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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Okay, take 2…
@ Calgary411
This is the first site that has ever suggested that the OVDI is not the way to go. Everyone seems to be pushing me towards it. That being said, I really like the idea of not going there – it seems like torture, and like asking for punishment!
I have been told that while I do not in theory have to file a return as I make less than USD$10,000 a year, I should back-file for the last 3 years anyhow, just to have it in the system so that the 3 year clock will start running. Or else the IRS can come at me at any time in the future. That is why I think/thought I have to file. I will be happy to be proven wrong.
To answer your questions:
1. Yes, my parents’ accounts exceed 10,000 USD.
2. My parents are not US citizens. Dad was studying in the US, Mom was with him, I popped out, five years later we all moved back home.
3. I don’t plan to remove myself from the joint accounts. If I said that, I misspoke. I will if I have to as some sort of temporary measure, but as soon as I renounce, I will be back on all accounts.
Thank you for the link to the citizenshipsolutions website. I will look at it tonight. (Talk about information overload! But finally I am hearing things that give me hope!)
I am FULL of questions, so you will be hearing from me. FINALLY I have found a place that makes sense to me and that understands that I am not trying to hide zillions of dollars from the IRS!
@ Yoga Girl:
Thank you. And yes, am I glad that I did not pass citizenship on to my kids! I actually did ask about it, but I was told in no uncertain terms that I was an Accidental American. What a blessing! My daughter – had she become a citizen – could renounce, but my son would have been stuck with it forever! Dodged a bullet there…
Thank you for the link… will check it out..
@ George
I don’t think I have done ANYTHING to relinquish, so renouncing is the way to go for me. I travelled on my US passport up to Dec 2013. And I have an SS# – I was required to get one when I renewed my passport as an adult.
So your suggestion is renounce THEN comply?
My plan was to spend the rest of the year becoming compliant – whatever that takes – and then do the actual renouncing next year.
Why? Two reasons, one of which I will admit is self-serving in a way.
First, I was thinking it had to be comply then renounce, because from what I read there is a form I will have to sign (8858?? I forget) that says I am compliant with the IRS for the last 5 years.
Second, this would have worked for me on a personal level. Last year my son was well enough to travel for the first time, and I took him and my daughter to Disneyworld. He flourished there, and it was such a treat for my daughter, who has had to at time play “second banana” to his special needs. My parents saw the improvement, and promised him that if he worked hard on all his therapies this year, they would send us back in Jan 2015 (low crowds, cool weather). He has been working as hard as he can.
I come from a country that requires a visa to enter the US. (Both kids are Canadian dual citizens – their father is a Canadian – so they require no visa.) I am concerned that if I renounce BEFORE the trip, I may not be given a visa (for spite, or for whatever reason), OR I might not get it in time. Because the CLN would have to come through before I can even apply for a visa.
I find it unconscionable that my kids might not be able to go to Disney next year, simply because this stupid tax thing has popped up. Not after my son has worked so hard. How can I even BEGIN to explain that to him?
So my thought was a) file now, FBAR now, do whatever is required for compliance now. I presume that will take a few weeks/months as it is. Then b) take them to Disney in Jan as planned. Then c) renounce in Feb. My parents are willing to send us again after 2015, but i) they just won’t promise my son that, and ii) it won’t be for at least another year or two, which should hopefully be enough time to get me a visa.
Is there any reason why I can’t/shouldn’t do it this way? I will do whatever is logically best, but if we could work around Jan 2015, that would be so, so good….
http://hodgen.com/chapter-4-are-you-a-covered-expatriate/ discusses Form 8854, which I think you are referring to, Isabella.
http://www.irs.gov/instructions/i8854/index.html — you will have to certify US tax compliance for five years and the partial year of renunciation and you can do so with the latest Streamlined option (others will better be able to tell you about that). To not do so, you will be deemed by the US a “Covered Expatriate” no matter your net worth, which you also give them with Form 8854.
