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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@ 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.)
I renounced and filed my “Exit” tax return. I have been told any of my recently filed returns can be audited for up to three years after the filing date of the Exit return, and that after that I cannot be audited. True?
I’d say the real answer, if you don’t have US assets, isn’t “true” or “false” but “who cares?”
If they can’t touch you, does it matter?
@Tom Heimer
True
Not sure if this belongs here, but I know people have been waiting to see when renunciation/relinquishment services would resume. Those services weren’t listed in the notice below, butI received this notice today that some US consular services are resuming in Toronto;
“U.S. DIPLOMATIC MISSION TO CANADA
Message to U.S. Citizens in Canada: U.S. Consulate General Toronto resumes most American citizen services
AUGUST 13, 2020
Location: Toronto
Event: U.S. Consulate General Toronto resumes public appointments for American citizen services
BEGIN Message for U.S. Citizens
The U.S. Consulate General Toronto is now accepting a limited number of appointments for most U.S. citizen services. You can request an appointment for routine and emergency passport services, Consular Report of Birth Abroad (CRBA) services, and adult citizenship claims by emailing us at TorontoPassport@state.gov. Please note that appointment numbers are limited to prevent crowding, and therefore wait times for appointments will be longer than normal. We appreciate your patience and support for our mutual efforts to prevent the further spread of COVID-19.
We are not offering routine visa services at this time. For information on visa appointments, visit https://ais.usvisa-info.com/en-ca/niv.
In order to be admitted to the Consulate, all applicants other than infants under age two must wear a face mask. If you are feeling ill, have a fever, or show any symptoms of COVID-19, please stay at home.
If you have traveled outside of Canada within 14 days of your appointment, or if you or any family members who plan to attend the appointment are feeling unwell, please do not attend your appointment.. Email us and we will assist you with rescheduling.
Please arrive at your designated appointment time only. Due to COVID-19 precautions, we will limit the number of people allowed to enter the building. If you arrive outside of your scheduled appointment time you may be asked to return at a later time or to reschedule your appointment.
Please ensure that you are fully prepared for the appointment as we are operating on a limited basis. Unprepared visitors may need to reschedule their appointment.
Security Procedures: All visitors must be screened prior to entering the U.S. Embassy or Consulate and are subject to inspection via walk-through metal detector and a hand-held metal detector. All personal items will undergo full inspection by use of x-ray and other detection equipment. Any visitor refusing to submit to security screening or carrying prohibited items (including large bags, backpacks, cell phones, and electronic devices) will not be able to enter the Consulate. For a detailed list of prohibited items, please visit: https://ca.usembassy.gov/embassy-consulates/toronto/security-procedures/. “
Hi, I am a green card holder and plan to renounce my green card. If I renounce my green card before 8 years out of 15 tax year (not a long term US resident as defined by IRS 877 (e) (2)), I will not subject to exit tax (correct me if I am wrong). My question is if I renounce my green card before 8 years (I am not a long term US resident when the time I give up my green card) and my worldwide networth is more than $2 million, does it means I am not subject to Exit tax as Exit tax only apply to Long Term resident, even I have worldwide networth of $2million? I have read several websites on Exit tax and I am still confused. Thank you
Phil Hodgen extensively covers situations such as yours on his website:
https://hodgen.com/resource/green-card-holder-becomes-expatriate/
He is known to be a reliable source. Good reading and good luck.
I believe you can abandon your green card by filing form I-407. Send it by registered mail or Fedex. No need to visit a consulate. Keep a record. No exposure to the exit tax. No need to file anything related to the exit tax.
Thank you For your reply, maz57 and Portland. I have read the link you attached and it is helpful. May I ask:
1. I have obtained my green card in June 2018, to prevent Become a long term resident, I would need to renounce my green card Before or in Year 2014 (that would be my 7th year), Can I return my green card together with completed form I-407 at any part of Year 2014 or best to do it early of the year, as depend on How long take to process?
