Renunciation: Interactions between Department of State and the Internal Revenue Service
You can renounce if you have not filed taxes. Here’s some general information relating to that and the relation between DoS and IRS in the context of renunciation — Pacifica
(1) Dept of State
Dept of State basically doesn’t care about one’s tax status as the citizenship itself (and the issuance of the CLN) is not dependent on one being tax compliant.
DoS’s involvement/connection with tax is the following:
(a) At the consulate the person signs DS-4081, Statement of Understanding of Consequences; one of the 12 items on it is Item 10, that renouncing “… may not exempt me from US tax income taxation [etc] …”
(b) The DS-4079, which is relevant and required for relinquishments, is not used for renunciations in Canada (or most places elsewhere AFAIK). However, some consulates may be using it for renunciation (while DoS discourages its use with renunciation, they do not forbid it, 7 FAM 1264. Your local consulate will let you know which forms they require, either on their website or when you send in an appointment request).
This questionnaire, DS-4079, asks at q. 13 (e) “Do you file US income or other tax returns?” This question is on the DS-4079 as an indicator of your ties and connections to the US, which is important if you’re claiming to have relinquished some years ago (in which case you’re trying to illustrate your lack of ties/connections/citizenship behaviour). For renunciations, it’s irrelevant if you have ties/connections/citizenship behaviour or not – and your answer has no bearing on if you can renounce or not.
(c) Dept of State is to provide IRS with a copy of each CLN they issue as per DoS Interagency Coordination and Reporting Requirements, 7 FAM 1243(a).
(2) IRS
To log out of IRS and avoid covered expatriate status, IRS requires that the person file their exit tax form (8854), their final year form, and the five-years-previous-to-final-year forms, by June 15th of the year following the renunciation. (If you are applying for a CLN based on a relinquishing act performed prior to 4 June 2004, please read this post as the law regarding this did not come into effect until that date.)
If a person does not file, the citizenship itself remains terminated and the CLN remains valid.
Several relatives of mine (who do not speak any English) have received FATCA letters from their banks. To make a long story short, they have decided to “renounce” so as to obtain a stupid certificate. They do not have their old US passports but do have their US birth certificates. Will these suffice to renounce at the Embassy? Some insight will be much appreciated…
Since there seems to be some variation from country to country, best bet would be to contact the embassy where they will renounce and ask what is required. That being said, I expect they’ll be fine with just the birth certificate.
Thanks for posting this – I am still reading comments on blogs claiming that one cannot renounce/relinquish without being US tax (and FBAR) compliant. Those ill informed claims are probably scaring discouraging people who otherwise would look further into renouncing/relinquishing for relief.
@Nononymous
“That being said, I expect they’ll be fine with just the birth certificate.”
Sounds logical; it does the same job.
@badger
“Those ill informed claims are probably scaring discouraging people who otherwise would look further into renouncing/relinquishing for relief.”
It is the fee that is discouraging me, as I simply cannot afford it. Otherwise, it would have been a done deal a long time ago…
@badger
We must do whatever we can to correct that information, in comments or by contacting authors.
“That being said, I expect they’ll be fine with just the birth certificate.”
‘Sounds logical; it does the same job.’
We already know that this kind of logic does not apply to the US government.
In 1994 the Social Security Administration saw my birth certificate (and returned it, instead of stealing it as they did years later). But they weren’t satisfied because they didn’t know if I still had US citizenship, so they wanted to see my US passport. My US passport had Japanese immigration stamps in it so I couldn’t send it to the US where it would sit for months before the SSA would return it by unregistered mail (for example if Japanese police or immigration ask to see my passport I’d better be able to show it[*]). I asked if some other arrangement could be made but they didn’t answer.
To be logical again, what would a poor SSN applicant do if they lived in the US and didn’t have a passport, what would they do when the SSA demands to see their passport?
[* Japanese law didn’t exactly say that, because police should be satisfied to see an alien registration card (which would now be a residence card), but Japanese police have the same disdain for laws as US police have. A friend was quasi-arrested even after showing his passport belatedly. Police made him sign a statement that he voluntarily accompanied police to jail without being arrested.]
@ND
Helpful as ever.
@Duality
It’s likely perfectly fine to renounce without a US passport, but the embassy or consulate will provide the definitive list of what’s needed so ask them.
Duality, I hope your relatives know enough to stay away from filing tax returns.
Well sure, use logic. You and I know about logic. US civil servants and Roman soldiers, not so much.
https://en.wikipedia.org/wiki/Archimedes
Get a load of this
https://www.watoday.com.au/politics/western-australia/nahan-admits-us-citizenship-tax-dispute-with-internal-revenue-service-20180731-p4zuq8.html
https://www.facebook.com/groups/citizenshiptaxation/permalink/1863125843777155/
Brockers discussing
“The issue is that there’s a tax dispute between myself and the Internal Revenue Service in the US and I have a lien on my renunciation of my citizenship,”
I guess we now know that renunciation is an asset. As an asset, it can have a lien placed on it. The next thing the IRS can do is levy it, upon which the renunciation will become the IRS’s asset, and the IRS will lose its US nationality.
