Renunciation Questions Thread
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.
Renunciation Spin-Off Conversations. Conversations that spin off from questions asked on the main Renunciation Questions thread are moved to this one.
Previous Renunciation Threads:
Renunciation and Relinquishment of United States Citizenship: Discussion thread (Ask your questions)
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@ minilibralian
I do not think the IRS have the time, resources or inclination to sit there and try and match up renouncers to their parents or spousal returns, especially when they don’t have a clue to your financial situation abroad and cannot collect even if they did. There are only 5 countries who have any kind of tax collection agreement with the US and that is ONLY if that person was not a citizen of resident country at the time of the tax assessment.
http://isaacbrocksociety.ca/2016/11/01/dual-citizens-of-sweden-france-netherlands-denmark-canada-take-note-your-country-will-not-collect-for-the-u-s/
There was some discussion on Brock about the possibility of the IRS sending out fishing letters to their citizens and ex citizens abroad , with the aim of frightening people into compliance, but as yet nothing has happened. If any such letter arrives then perhaps the best use for it would be as spare toilet paper during the Corona virus shortage?
The IRS are realists and concentrate their efforts on those it knows about and can collect from at home or those it can scare into giving up information on their bona fide financial life abroad.
This post by Karen Alpert of http://fixthetaxtreaty.org/ gives a pretty good reflection on non-compliance in light of the potential “fishing letters” mentioned above.
Also, this part of the internal IRS manual shows (some) internal guidelines regarding both cross-border exchange of information and collection assistance: https://www.irs.gov/irm/part4/irm_04-060-001r#idm140663802619568
I guess in theory the IRS could make life miserable for many non-compliant former citizens, if they so choose (e.g. by using the OECD convention, which also does include collection assistance provisions). As they very well know most “Accidental Americans” (of which I am one) owe exactly zero US tax, so this would not make sense from a business perspective. Meaning the odds of this happening must be small indeed.
The post mentioned above: http://fixthetaxtreaty.org/2019/09/09/new-irs-relief-procedures/
Note
The collection assistance is with those 5 countries only and does NOT include people who are citizens of their resident country at time of so called tax debt.
My understanding, perhaps incorrect, is that outside the five collection-assistance agreements (Canada, Denmark, France, Netherlands, Sweden – and all excluding collection against a country’s own resident citizens) the information-exchange and collection provisions in other tax treaties, or the OECD convention, would only be used for individual criminal investigations, case by case, and as this is all quite expensive and time-consuming, likely not an issue unless there are serious amounts of money involved with a good chance of recovery (or political value to prosecution, such as Manafort). Ordinary folk need not lose sleep over this.
It’s worth remembering that we only know of collection assistance being invoked twice, once against a US citizen in Canada (Dewees) and once against a Danish citizen in the US. Personally I don’t think the IRS will ever bother sending “hi, don’t forget about us” letters to people who renounce without filing anything.
@Ron
That is my understanding entirely.
Beware the compliance industry trying to tell you otherwise!
Indeed. Those letters would be a waste of good postage stamps.
I seem to remember someone here on Brock who mentioned he ordered himself a “DECEASED-RETURN TO SENDER” rubber stamp and returned IRS letters unopened if or when they showed up in his mailbox. But that was overkill and just for fun.
Simply ignoring the letter would suffice if anyone ever got one (which is extremely unlikely). Attempting to interact with the IRS is where the trouble always starts. (Beware the compliance industry x2.)