I don’t know what the implications would be, but you might want / need to remove yourself TEMPORARILY from you parents’ accounts. Just something to ask about — may not even be advisable as a temporary measure.
Your son does need the promised reward as part of his “therapy”. To remove that promise would be cruel and foolhardy for his progress (I think).
IsabellaG. Welcome, you are among friends. Firstly, don’t even think about any amnesty unless you very carefully evaluate the streamlined program. The original OVDI is an obination. It was meant for those who needed to avoid criminal prosecution- that’s NOT you.
For any year that you were under the income threshold you didn’t need to file tax returns. I would file going forward. Backfilling 3 yrs is not a bad idea. If nothing was owed, there are no penalties.
FBARs are another matter. You will find that they must be filed electronically. There is a pop down in the field where you explain why you are late. ” I didn’t know I had to file” appears to be acceptable for small actors. Seriously consider filing FBARS going forward only. Or for 2013 if you like.
Remember, this whole thing was meant for wealthy Americans resident in the US who moved money offshore. You are collateral damage. The likely hood that they will come after you approaches zero. The IRS is overworked and underfunded. Comply going forward, file FBARS for last year if you feel you must and then going forward. After a few yrs. (5?), you will be able to renounce.
You are able to renounce before you are compliant if you wish.
There is 1 more option. If you were to renounce and not become compliant and not file anything, there is precious little they could or would do to you.
@Calgary411:
You are quite right, it’s the 8854 I am talking about. I think I remember somewhere that you are required to sign it when renouncing.
I fully agree that not going to Disney would not be in the best interest of my son. Not when he has been working so hard just FOR THAT. So that’s why if at all possible I want to renounce after Jan. At the same time, if our banks here are going to start reporting soon, I believe I should self-report before then. Hence my thinking “comply now, renounce later”.
Do you have any ideas how the reporting works? Say I take my name off all accounts right now. When banks start reporting, do they report closed accounts, or accounts that USED to have a citizen as a signatory? Or do they only report current accounts?
@KalC:
Thank you. It does feel like I am among friends. It’s the first time I have felt like that since this nonsense started. (It’s been only about a month, but it has been The Longest Month Ever.)
Okay, so I have GOT to look into the streamlined program. Before George mentioned it, I didn’t even know it existed. Any sites you particularly recommend, or is the Magic of Google sufficient?
I only had any income from 2012. So 2012, 2013, and we are in 2014. Less than $10,000 each year (I am extrapolating for this year).
I have no problem filing FBARs for the future only. I was, however, told that for any year I file, I HAVE to have/refer to a completed FBAR in the tax return. Therefore I have to have FBARs for those years. Of course, this was said by a tax person. So who knows if that’s actually the case.
I really would like to renounce sooner rather than later, and not wait a few years. (Still after Jan 2015, though, ha ha.) Here’s why.
a) Banks here are seeming to tend towards not wanting to do business with US citizens. The compliance requirements are too onerous for them. They have hinted that once they are forced to report, they may well require US citizens (even dual citizens) to close their accounts. So I might be in a position where I live here, but I cannot have an account here. Not good.
b) I am trying to set up trusts etc for my son. To be more accurate, my parents are trying to set up a trust for him. And they want me to administer the trust in my lifetime. The people we have spoken to down here say that now that is impossible since I am a US citizen. They will have to report it as “my money”, since theoretically I will have full control over the funds, and I can take them and buy myself a yacht. If I give up citizenship, then I can do what I need to do for my son. As such I will be taxed on it as MY income.
c) My parents are not young. If I pull my name off of everything for the next x years until I renounce, if they die in the interim, it will be a mess. And the money they intended to go for my kids will be swallowed up by inheritance tax. Also, if they do not die, but become incapacitated, I will have no access to the funds to take care of THEM. Not a pretty picture.
So we are thinking that I really do need to renounce ASAP after Jan.