By the way a US non-resident’s lien is registered in the District of Columbia, so we already know that the IRS can seize assets that he has located in D.C., so now we know that his loss of US nationality is located in D.C.
@ND
Or the journalist got it wrong, or the Australian politician either got it wrong or is inventing an excuse for why he didn’t get rid of his US citizenship.
Much simpler explanation.
Or like so many others he got bad legal advice. My guess is he never formally renounced or documented relinquishment. He should have obtained a CLN way back in 2008. The IRS would nothave been involved by state at that time. An interesting tale- outcome tbd
Re: “The IRS would not have been involved by state at that time.”
Nor would they today. Even today, the citizenship termination does not remain on hold if one has an outstanding debt or dispute with IRS. The person would receive their CLN and be a non-US-citizen with an outstanding IRS debt or dispute.
His whole story is fishy. I followed links to to several Australian newspaper articles and his own website regarding this matter, which people have posted on the Facebook page Patricia linked to above.
“Then shortly after becoming elected in 2008, I started the process of renunciation of my US citizenship.”
http://www.abc.net.au/news/2018-07-31/mike-nahan-is-dual-us-citizen-embroiled-in-tax-dispute-with-irs/10057092
Although he uses the term “renunciation”, he may have been applying for a relinquishment-based (Immigration and Nationality Act, s. 349(a)(4)) CLN as opposed to a renunciation-based one (INA, s. 349(a)(5)) “shortly after becoming elected in 2008.” But either way, he would have had a CLN for about ten years now.
Unless he “started the process” and dropped it, but it’s not *that* complicated a process
and this person sounds like a smart and sophisticated person. Sounds like spin to me.
(Interestingly, unlike federal parliament, holding dual citizenship is apparently not a bar to serving as an MP in Western Australia’s state parliament.
WA Attorney General: ‘Dual citizenship’ not a problem for state pollies
WA Opposition Leader denies owing US tax)
@Portland
“I hope your relatives know enough to stay away from filing tax returns.”
Did this fact even cross their minds whilst growing up in Cyprus? Certainly not.
@Norman Diamond
“We already know that this kind of logic does not apply to the US government.”
Yes, it is as logical as charging 2.350 $ to renounce.
Nahan’s not in the Federal Register, for whatever that’s worth.
(Quite possibly nothing: 2006–2008 were peak years for missing names. E.g. Jamaican MP Daryl Vaz never showed up either, but if I remember correctly there were pictures of his CLN in the newspapers. Back then Jamaica was going through the same thing back then that Australia is going through now, so all the suspected dual-citizen MPs were under a great deal of scrutiny — and unlike Australia, most of Jamaicas duals were Americans, so the journos quickly got up to speed on US-specific administrivia like CLNs and embassy appointments and whatnot.)
@Duality, re the fee to renounce / relinquish – it is a crime, and a human rights and constitutional issue to effectively prevent or deter people from exercising their right to choose where to award their allegiance and their nationality by the US government/State department charging so much.
It will be interesting to see how long it will take for the UN to acknowledge and respond to the complaints submitted by those participating at IBS, raising that and the other human and civil rights issues created by US extraterritorial CBT made inseparable with citizenship and quasi-citizenship status.
I would like the fee to be challenged with a class action lawsuit in a US court on the basis that contrary to their claims the average cost to the State Department to process a renunciation and issue the COLN is a fraction of the excessive charge of US$2350, an unjustifiably large amount. I could see them justifying the old fee of US$450 for a relatively minimal few hours to look at an application and an appointment with the consular official, but there’s no lengthy extreme vetting for people leaving the US, and the State Department spends no time checking on tax situations. Maybe we could get some money back for fees already paid, and pay a less extreme fee in the future. Any lawyers out there?
“I would like the fee to be challenged with a class action lawsuit in a US court”
Courts will dismiss for lack of jurisdiction. It doesn’t matter what the facts and laws are.
I’ve spent more than a year’s salary trying to recover my withholding that IRS data entry clerk Monica Hernandez embezzled from me. Every kind of US court dismisses for lack of jurisdiction. Over the years I’ve learned that laws require the IRS to investigate if the Form 1099 issued by Ameritrade was genuine or not, the IRS is required to issue a Notice of Mathematical or Clerical Error when the IRS doesn’t have records of the withholding (since Monica Hernandez recorded the withholding as hers instead of mine), the IRS is required to issue a Notice of Deficiency to me when I request one, the IRS is required to credit me even if the credit stays in limbo until I meet demands of the US Department of Justice (e.g. the IRS didn’t require me to fabricate a social security for my wife but the DOJ required it), etc. … but the IRS violates all those laws and courts still refuse to accept jurisdiction.
Laws are for rich people. Abuse is for poor people.
When Russian courts issued two mutually contradictory rulings against Mikhail Khodorkovsky, the second judge showed by facial expressions that he didn’t like the ruling that he was forced to issue. The US president and US secretary of state criticized Russia’s lack of due process. That’s because Khodorkovsky was rich.
When a US judge issues a self-contradictory ruling in a single ruling, US judges jump for joy over the US’s lack of due process and politicians don’t give a shit.