Renunciation and Relinquishment of United States Citizenship: Discussion thread (Ask your questions) Part Two

10,433 thoughts on “Renunciation and Relinquishment of United States Citizenship: Discussion thread (Ask your questions) Part Two”

1. 
   Lost-in-London says
   December 12, 2012 at 4:48 pm
   Thanks to all the well-wishers!!

   I had my relinquishment appointment in Toronto on Monday. Despite showing up early, I still waited almost an hour and a half. Despite that, all seems to have gone well.

   They were indeed very pleasant and did not in any way try to give me a hard time. I had the completed forms 4079 and 4081 in hand, in addition to a personal declaration, my Canadian passport, citizenship card, commemorative citizenship certificate, and drivers license; the latter was not required. After the long wait, the signing (by me) and countersigning (by the vice consul) took less than 10 minutes; everything now goes to Washington for processing.

   According to the vice consul, the long waits (6 to 8 months this summer) have been “reduced significantly”; we’ll see how long it takes to get my CLN. I was also asked to fill out a personal contact form for when the CLN is granted; it appears they will email/phone me when it comes in and I can have it mailed to myself in London as opposed to making another trip to the consulate.

   ….on an otherwise gray day the sun came out briefly as I made my way across the cobbles in front of Osgoode Hall on my way back to my car.
   

   Well, exactly 6 months to the day that I went for the above cited interview in Toronto, I received a phone call yesterday that my request for the CLN has been “accepted and approved” !!
   The consular office called to see whether I’d like to pick up my CLN in person or have it mailed to my home; I elected to have it mailed as I really don’t relish the thought of yet another trip to Toronto.
   ….having said that though, I’m waiting with bated breath to actually hold it in my hands and confirm that it’s backdated as requested, etc.

   More updates to follow.

2. Congratulations Lost-in-London! Good news indeed. In just a few more days it’ll be in your possession and you can show the world you’re now an “ex” along with the rest of us.

3. Wow, six months. Here’s hoping they received a batch, and mine is in there from my renunciation two months ago. Chances are pretty slim, I think.

4. Tropical MBA — expat blog from Thailand:

   “Could Renouncing US Citizenship become Business as Usual?”

   http://www.tropicalmba.com/renouncing-usa-citizenship/

5. Just found this site, very nice. I’ve been in NZ for 13yrs now (NZ citizen for 7yrs or so), married a kiwi, have a 10yr old kiwi daughter. I have no intention of ever returning to the US. I have intended to renounce many times over the years but hectic life has not helped. I finally want to but find I can’t renounce properly until I am caught up on filings. I have not filed in 5yrs and and probably missed a couple fbars, I can only cringe to think how screwed I might be? sigh. I got an online expat tax place, it’s looking like $350 a year to file. I would do it myself but have no clue what the hell I am doing and don’t want to make matters worse. We don’t have much money, I never make over 80k so maybe I can get compliant without too much grief, but if they fine me 10k a year then what can I do? I just want to be done with the US and renounced. Has anyone been in a similar situation? How screwed am I? I knew a guy from another country here who was also a NZ citizen you know how he renounced? He said all he had to do was vote in NZ once and that was it, he also had no tax obligations to worry about. I feel what the US does to some of us is akin to a violation of our human rights. Grr…

6. Welcome pukekonz, glad that you’ve found us.

   I have to say your friend was lucky, but even taking out NZ citizenship may have been enough for his birth country. Unfortunately, that’s no longer the case for the US, although it would have been back in the 50s and 60s.

   For you, well the question is are you ever likely to travel to the US again for any reason? If not, then you could renounce, do the necessary filing and wait to see if you need to pay tax or get fined. However, there’s nothing the IRS can do to make you pay up if you have no assets in the US and never return to the country. I’m not advocating doing this mind; it might cause the US government to rescind your CLN in future.

   Have you ever served in the NZ military or held government office. Do you still have a US passport. Did you apply for NW citizenship with the intention of losing your US one? If so you might be able to relinquish. Here are the conditions under which relinquishment might be possible:

   (a) A person who is a national of the United States whether by birth or naturalization, shall lose his nationality by voluntarily performing any of the following acts with the intention of relinquishing United States nationality—

   (1) obtaining naturalization in a foreign state upon his own application or upon an application filed by a duly authorized agent, after having attained the age of eighteen years; or

   (2) taking an oath or making an affirmation or other formal declaration of allegiance to a foreign state or a political subdivision thereof, after having attained the age of eighteen years; or

   (3) entering, or serving in, the armed forces of a foreign state if

   (A) such armed forces are engaged in hostilities against the United States, or

   (B) such persons serve as a commissioned or non-commissioned officer; or

   (4)