You refer to the “do nothing” option… “If you were to renounce and not become compliant and not file anything, there is precious little they could or would do to you.” I am intrigued, but isn’t that risky? Especially if they do report any accounts I have in between now and the time I renounce? Then won’t they get me for not filing FBARs at least?
I am not entirely risk-averse, but I am trying to be some level of cautious. I am willing to shortcut my way around a system that is patently unfair, and that is punishing me needlessly, but I do need to keep myself solvent and out of jail. I will be the primary caregiver for my son for the foreseeable future. Facing criminal action or huge tax penalties is NOT something I can deal with.
If anyone at any time sees anything wrong with my logic, for heaven’s sake let me know. At this point all I know is that I don’t know enough as yet to make the best possible decision. I have theories and possibilities, but nothing is set in stone. [ Except hopefully Disney 🙂 ]
Re. SSN
I applied for & received a U.S. passport as an adult (dual citizen, born in Canada to a U.S. mother), but was not asked for a SSN and have always assumed that I do not have one. After reading Isabella’s comment “I have an SS# – I was required to get one when I renewed my passport as an adult.”, I am wondering if I was automatically given a SSN when my mother registered me at the US consulate after my birth . . . and that the USG had the number on file when they granted me my passport. Is it possible that I got my US passport without having a SSN?
Typo above…
I wrote:
They will have to report it as “my money”, since theoretically I will have full control over the funds, and I can take them and buy myself a yacht. If I give up citizenship, then I can do what I need to do for my son. As such I will be taxed on it as MY income.
It should read:
They will have to report it as “my money”, since theoretically I will have full control over the funds, and I can take them and buy myself a yacht. As such I will be taxed on it as MY income. If I give up citizenship, then I can do what I need to do for my son.
“Then won’t they get me for not filing FBARs at least?”
You need to understand that if you haven’t filed before, then they don’t know you exist. Therefore, they can’t ‘get you’ for anything. It costs time and money to ‘get’ someone . They only have resources for whales, not minnows.
@KalC:
What I mean by them “getting me” is this series of events:
a) Local banks report accounts held by US citizens
b) Some IRS flunky sits in a cubicle and cross-checks names on bank list to see if they have FBARs filed
c) IRS flunky sees that banks say I am on x accounts that had a max balance of $y, but do not see FBARs from me.
d) IRS says “Aha! It might not be a whale, but we can make some easy money by fining her for not filing FBARs. And thanks to this bank info, we know we can get at least $y.”
It seems like an easy, quick way for them to make money. Low-hanging fruit and all that…
Is this possible? Probable? Likely? I have NO idea, but that is the scenario to which I was referring.
Isabella,
I would wait to set up a trust for your son until after your renunciation. A discretionary trust, if your country has that, takes effect when your parents die and is often used to set up appropriate funding for a family member with disability. Trusts require complex reporting for the US IRS on Forms 3520 and 3520A. If you are going to be filing going forward and then renouncing five years down the road (if it were me), I would not change your being “joint” with your parents on the accounts that are meant to take care of your son.
FBARs and tax returns go to different places — and now the FBAR is called FINCEN 114 and must be filed electronically (FINCEN = Financial Crimes Enforcement Network). The pretty much duplicative (FATCA) Form 8938 (if required) is attached to the tax return.
You do not sign a FBAR when you are renouncing. It, as well as your tax compliance, has nothing to do with your actual expatriation.
No, I don’t know how the reporting will work and it will not be the same for all countries. Banks are right now to be searching their records for US indicia in existing accounts and *may* ask specific questions when anyone opens a new account. Actual reporting starts in 2015.
@Calgary411:
I agree – there is no way I want to be on a trust for my son while a US citizen… hence why I want to renounce ASAP. Unless I see a compelling reason otherwise, I do not think I will wait years.
