“.
The instructions say:
I recall quite a while ago reading a dissection of what being “required under section 6039G” means in practice. I can’t recall the details at all, but I *think* (take with large grain of salt) that it did mean that everyone had to fill it in.
Lastly, I specifically asked an accountant, who works with a cross-border tax lawyer, if Part V was required for non-covered expats, and he said yes. I’ll press him on it when the time comes for me to have to worry about it as he may have been giving an off-the-cuff opinion, but that’s what he said.
@WhatAmI, @Duke
Don’t get me wrong – I’d be more than happy if it were the case that Part V, or parts of it, could be skipped for non-covered expats. However, I haven’t seen anything concrete to make me believe that’s the case.
@EmBee
I have no doubt that your husband may well never be bothered by the IRS for skipping those columns. However, it doesn’t necessarily mean it was correct (in the eyes of the IRS), it could just mean they couldn’t be bothered about it. And if those columns are indeed “required”, it doesn’t mean that the next person who fails to fill them in will be treated with the same indifference. All it would take would be for someone to get a bee in their bonnet about 8854 correctness (as was done with FBAR compliance, and as was done with offshore compliance) and it becomes a different story with potentially unpleasant consequences.
For what it’s worth, here’s what I did: I self-relinquished about 2 years ago, i.e. even though I did not apply for and do not have a CLN, I am no longer a US citizen. I filed the FBAR for the final year I was a US citizen. I did not file a final year 1040 because most of my income was US tax-exempt and I was therefore below the filing threshold for my filing status. Previous year returns were filed even though I was also below the threshold just so I could show a pattern of not being obligated to file.
After downloading and examining Form 8854 I found it so offensive I swore to myself I would never file one. I refuse to assist them in any way by providing additional information I certainly would have met the average tax liability test, the net worth test, and probably the 5 years of compliance test even without filing that final year return. (It says 5 years of compliance, not 5 years of filing, right?)
So here is what I figure the IRS knows about me:
1. I’m a minnow. I owed no tax. I was below the filing threshold for those years I did file.
2. My name, address, SSN, age, pattern of income, etc.
3. My account numbers, institutions, amounts, etc. and the fact I’m above the 10k threshold for filing FBAR.
4. I inexplicably stopped filing anything after 2012. (Who knows if they have even noticed?)
5. My net worth (at least according to FBAR) would be pretty small potatoes.
6. I have no US assets.
Because I was never issued a CLN, here is what I figure the IRS doesn’t know about me:
1. I lost US citizenship but didn’t file 8854.
2. I am a covered expatriate.
The FBARs I filed were paper ones, I never entered their electronic Fincen system. My last FBAR and all the ones for previous years are presumably sitting in a box in a warehouse somewhere. The tax returns I filed were also paper so presumably sitting in some other box in some other warehouse.
I never filed anything for 40 years and I now regret that I panicked and did start to file. I have heard nothing from the IRS and don’t expect I ever will. Somebody would have to sort through a lot of paper to even notice that something doesn’t compute. For all they know I’m dead.
I now know the reach of the IRS into other countries is greatly exaggerated. I sleep well at night.
@ tdott
He did do column (a) so hopefully they won’t get a bee in their bonnet. They do know his “net worth” which is not so much, in dollars and cents … although he is worth a lot to me in terms of what really counts.
maz57. Bravo. Well said. Your actions fit very well with advice given here about 3 years ago. “Never tell them anything they don’t already know”
tdott. In the end It won’ make the slightest difference.
.
@tdott,
I don’t need respect or care to change your mind, but in order for our dissection to be helpful to others we at least need to be looking at the same words.
In the 8854 instructions:
Page 2 says “Comply with the annual information reporting requirements of section 6039G, if you are subject to tax under section 877.”
Page 4 says to complete Parts I, IV and V if you expatriated during 2014. (but you have to look at the instructions for those parts and follow what it says there specifically)
Page 5 for Part IV Section A says “This section must be completed by all individuals who expatriated in 2014.”
Page 5 for Part IV Section B says “Complete Section B only if you are a covered expatriate”
Page 8 for Part V says:
Finally:
6039g ( http://www.law.cornell.edu/uscode/text/26/6039G ) says: “…any individual to whom section 877 (b) or 877A applies for any taxable year shall provide a statement for such taxable year…”
6039g/877/877a do not apply if you are under the thresholds and certify filing compliance. IE they do not apply if you are not a covered expatriate. Part V says it must be filled in if you are under 877 or 877a, which you are not if you are not a covered expat.
Yes, it could be MUCH clearer, but I see nothing at all that indicates Part V is required for non-covered expats.
Again, if I ever had to fill out this form I would probably do the extra sections regardless, even though I believe they are not required, because that would in my mind increase the chances of never hearing from the IRS again. My reason for pushing this point is that there are people here who have renounced and not filed Form 8854, or not these offensive sections, for various reasons. If they agree with my interpretation then maybe they’ll sleep a bit better on their decision.
