Renunciation and Relinquishment of United States Citizenship: Discussion thread (Ask your questions) Part Two
Ask your questions about Renunciation and Relinquishment of United States Citizenship and Certificates of Loss of Nationality.
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NB: This discussion is a continuation of an older discussion that became too large for our software to handle well. See Renunciation and Relinquishment of United States Citizenship: Discussion thread (Ask your questions) Part One
Based on my reading under this item from CRA an ex-USA citizen may be considered a non US person for tax purposes without all the IRS tax compliance. Can some other reliable person confirm my opinion?
http://www.cra-arc.gc.ca/tx/nnrsdnts/nhncdrprtng/ndvdls-eng.html
“My financial institution is asking if I am a U.S. person for U.S. tax purposes. What does this mean?
In general, you are a U.S. person for U.S. tax purposes if you are a U.S. resident or a U.S. citizen.
A U.S. resident would not generally be expected to include a person that has economic and social ties that are closer to Canada than the U.S.”
You may check with the British government has a similar ruling.
D Edem.. George says “The original British Fatca requires you to be tax compliant with USA exit taxes to be considered a non USA person.
There is nothing in the UK IGA to support his statement.
This is from the UK IGA.
(identical wording to the Canadian IGA). Treasury has been quite successful at imposing the same conditions on all signers of model1 IGAs. In other words, your CLN is your pass out of the IRS trap.
KalC
based on this and other sources you are a USA taxpayer until do the exit tax.
“The Good News – It is simple to renounce your U.S. citizenship
That’s what S. 349 of the Immigration and Nationality Act says.
The Bad News – It’s not simple to get free of the IRS
But, what’s renunciation got to do with taxes anyway? Well nothing really, except that under
U.S. tax law one is treated as a “U.S. taxpayer” until one gets a “certificate of good tax
paying” from the IRS. Receiving this “certificate” may require paying an Exit Tax! Receiving
this certificate will almost certainly require the expense of 5 years of U.S. tax compliance.
Rather than taking you through the torture of referencing and cross referencing the various
statutory provisions, I will quote directly from the IRS. All of which may be found at:
http://www.irs.gov/Individuals/International-Taxpayers/Expatriation-Tax”
so under
(1) a self-certification that the account holder is neither a U.S.
citizen nor a U.S. resident for tax purposes (which may be on an
IRS Form W-8 or other similar agreed form);
You are still a USA tax payer until you fill out all the exit.
You can show your CLN and say they you are no longer a US citizen for tax purposes but the banks could check. I think there is provision which allows them to deny the claim if they do not think it is correct. You then may need that certificate.
I know that Petros got that certification
@KalC,
I’d like to believe that FFIs will believe you are not a US person if you say you are not.
It seems more like, for the purposes of FATCA, other countries will consider you a US person until the US says you are not. That raises the question that has been asked often, which is will FFIs accept just a CLN, since a CLN does not even come close to certifying that you are compliant with taxes? The IGA says that a CLN is all that’s required, but of course FFIs can do as they please, and most people seem to think that means erring on the side of caution. And, countries like Switzerland and Israel are pushing away tainted customers completely.
For Canada, I’m still hoping that banks with a local client base restriction will be deemed compliant. That seems to be the only safe bet. Dealing with any institution that has FATCA reporting in place runs the risk of reporting you whether you deserve it or not. Presumably, this couldn’t possibly happen with a deem-compliant FFI since they would not have any reporting system in place at all.
This is interesting. Someone posted this on Victoria’s blog:
” Anonymous said…
New question on U.S. passport renewal application:
”If you naturalized as a citizen of a foreign country since your last passport was issued, please provide a photocopy of your foreign naturalization certificate and a statement confirming whether or not it was your intention to relinquish U.S. citizenship when you naturalized as a foreign citizen” http://london.usembassy.gov/cons_new/acs/passports/fta.html
it only turns up on the websites of some U.S. embassies.
Why?”