There was a lady on the news tonight from one of the banks. I am not sure how much to trust her, because she said “my bank has signed an agreement with the IRS”, and I am not sure they do that. The treaty is between countries, and the country makes the banks comply, as far as I know.
Anyhow, the thing is that she said that when they begin reporting info to the IRS, they have to get the US citizen to sign a consent form before they send the info to the IRS. If there is no consent, they will not send the info, but will close the account. That is news to me. Is that how it works? The banks TELL you when they are going to report you?
They are already asking questions here when you open a new account, btw…
____________
I’m just thinking out loud here, but…..
If reporting does not start until 2015, does it gain me anything to renounce BEFORE then? That way even if I do not get a CLN to give to the banks and they report me in 2015, they basically did a “false report”, since I lost my citizenship in 2014?
Because while Jan is preferable for our trip, I CAN switch it to early Dec. It will be a bit more crowded, but still cool. Not optimal, but certainly doable. Then get back here mid-Dec and basically renounce as soon as I get home.
Does that buy me ANYTHING at all?
(And thank you so much for all your help, all of you. You have no idea how good it is to be able to openly talk to someone about these things, to figure out the stupid little nuances in a friendly place. It’s like a weight has been lifted, even though I’m no closer to a decision that I was this morning!)
There probably is no IRS flunky sitting in a cubicle. They don’t have the resources., it’s all done by computer matching of what is sent in.
They will look at FUBARS after they decide to audit someone. Then they can pile up the penalties. Very very few people are audited. No one with as little income as you are talking about is audited.
Some countries have signed a model 2 IGA. In that case, the bank reports to the IRS.
Your country must have a Model 2 IGA: http://www.arthurbellcpas.com/difference-between-the-two-model-igas
You will also need to take into account how long it will take you to gain an appointment for your renunciation. There are longer and longer waiting periods at US Consulates and Embassies. If you could book an appointment for the timing that would best suit you, your plan might work out OK.
Also, even though reporting starts in 2015, I think it would include accounts back to July 1, 2014 — or whenever your bank signed up to take part in “the US Person Roundup”. Again, someone might have much better information than my assumptions.
You are doing what you need to do, Isabella, gathering information to make the decision you need to make for you and your son — so important in your situation. One step at a time — you don’t need to make that decision today. Read, read, read and ask questions here.
I’m so glad that you found this blog and that you have some of the stress taken from you just by being able to discuss this with people who understand. Know that we are not lawyers so our “advice” is that based on a lot of information we’ve gathered in the last several years — it is advice from one friend to another, with links to some “experts”. Consider the first suggestion I gave you for the point of view of a trusted professional.
Sleep better tonight!
Oh Heavens to Murgatroyd!
This thing gets more complicated every time I turn around!
Now off to research IGAs (up to now I only had IGA pegged as a supermarket!)
And yes, then off to sleep… but a better sleep than I have had in weeks.
I get that you guys aren’t professionals, but you sure are arming me with the info I need to talk to one… and I already contacted the person you mentioned in your first suggestion!
Again, a million thanks..
@IsabellaG, firstly it doesn’t matter if you renounce before or after you sort out the tax side. Similar to you I only needed to file FBAR’s as I have no income. I renounced last year and then did the necessary filing. You don’t sign any forms to do with tax at your renunciation, it’s completely separate. They may mention that you might need to sort out the tax side if you’re not compliant, but that’s all.
FBAR’s aren’t too difficult to fill in yourself. You need to find the highest figure for each account during each year so you’ll need to check through your statements. It will need converting into US dollars and you can use the exchange rate found here:
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Treasury-Department-End-of-Year-Exchange-Rates
Then it’s just a matter of filling in the personal details of everyone, the account details and amounts. You can access the new electronic form here:
http://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html
without necessarily filling it in straightaway so study it and see if you think you can complete it on your own. If you’re unsure then seek advice, either here or from a tax preparer, even if it costs money to do so.