I understand what maz57 is getting at. We here are guinea pigs, and I agree with him that the IRS are not likely out to get the likes of us (minnow law abiders who will give little revenue for them and create work), and will not go out of their way to do so. Problem as I see it is once you put yourself on their radar by giving information, one thing can lead to another very quickly and they have no option but to follow their own protocol once process is begun. There is no turning back in other words.
I consider my Dads situation. No paperwork filed since emigrating in 1976 but lived and worked there prior. Innocently applies for his US pension a few years back (not knowing he ever had obligations), and no questions asked about back filing. Gets his US pension no problem every year now with a very non invasive form filed. He didn’t believe the other day when I told him what he ‘should’ have been doing for the last 30 years!
Because we are law abiding people we want to do the ‘right’ thing and also have some closure for our sanity, but I am still debating if I want to even go down the track of playing their game (though I so badly want out of this mess). I use the scenario if I was indeed told at some time in years to come I owe tens of thousands in tax/penalties (and after 30+ years it would indeed be that amount!), can you imagine the uproar if you went to the media with it, considering I never used a US service in my life and left prior to age 2….!?
Then again, can I sleep at night with the what ifs, and not to mention the guilt Id feel if my NZ husband who has worked so hard for what we have was dragged into it.
I have reasoned the best option is to try and back date relinquishment, as there is nothing to lose, and if this is declined then ill have to decide a) do nothing and if something ever comes of it in the future I will use this as a defence and claim I’m not a US citizen and tried to tell them so, and what are they going to do in reality to prove otherwise, let alone how will they screw tens of thousands out of me when I’m over here. Accepting the fact I’ll never step foot in the US again of course….. b) cave in and file the damn things and pay the price tag to get out of it cleanly.
I’m yet to come across a story of an accidental being taken through the ringer….
All food for thought and I think ‘don’t be hasty’ is the key. Incidentally I came across the IRS officer manual of instructions online re relinquishment if anyone is interested. Also the NZ procedure and limits for FATCA. Basically accounts with bal over $50k are the only ones that would be red flagged, but US ownership would need to be established before reported.
@Coleen,
I haven’t looked at the NZ FATCA IGA, but the Canadian IGA states that the $50K threshold for account reporting is an _option_ if the financial instituion “elects” to make use of it. It is not mandatory. You might check the NZ wording carefully.
Our wording regarding the $50K threshold says: “Accounts Not Required to Be Reviewed, Identified, or Reported: Unless the Reporting Canadian Financial Institution elects otherwise…”.
@WhatAmI
I still believe the instructions (and form) to be unclear.
There is no comparable sentence for Part V. If the intent is for Part V to only be completed by covered expatriates, it would seem logical for the instructions or the form to explicitly state so as was done for Part IV Section B. The fact that there is no comparable sentence in Part V (or anywhere, for that matter) is at best a head scratcher. I see 2 possibilities: it was either omitted as an oversight (which seems odd given how long this form has been around), or the intent was for non-covered expats to complete Part V.
I again point to Line 6 of Part 1 of the form, which says if you expatriated January 1, 2014 – December 31, 2014, “Complete parts IV and V”. This is telling everyone who renounced in that time perioid, covered and non-covered, to unconditionally complete Part V. If that is not the intention, then the best that could be said is that it’s confusing, if not contradictory.
Most of the rest of the argument seems to rest on what exactly is meant by being subject to 6039g, 877 or 877a. I’m running late but hope to look at it more later.
@Maz57, let me see if I can understand your logic and the underlying ethos;
1. At one time you understood and identified yourself as a full an legitimate US Citizen.
2. You then performed an expatriating act under 8 US Code with the voluntary intention of relinquishing US Citizenship.
3. Having peformed such relinquishing act as specified under US Law, you believe yourself to no longer be a US Citizen.
4. Today as a Citizen of X, you have no intention of following law that is both foreign and overseas promulgated by a Foreign Government. As such you have no intention of following the law of Sudan, China, Russia or any foreign government to include the USA which is a foreign government.
Does that about suss things up?
Going through the above and all the hoops that the USG places in front of a former or wanne be expat. The USG can ultimately fall back on the position and state that relinquishing is simple, quick and painless and in full conformity with the Expatriation Act of 1868. How? A CLN though an excellent item have just like the “American Express Card” is purely optional and is not required to lose actual USC for relinquishers.
@George.
1. No question. I was born there.
2. Yes.
3. Yes.
4. Yes.
I always leave home without those cards because I don’t have either one of them. But not being a US citizen anymore is priceless!
@Maz57,
Merry Christmas
🙂 🙂 🙂 🙂 😉
“But not being a US citizen anymore is priceless!”
LOL LOL