   (A) accepting, serving in, or performing the duties of any office, post, or employment under the government of a foreign state or a political subdivision thereof, after attaining the age of eighteen years if he has or acquires the nationality of such foreign state; or

   (B) accepting, serving in, or performing the duties of any office, post, or employment under the government of a foreign state or a political subdivision thereof, after attaining the age of eighteen years for which office, post, or employment an oath, affirmation, or declaration of allegiance is required; or

   (5) making a formal renunciation of nationality before a diplomatic or consular officer of the United States in a foreign state, in such form as may be prescribed by the Secretary of State; or

   (6) making in the United States a formal written renunciation of nationality in such form as may be prescribed by, and before such officer as may be designated by, the Attorney General, whenever the United States shall be in a state of war and the Attorney General shall approve such renunciation as not contrary to the interests of national defense; or

   (7) committing any act of treason against, or attempting by force to overthrow, or bearing arms against, the United States, violating or conspiring to violate any of the provisions of section 2383 of title 18, or willfully performing any act in violation of section 2385 of title 18, or violating section 2384 of title 18 by engaging in a conspiracy to overthrow, put down, or to destroy by force the Government of the United States, or to levy war against them, if and when he is convicted thereof by a court martial or by a court of competent jurisdiction.

   (b) Whenever the loss of United States nationality is put in issue in any action or proceeding commenced on or after September 26, 1961 under, or by virtue of, the provisions of this chapter or any other Act, the burden shall be upon the person or party claiming that such loss occurred, to establish such claim by a preponderance of the evidence. Any person who commits or performs, or who has committed or performed, any act of expatriation under the provisions of this chapter or any other Act shall be presumed to have done so voluntarily, but such presumption may be rebutted upon a showing, by a preponderance of the evidence, that the act or acts committed or performed were not done voluntarily.

7. pukekonz Renouncing is not dependant on being tax compliant. If you choose, you can renounce or even better you may have relinquished, and not bother with the tax filings. Why play by their rules?

8. I don’t agree with medea F that they might rescind your CLN.

9. @pukekonz –

   If you haven’t done anything since becoming a NZ citizen to imply a claim to US citizenship, you may be able to relinquish from your NZ naturalization date, as Medea said. Which would get you off the hook for all those tax filings.

10. @KalC, I did say in future and I wouldn’t put it past them to make the CLN effective only once you’ve paid any owed tax. After all, they say you can’t renounce for tax purposes. If you don’t file and pay as required they could argue that you tried to renounce for tax purposes and therefore the renunciation is invalid. I think it depends on how many take the final step and how threatened the bods in the government feel by that. We already know that some want to make us pay forever, even if we have renounced. Making the renunciation conditional on paying any owed tax is a small step to take, especially as they’re also considering making getting your new passport conditional on being up to date on your taxes.

11. I would like to clarify that relinquishing under s. (1)-(4) doesn’t in itself affect whether or not one has IRS obligation. The issue is if the relinquishing act, upon which the CLN is based, had taken place before today’s law was in effect.

    There’s some important information about that in these posts:

    Michael Miller paper on the Exit Tax – Applies prospectively
    http://isaacbrocksociety.ca/2013/03/05/michael-miller-paper-on-the-exit-tax-applies-propsectively/

    Pre-1995 Relinquishers and the IRS: Three Recent Legal Opinions
    http://isaacbrocksociety.ca/2013/02/16/pre-1995-relinquishers-and-the-irs-three-recent-legal-opinions/

    Please read this post if your actual expatriation date is before 2004 (Updated)
    http://isaacbrocksociety.ca/2012/06/19/if-your-expatriation-date-is-before-2004-the-rules-are-different/

12. Hi Guys, well I am looking into the relinquishing aspect but not sure if it will work. I became a NZ citizen April 2008, even did the ceremony pledging allegiance to NZ in front of many people. At the time had I known about relinquishment I would have made contact and told the embassy I no longer want to be US citizen. So are you saying I might be able to now approach the embassy and say based on my NZ citizenship and oath in 2008 I relinquish? I have no ties to the US whatsoever other than a paypal account that doesn’t do much but I could close that. My US passport expired a couple years ago. My last time in the US was 4 yrs ago to visit my parents and I even entered on my NZ passport. If I try renunciation is there any official documentation that states I have lost my citizenship? I am worried I will renunciate and then IRS will come back to haunt me. The below is not very clear to me:

    —————————————————
    Loss of Nationality and Taxation

    P.L. 104-191 contains changes in the taxation of U.S. citizens who renounce or otherwise lose U.S. citizenship. In general, any person who lost U.S. citizenship within 10 years immediately preceding the close of the taxable year, whose principle purpose in losing citizenship was to avoid taxation, will be subject to continued taxation.