In other words, it appears that DOS wants you to state that by renewing your passport it’s your intention to maintain US citizenship. Must be as a result of all of those back-dated CLN’s by relinquishers.
https://www.blogger.com/comment.g?blogID=2424131704277823220&postID=7087350561935963429
@ bubblebustin
So the USA wants to force all its citizens who become duals to declare their intentions. Almost force them to relinquish. Well some problems are solved I guess — no more messy duals to clog the US tax system (or fleece either). You could answer the question about intention to relinquish with, “Maybe it was, maybe it wasn’t, maybe someday it will be. I’ll let you know.” And, perhaps add, “However if the US tax system continues to deal punitively with Americans living overseas then my answer is probably yes.” I’m so glad my husband will never have to renew his US passport. When they return it with the holes punched through he may even burn it.
@Em
It would appear that renewing your passport would be contingent on answering yea or nay. And to have it appear in only some embassies?
What ami
I would use this cra info site as a defense
http://www.cra-arc.gc.ca/tx/nnrsdnts/nhncdrprtng/ndvdls-eng.html
“My financial institution is asking if I am a U.S. person for U.S. tax purposes. What does this mean?
In general, you are a U.S. person for U.S. tax purposes if you are a U.S. resident or a U.S. citizen.
A U.S. resident would not generally be expected to include a person that has economic and social ties that are closer to Canada than the U.S.”
To me this sounds like the Canadian government is not requiring you to be tax compliant. Can someone confirm?
This web page has explicit defense foe Green card holder who are Canadian resident and people who thought they gave up US citizenship when they swore allegiance to Queen a long time ago.
My original question is Are the British still requiring US citizen to be tax compliant. You have to be tax compliant to be considered a Non US person.
http://www.irs.gov/Individuals/International-Taxpayers/Expatriation-Tax
“Finally, even if they do not meet the monetary thresholds for imposition of the IRC 877 expatriation tax, IRC 7701(n) provides that individuals will continue to be treated as U.S. citizens or long-term residents for U.S. tax purposes until they have notified both the Internal Revenue Service (via Form 8854) and the Secretary of the Department of State (for former U.S. citizens) or the Department of Homeland Security (for long-term permanent residents) of their expatriation or termination of residency.”
Nutbar Brocker rumor-mongering now fixates on “new” U.S. passport requirements that vary by consular web site!
This is the kind of crap that really needs to be censored. But the obsessive schoolmarms that hover in the background to do their deeds would rather wipe out what they perceive as failures to be nice.
Go to DS-82 aka U.S. PASSPORT RENEWAL APPLICATION FOR ELIGIBLE INDIVIDUALS …
http://www.state.gov/documents/organization/212241.pdf
See declaration toward foot of page one just before the signature space. Then refer to Page 2 to see what an applicant need to declare “intention” on. Full text of that copied below.
Some version of this requirement for supplementary explanatory statement has been around for decades. Nothing to do with recent increase in CLNs. Get a life.
ACTS OR CONDITIONS
If any of the below-mentioned acts or conditions have been performed by or apply to the applicant, the portion which applies should be lined out, and a supplementary explanatory statement under oath (or affirmation) by the applicant should be attached and made a part of this application.
I have not, since acquiring United States citizenship/nationality, been naturalized as a citizen of a foreign state; taken an oath or made an affirmation or other formal declaration of allegiance to a foreign state; entered or served in the armed forces of a foreign state; accepted or performed the duties of any office, post, or employment under the government of a foreign state or political subdivision thereof; made a formal renunciation of nationality either in the United States, or before a diplomatic or consular officer of the United States in a foreign state; or been convicted by a court or court martial of competent jurisdiction of committing any act of treason against, or attempting by force to overthrow, or bearing arms against the United States, or conspiring to overthrow, put down, or to destroy by force, the government of the United States.
Furthermore, I have not been convicted of a federal or state drug offense or convicted for “sex tourism” crimes statute, and I am not the subject of an outstanding federal, state, or local warrant of arrest for a felony; a criminal court order forbidding my departure from the United States; a subpoena received from the United States in a matter involving federal prosecution for, or grand jury investigation of, a felony.