I did my filing via the Streamlined program and used a US tax preparer as I really didn’t know what I needed to file. It cost me, but for me it was worth it, but if I’d understood the system I could have done it myself.
Yes, your bank will likely ask you to sign a W-9 form allowing them to pass any account info on to the IRS. If you refuse then the IGA agreement may see that as you being “wilfully non-compliant” and yes the account could be closed with little warning. Here in Switzerland the banks have also been asking for proof of tax compliancy by requesting copies of US tax filings or proof that you’ve entered the OVDP or Streamlined program. Some people here may say that you don’t need to file FBAR’s and they may be right. But if your bank demands more proof than just a CLN then having evidence of FBAR filing may be a good thing.
The main thing is to be able to fill in the 8854 form to declare that you’ve met all your US tax obligations so won’t be considered a “covered expatriate”. The form is here so study it as well.
http://www.irs.gov/pub/irs-pdf/i8854.pdf
Contact your US embassy/consulate and find out how long it’s taking to get an appointment to renounce, that’s your first step. I’d advise renouncing as soon as you can because if you go over into 2015 then that’s another partial year of reporting to be done. Whether it’s sooner or later you can work on sorting the tax side out at the same time. If you can’t get an appointment until a year from now then you have that time to do the tax. If they can do it quickly, then the tax can be done after the renunciation.
Take your time and don’t rush into anything. Research thoroughly and make the best decision for you. We’re all in different situations so all have different solutions. Remember always we’re here to support and help in any way we can.
@Sasha, yes I would think that is the case. If your mother registered your birth you may well have been assigned an SSN at that time. Easiest thing to do, if you want to, is check with the embassy to see if they have it on their records.
@Sasha
The current forms for both getting a new passport and renewing a passport all have a place to enter an SS number IF YOU HAVE ONE. The instructions say to use all zeros if you do not have an SS No. I don’t think is is absolutely necessary to have one, but some consulates might interpret that differently. It is an IRS requirement, and some consulates might feel that they are required to enforce it strictly, but if you claim you do not have an SS No. they are still supposed to forward the passport application. So it is not impossible that you applied for and received a passport without having an SS No.
Thank you all who responded to my post on page 123 regarding the notion of not applying for a CLN (that is, by advising the USG of my relinquishment in 1980) now. George I hope I stated it better this time.
I’m still not sure I am persuaded to do anything now although I’m still not decided. The way I see it there are two ways I can become known to them. First, if my bank knows I have US birth/ had US citizenship (they don’t) they will transmit the data to the USG via CRA (can you believe it). Second, when I cross the border they verify my Canadian passport and see my US place of birth.
I do plan on visiting the US in the future so that second one is a concern. However, practically speaking, I just don’t think there will be anything but an annoyance about that (extra questioning) unless there is something about me serious enough to actually do more than questioning. I am a middle-class person not a big fish. I will not identify myself as a USC but rather tell them that I relinquished 35 years ago with intent when I swore an oath to the Queen/Canadian gov. If they do anything more than inconvenience people with US POB in their Canadian passports, it will create a logistical nightmare at the borders and create a big political issue. Can you imagine if someone like me was detained? There would be an outrage. And there’s just too many of us. The first time anything like this happens, many people would cancel or alter plans to travel to the US, which would create a stir especially in the US tourism industry. Can’t see it.
I think someone like me would be at worst warned that I must officially obtain the CLN, and a note put into the system so perhaps no entry until it was done or at least applied for.
As you stated George, I am not a USC. I think due process would be required for me to prove it, again, unless there was something serious on my file which there isn’t unless a mistake has been made.
Another plus in holding off getting the CLN (besides the expense and inconveniece of travelling 5 hours each way to the nearest consulate) is that once the logisitics of catching all of the accidentals becomes a reality, I have to believe they will at least create unoffical rules to exempt us from all of this. For example, never worked in the US or had a Social Security number? You’re exempt. It’s just not workable if they enforce the letter of the law.