3. When abandoned my green card by filing form I-407 (do I need to file form 8854 for non long term resident?) and either send by fedex or drop off personally at the nearest consular, once the staff at Consular confirmed they have received the form I-407, is that consider Process of renounciation is done and immediately i am no longer a green card holder and no need to file tax return for Year 2025 (year 2024 will be my last tax filing)? Or That is not done yet until I received confirmation from USCIS? And any idea take how long for them to process?
4. Do I need to engage a Tax specialist to file Form I-407 and Form 8854 (if Form 8854 is required for non long term resident)?
5. Please share contacts of tax specialist to help filing the forms for renounce of Green Card, If you know of anyone.
Thank you again
Hi Portland, with regards to your comment reply to J Germany in March 2020, pardon me as I could not find the original post by J Germany.
May you enlighten me how can US citizen or a green card holder not to File 1040 and no FBAR? I was asked to do so after I obtained my green card. Thank you
Below comment From you:
“Above all, don’t be persuaded to file any tax related forms. No 1040, no 8854, no FBAR. NOTHING.“
Eva, it’s simple. If you live outside the USA, you simply decide that a country’s laws end at its borders and you’re not going to file any US tax paperwork. If you don’t have any financial life in the USA, the IRS is unlikely to be interested in you nor can they do very much to you.
All of my financial life is in the UK, so I refused to complete any US tax returns or FBARs.
Eva, J in Germany was an accidental American having bank problems. He wanted to renounce. He had never been in the US tax system. We advised him not to start. That is a general rule.
Remember, the IRS processes hundreds of millions of returns and information slips with antiquated equipment and processes. They have recently been burdened with the affordable care act and Covid stimulus. They sent out thousands of stimulus cheques to the wrong people. They can hardly be bothered with green card holders.
Are you currently in the US? Are you a financial ‘whale’? Why wait until 2024?
in any case you don’t need a lawyer or a tax specialist. I-407 is a simple form. If an accountant says otherwise, they are only interested in their fee. Send the I-407 by Fedex or equivalent to the Williston Vermont USA address.
https://www.uscis.gov/i-407
You don’t need an acknowledgement. You are not in the wrong here. After that you are free. If you feel you must, and if you have US income, you could file a final 1040. You are not required to file form 8854 and you are not subject to the exit tax.
Eva You haven’t mentioned where you live and whether or not you have US income or ties. If you don’t live there, I would simply stop filing US tax forms. Nothing will happen.
Sorry for the late reply. I am currently In USA with my husband (he is an American). I plan to apply Singapore PR for my husband and it may take 6 months to 3 years, depending on luck. My home country is, Singapore and we will move back there and once my husband got his Sg PR approval. However, if his PR application is taking longer than it should be, I, myself will have to move back to Singapore before the 8th year to avoid all the tedious US tax paperwork and Exit Tax. I have 2 US properties (Joint ownership with my husband). We bought it before I became a green card holder. After I abandoned my green card, If I sell the US properties, I have to pay capital gains tax (My 50% of share) or no? And then I heard about the NRA tax. Do I have to pay NRA tax as well as CG tax for the US properties sold (do I have pay any tax for my Singapore property if sold after I no longer a green card holder?). Still don’t quite understand how the NRA tax applies to me. Any tips on what should I do to avoid NRA tax? Thank you very much
@Eva
In your case I would recommend that you do things properly and contact a professional if needed. (Do not rely on random advice from the internet.) You are a US resident with US assets.
Generally speaking, our area of expertise here is keeping people out of the US tax system. You are firmly in it.
@EVA
Here is a good source of free advice from Phil Hodgen re tax implications of giving up your green card to help make yourself aware of your situation. You can then decide if you need further professional advice .
http://www.nysscpa.org/most-popular-content/avoiding-the-exit-tax#sthash.AWiwmLtL.dpbs
Eva Your situation is above my pay grade. I agree you need professional advice. Be careful who you consult
Thank you For your reply Ron, Heidi and Portland. Appreciated very much. Before I get to know Isaac Brock and US tax Facebook group, I have hired Tax CPA previously to consult on Exit Tax/Relinquish of green card and didn’t get the clear answers. I am not sure who can I consult on NRA Tax or post renounciation tax. Will need to search. Hopefully will meet the right tax professional.