@ usxcanada
Thank you for the clarification but you could have been less snarky.
@Em
Snarky? I’d have said to usx, “you could have been less obsessive.”
@usxcanada
Since the requirement for supplementary explanatory statement has been around for decades, one has to wonder what motivated DOS to move it from obscure form footnote to front of website. I doubt it is pure coincidence.
Wow….so now I am more confused:-) If I go to a consulate and formerly renounce, and in due course receive my CLN (which I now gather is not in any way dependent upon taxes, paid or unpaid)…..I will still be considered a US person if I haven’t sent the final form into the IRS? Having not lived in the US for 30 years, and never filed, I would be reluctant to get into the web by filing. But is it then the case that the CLN means nothing and you are still a “US Person” until the IRS says otherwise….never mind the CLN?
Surely this can not be?
@ D Edem et al.
Don’t do anything for now. This news just in:
http://www.thenewamerican.com/usnews/constitution/item/18253-critics-mount-constitutional-attack-on-dreaded-fatca-tax-regime
Apparently the news was on Swiss radio too last night so it’s not some kind of “fruitcake” report.
Has anyone else picked up on this?
@GeorgeIII
There is no such thing as a “certificate of good tax paying from the IRS.” They don’t issue any such documents.
@Lyoba
The lawsuit may or may not succeed and will take a long time to work its way through the system. In the mean time, a lot of damage will be continue to be done.
One needs to “sit tight” at their own risk.
Good luck finding banks that will take clients with a US place of birth and no CLN.
@D Edem There are several plates you need to juggle in the air. But first lets confirm a few things based on prior comments; You live in the UK, assume a British Citizen, married to a non-foreign spouse (cough cough, a UK or EU spouse is non-foreign, a US would be foreign), assume you are squeaky clean compliant with HMRC. Lastly you have no offshore accounts, meaning all your accounts are local as in the UK and EU, accounts in the USA are offshore.
1.) Unless you are a blaring “American Firster” we assume that all your financial accounts were opened as a British Citizen. Some people blare out who they are. It is likely no one knows you as anything other than British. There are lost of them, I know some and cringe around them.
2.) Having said #1, there are several compliance trains of thought in the UK. Look online at some of the major High Street Banks and see what they ask you to open an account. Some are asking for Country of Birth. I called one of those banks, got passed to a person who would definately know and asked if you had a US Country of Birth but had a CLN, would your information be reported? The answer was that you would still be reported because that is what the IGA allows. So even if you get a CLN you need to be very careful and investigate everything before opening accounts.
3.) Even after relinquishing/renouncing it is still likely best because of the US Indica Tatoo (Country of Birth) to stick with “local client base firms” and exempt products. This would be building societies, credit unions and NS&I. Product wise stick with ISA, pensions, NS&I products which is their entire product line not just premium bonds.
4.) Anyone who has relinquished (documented or not), if asked Are you a US Citizen? can answer no to that question because you are not a US Citizen.
5.) Concerning form filing, a person will do what they are going to do. If you file any forms, DO NOT LIE.
6.) Regardless if if you file or not, you need to do the calculation and see what the exit tax would be if you were a covered expat. Do the math and see if they would get anything.
It seems like you are having a OMG moment. Thats OK, and normal.
You are probably afraid of the penalty structure and thats whats keeping you away from compliance.
But you do need to know if you would owe any exit tax, regardless of filing or not.
7.) The US will not be able to collect anything from you in the UK with the help of HMRC. That became clear here at IBS yesterday.
a.) There is only a handful of countries that have a collection provision in their dual tax treaty. The UK is not one of them. Further the UK US Treaty does NOT include penalties, but that is all moot because only adminsitrative assistance can be provided not collection.
b.) But there is something called OECD’s Multilateral Convention On Mutual Administrative Assistance In Tax Matters and that is a large multilateral treaty that allows and requires states to collect for one another! The UK and US are signatories BUT the US excluded the collection language back in ?1988/1991? and what that means is there is no collection between ANY other Country and the US!! I seriously doubt that the US Senate can get a 2/3 vote to revoke that prior reservation.