Am I naive? Please weigh in.
BreakingSad, I have tremendous empathy with your situation but I imo there is some wishful thinking in your comments. Firstly, the US routinely and daily denies entry to the US to many people and I haven´t heard of a lot of outrage to date. Secondly, if you were born in the US and don´t have a CLN then it´s pretty hard to argue that you are not a USC; sorry! Thirdly, regarding the banks, the moment of truth will come if/when you are asked to ´update our records´ by signing a W-9. Knowingly falsifying a W-9 could land you in a heap of trouble.
All the best to you!
@BreakingSad, I basically agree with bdwight’s comments. It seems that in the very near future U.S. border agents will be enforcing the requirement that U.S. citizens entering the U.S. must show a U.S. passport. Those of us who have a Canadian passport showing a U.S. place of birth will be inadmissible without a CLN. (We may still be subject to delay, harassment, and possible denial of entry if we do have a CLN.) I have obtained a CLN documenting a relinquishment in the late 1970s, and I am glad that I have it, though I admit that it was relatively easy for me to go to the consulate in Toronto, where I live.
I, too, have great sympathy for your plight and that of the several million other “U.S. persons”, dual citizens and former citizens living outside the U.S. who are being put through mental anguish over all this. Best of luck!
@BreakingSad, it’s a difficult decision for you. Another thing to consider is this – here in Switzerland as far as I know the banks will only accept a CLN as proof that you’ve renounced/relinquished. The Canadian banks may react differently, but just keep in mind that no matter how much paperwork you gather you may be missing the only one that’s acceptable.
AnonAnon,
BreakingSad’s and the stories of so many others of so-called *US Persons Abroad* are the very many reasons for the Human Rights Complaint
and
the Canadian Charter Lawsuit.
http://www.adcs-adsc.ca/ accepts all donations in support of *US Persons in Canada* and, by extension, those in other countries outside the USA.
@BreakingSad
While I like doing nothing as an option and feel that you would eventually be able to get around FATCA, the border is another thing. If you really intend on visiting the US in the future with a US birthplace in your passport then doing nothing is at best problematic. As you say, they are unlikely to “detain” you at the border, but denial of entry is much, much more arbitrary. If you’re really determined not to get a CLN, then it might be wise to have some other documents indicative of relinquished USC when you enter the US on a CA or other passport showing a US birthplace.
@BreakingSad, let me reiterate my philosophy, if you are going to travel to the USA, a CLN is likely required because they get to set the rules. But being an undocumented CLN relinquisher will probably be sufficient for FATCA.
In the alternative you may need to get an enhanced drivers license showing Canadian Citizenship to drive to the USA.
@All
One option I’d recommend people consider for Canadians with only an occasional need to travel to the USA who wish to avoid drawing attention to a US birthplace would be an enhanced driver’s license. It is issued by only four provinces but the majority of Canadians live in one of those 4: Ontario, Quebec, BC, and Manitoba. It doesn’t show place of birth–at least my US state EDL doesn’t.
It is only valid for entering the USA by land so someone who needs to fly to the USA every week to visit US clients will probably have trouble with just an EDL. But for someone living in one of the populous provinces that issue who can plan their occasional US travel so that they cross the border by land, I think it is a good document for presenting oneself as Canadian and nothing else.
@BreakingSad
I have been stopped at Customs for attempting to enter the US on a Canadian passport, about 4 years ago. That was after having flown with my Canadian passport to the US several times a year for the past 30 years! I did (sigh) get a US Passport, and (reluctantly) use it for this one purpose. I love returning to Canada with my Canadian passport proudly grasped!
You can get a Canadian passport without your country of birth written on it (http://passport.gc.ca/info/section1.aspx) but they warn you that some other countries may not accept the passport without that information. I don’t believe the US requires that information to be recorded, but I’m not sure.