Renunciation and Relinquishment Questions – Part 1 of 2
Ask your questions about Renunciation here.
This thread will be focused closely on renunciation questions and answers. If the conversation starts to ramble, those comments will be moved to another thread.
Sub-topics (more will be added as they occur):
Farrell v. Tillerson. Plaintiff is contesting Bern Embassy’s rejection of his CLN application due to his not having appeared in person at the embassy and his having been issued a passport after the relinquishing act.
Previous Renunciation Threads:
Renunciation and Relinquishment of United States Citizenship: Discussion thread (Ask your questions)
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This thread is now closed. Please comment on Renunciation and Relinquishment Questions – Part 2 of 2
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@Heidi: I took your advice from a few months ago and I did contact the Luxembourg embassy. They seemed more keen to help and they told me to contact them in April once things are clearer on my end and on their end. I will let you know next time I am in your area. Happy New Year!
@ByeBye
A Happy, Healthy New Year to you and your family too and to all fellow Brockers !
Does anyone have any real examples they can share of renouncing their US citizenship in Canada while also a Canadian citizen? I’m specifically wondering about renouncing without filing the last 5 years of taxes. I have never worked in the U.S. and have lived in Canada since I was an infant, so naturally I never filed taxes in the U.S. before. What was the result of renouncing without having filed the past five years first? If I don’t file them now and the IRS comes for it years later, would it not be the same amount that would be owed now (plus penalties?)?
For additional info, I’d estimate my net worth is less than 1 million CAD. So its not like I am hiding away a fortune from the IRS. And its below the 2 million USD threshold that makes a person a ‘covered expatriate’. On the flip side, perhaps I wouldn’t owe any taxes even if I do file. Thanks in advance to any help!
@Jake
Here’s a recent example from Canada (go to the most recent post, on the final page):
http://isaacbrocksociety.ca/consulate2/
The result of renouncing without tax filing is that you receive your CLN in the mail just like everyone else, and you never hear from the IRS. If you have no US financial ties and have never been in the US tax system, it’s completely reasonable to just renounce and walk away. According to the IRS, 40 percent of those who renounce never file Form 8854 or go through the tax exit procedure; the IRS admits that it makes no attempt to follow up.
I’m British, not Canadian… I renounced in 2018, never filed any US tax paperwork. I’ve travelled to the USA twice since then without any issues. I’ve never heard from the IRS and, even if I did, I have no financial life in the USA and I’m not worth their while.
There is no need to file taxes in order to renounce US citizenship. They are not linked.
A certain law firm that starts with M and rhymes with foodie tells people otherwise to generate business.
If someone isn’t in the IRS system, it is best to never enter it. Their computers won’t be able to do anything.
My understanding is that all future tax obligations cease from the moment of renunciation (you instantly become a non-resident alien) provided of course no US assets or income sources. After renunciation you are still responsible for any past debts owed to the IRS, but if a person were never in the US tax system, the IRS has no information with which to figure out whether money would or would not have been owed.
In other words, it’s not a problem to renounce after having never filed US tax returns.
@Ron Henderson, @BirdPerson, @portland
Thanks for the feedback. Its good to see actual examples to confirm what my understanding was.
One other question I have had that has held me back from doing this years ago: Will my renouncing flag my family members that have had a past in the US tax system? Specifically, one of my parents is a US citizen that lived and worked there around when I was born but then has been in Canada ever since. As far as I know they have not filed any taxes with the IRS since living in Canada. I don’t want to be the reason that the IRS hunts them down.
Nope. Your parents will not be hunted down. The renunciation forms ask no questions about family history.
If your parent is a permanent resident rather than a dual citizen, then the IRS would have some means to inflict punishment on them, were they ever to attempt compliance and it all went sideways somehow. But if they have Canadian citizenship then they are fully protected.
I’m looking at some of these renunciation forms and have a few questions that I can’t find elsewhere on the site:
1. The CLN questionnaire asks for a few things that I either don’t know or would rather not share:
a. SSN (which I do have but would rather not share)
b. Last dates and address resided in the US (which I don’t know because I left before the age of one). Can these be filled out with these left blank or will that be a problem?