What does it mean? Non-US assets will not be collectible.
Go to IBS and read the article and all the comments!
http://isaacbrocksociety.ca/2014/05/14/us10000-non-filing-fines-for-committing-ordinary-personal-finance-and-the-oecds-generally-accepted-taxation-principles/
8.) The UK is a signatory to CONVENTION ON CERTAIN QUESTIONS RELATING TO THE
ONFLICT OF NATIONALITY LAWS THE HAGUE – 12 APRIL 1930.
This is the legal basis for the Master nationality Rule which the UKBA posts in pdf on its website.
What this means is that whilst in the UK a British Citizen is solely absolutely British!! You shoudl search for the above, save them!!
The US did not sign that treaty but the US State Department guidance alludes that they follow it.
9.) Regarding past relinquishment, is your sole sin that you renewed a US Passport? Do you retain a US drivers license, vote in the US, own anything in the US? Do you use your UK passport for ALL world travel other than the US?
Finally, each person will make their own unique decision based on all other factors. No one is alike and there is no good answer!!
Do you have children that are tainted? Are they above or below the radar?
@FromTheWilderness “Good luck finding banks that will take clients with a US place of birth and no CLN.”
With respect to transnational banks, you are correct. Further, with transnational banks it likely does not matter what stinking pieces of paper you give them, they WILL rat you out. I called a high street bank, call passed around many times, and was told that a CLN did not matter, they were handing you over.
With respect to ANYTHING swiss, you are likely correct.
But local financial fiirms, your mileage may vary.
@George
Well, that’s not exactly reassuring, is it. The whole thing is a farce really. In the end, banks will either believe you or they won’t, it’s completely up to them. You can’t prove a negative, i.e. no one(!) can prove that they aren’t US tax liable. Even a non-USP with no obvious ties to the US may be liable, e.g. a business person who spent too many days in the US.
@Notamused, I was aghast when “High Street Bank” Compliance Officer was passed to me on the phone and said all account information would be passed along because the IGA permits it and that was the safest path for the bank. He suggested contacting HMRC because they would be transmitting it to the US.
Oh, certain “High Street Bank” also said that they would be reporting all account balances regardless of size and not applying the $50,000 limit. Because…..the IGA says they can.
@George
Yes, I’ve often pointed out that the $50K limit will very likely be ignored by all banks. It would cost them lots of $$$ to integrate their IT systems for that purpose, so if they don’t have to, why should they bother?
Exactly, they’ll take the easiest way to provide the info and that’s reporting anyone who is/was a USP in their books. One sweep through the system and they’re done. None of this checking on account amounts or weeding out holders of a CLN. Pass it all on to the IRS and let them sort out the mess. The only good thing about it is that if all other countries did the same the IRS would be so swamped with info it would take them a couple of centuries to sort it all out and make sense of. Might turn out to be a good thing – you’ll be hiding in plain sight as it were because of so much info. With any luck you’ll be dead before they find you.
I read the CRA web page. It seems that the CRA does mention anything about a CLN requirement for your bank. .at the info on the CRA web looks like you can self certify. So why couldn’t you just go to a citizenship lawyer like John Richardson and swear out an affidavit that you became naturalized on such and such a date, then became a Canadian citizen on such and such a date. and that you have no economic ties to the USA including a residence ,bank account etc. You do not hold a valid US passport etc. you now consider yourself a Canadian Citizen period.
You attach your notorized documents to the letter and hand that in to the bank (if they ask) or maybe even if they don’t) with copies to the CRA.. After all you then have appeared to have met the CRA requirements according to their web page which ? does not mention that you need a CLN. That way even if the bank reports you to the CRA you have already sent in documented evidence that you are a Canadian Citizen.
@ D Edem
Citizenship (as deemed by the State Department) is different from tax liability (as deemed by the IRS). So, yes, you can lose your citizenship but still be considered tax liable to the US. Green card holders, for example, are not citizens (cannot vote, have a US passport or hold elected office) but still have a tax (or at least a tax-filing) liability.