2. If I don’t share my SSN, I do have a US passport which I believe required sharing my SSN to get. So they probably have my SSN anyway. Is it worth withholding my SSN here if they already have it on file?
1.a. It can be very hard to remember the correct SSN number when filing out a form. Oh, dear, you might accidentally transpose a few numbers?
b. Sorry, can’t answer that one… Your parents can’t help you?
2. See above.
@Jake
In Canada, the will ask for your SSN “if you have one” so it’s not a problem to renounce without disclosing the number. Leave it blank on the form, if asked at the consulate simply say that you “don’t have it” – they don’t particularly care. (It’s possible to obtain a US passport without an SSN so that’s not a concern.)
For last US address, you can just give the city, it doesn’t need to be a street address. An estimate of the date (month or even just year) is probably sufficient.
What to do when CLN lost or stolen, but Ido have receipt for excessive document “processing fee”. I can’t get the document replaced apparently, but desperate to do so as final tax filing and FBARs have to be filed now and CLN required for current “relaxed filing requirements for those of us not rich and accidental Americans.Renunciation was July 23, 2021 in Vancouver,B.C.
@Suda
You may be out of luck if the State Department is not willing to replace your CLN. However, two pieces of good news:
1) I don’t believe that you need to attach a copy of your CLN to your final tax filing. I’ve never heard of this requirement.
2) Unless your affairs are very complicated, with US assets and all that, you don’t need to do any US tax filing after renouncing. It’s all basically optional. Many people renounce without prior tax compliance and never file a thing afterwards. The IRS is powerless to do anything about it, and does not seem to care.
What you will need your CLN for in future is to convince banks that you are not subject to FATCA reporting – but only if you were born in the US and living in a country where banks actually check place of birth on ID. In Canada you just answer “no” to the US citizenship question, no need to show anyone your CLN. (In your case this statement is true; many of us just lie and say “no” even if we are still US citizens – fortunately Canadian banks are happy with a drivers license as ID, which does not show place of birth. For this reason most Accidental Americans in Canada don’t need to bother renouncing, since they can easily fool their banks and have no reason to file US tax returns.) Furthermore, if born in the US, you may want a copy of your CLN with your passport in case you are asked about US citizenship when entering the United States. Not a problem if you weren’t born in the US, however. In both cases you might want to at least keep a copy of the receipt, as a substitute. Finally, if you are concerned about your executor doing something stupid and attempting to bring your estate into US tax compliance, it’s wise to keep a copy of your CLN (or in your case the receipt) with your will.
Regarding point 1 above, for all I know that might be required. Perhaps someone who’s actually filled out a US tax return or Form 8854 can provide clarification.
If you are not rich and are an accidental American, a wise course of action would be to not file a single thing. Nada. Bupkiss. Nothing will happen to you. They are understaffed and overwhelmed. They haven’t the resources to bother you.
According to John Richardson it should be possible to obtain a replacement. Takes a while though
http://citizenshipsolutions.ca/2019/12/24/how-to-replace-a-lost-us-certificate-of-loss-of-nationality-or-consular-report-of-birth-abroad/
@Suda I would concur 100% with Ron Henderson. Unless someone has sizeable net worth and/or assets and income in the US, it makes no sense to file anything with the US when renouncing. In my case, I have never disclosed my US status to my bank in Switzerland and I fill out the form as a non-US person. I simply show my Swiss documents, which do not contain a place of birth or US indicia. Moreover, the IRS does not have resources or inclination, advice confirmed by my US tax lawyer.
I will be renouncing within the next few months once our third and final child arrives. I have a litany of personal reasons, want to be more open and create a business, have other tax non-compliance, and I would be subject to the exit tax. I really just want to free myself of the US passport. We simply need to look at all the lies and insanity relating to the supposed Russian invasion of Ukraine as the latest illustration of the insanity. I feel more Swiss and I prefer to travel on a Swiss passport, as the Swiss tend to avoid international entanglements despite being an internationally export oriented country. Lastly, the Swiss treat the diaspora abroad quite well sending them a monthly magazine updating them on things in Switzerland as opposed to countless travel warnings about all the supposedly unsafe countries and tax obligations.
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