    See …

    Internal Revenue Service Instructions for Completion of Form 8854
    Internal Revenue Service Guidance on Expatriation Reporting Requirements
    Internal Revenue Service Expatriation Tax

    Copies of approved Certificates of Loss of Nationality are provided by the Department of State to the Internal Revenue Service pursuant to P.L. 104-191. Questions regarding United States taxation consequences upon loss of U.S. nationality should be addressed to the U.S. Internal Revenue Service.
    ————————————————-

    I am not renunciating to avoid taxes, I am renunciating because my life and my family are in NZ and that is that, I only want to be citizen of one country NZ. Thanks for the responses and if renunciation is an option for me what is the next step, do I contact the consulate and then?… Thanks!

13. Hi Pukekonz,

    “If I try renunciation is there any official documentation that states I have lost my citizenship?”

    The US govt provides a document called a Certificate of Loss of Nationality, which shows they officially recognise that you terminated your US citizenship, literally “expatriated him/herself” on such-and-such-date.

    You can obtain a CLN either by renouncing or if you have relinquished your citizenship by another means set out in s. 349 of the Immigration and Nationalities Act, as Medea has posted above.

    If you renounce, your citizenship is terminated the day you renounce at the consulate (say, 2013)

    From what you’ve written, it sounds like you relinquished your citizenship upon becoming a citizen of New Zealand in 2008. If that’s the case, to have it officially recognised by the US govt, you still have to fill out forms and sign them at a consulate (say, 2013) but your CLN will show that your citizenship terminated in 2008.

    If you took New Zealand citizenship voluntarily with the intention of relinquishing your US citizenship by that act in 2008 and your behaviour since then has been consistent with that of a NON-US citizen, you expatriated yourself in 2008. It’s based on the balance of probabilities. The PayPal account doesn’t matter. It’s not indicative of citizenship (as say voting would be).

    There’s 7 ways one can relinquish one’s citizenship. The most common way is Renunciation (s.(5)). The second most common way is to relinquish by naturalising with intent (s.(1)) which has gotten shorthanded to “relinquishing.” So, the terminology can be confusing.

    We have an article here Renunciation and Relinquishment: What are the Differences? Is there a Difference?

    I’d also suggest looking at the Consulate Report Directory. We have a few background articles in it, links to the Dept of State forms, including the questionnaire, and close to 120 pages of people’s stories of their experiences from booking their consulate meeting to what their meeting was like to getting their CLNs.

    You mention that you’re not doing this to avoid taxes. You mention that it’s “…because my life and my family are in NZ and that is that, I only want to be citizen of one country NZ.” That sounds like how I felt about Canada in 1979 and what I wrote on my questionnaire form when I applied for my CLN in 2012 (never even heard of a CLN before then or I would have applied right away in ’79).

    I can’t see there’s any way they could consider, and more importantly prove, a person who’s life is completely outside the US expatriated for “tax purposes.”

    I’m not too up on the tax side of things, but that quote from PL 104-191 sounds like the Reed Amendment that they’ve never gone after anyone with (correct me if I’m wrong) and, IMHO, they sure won’t start by going after little people with no assets in or connection to the US (they’d need to get a judgement from a US court, and then have the foreign court ratify it, something that is even more unlikely, so they just wouldn’t bother; the cost-benefit analysis isn’t worth it.)

14. Pacifica777 thanks! So do you achieve getting your CLN? Is this how you went about it. It sounds like my next step is to contact my consulate and state I want a CLN based on my citizenship and oath to NZ back in 2008. If that is all it takes I would be pretty happy to say the least.

15. Hi Pukekonz,

    Glad to be of help! First thing I suggest is line up your ducks before contacting the consulate. Take a look at the DS-4079 questionnaire, check out the Consulate Report Directory, (there’s quite a few s. (1) relinquishment experiences there, particularly in the Canada section as we have a very high proportion of relinquishers, but some in other countries as well) and make sure you have your required documents, before contacting the consulate. Depending where you live, it takes from a few weeks to a few months to get an appointment and the CLN comes in the mail a few months after that.

16. pukekonz. That’s all it takes.

    They will then tell you that you need to contact the IRS. Whether you do or not is up to you.

    There is a ton of detail here

    http://web.archive.org/web/20120726052834/http:/www.renunciationguide.com/

17. Thanks so much guys. KalC you say after I get CLN they’ll ask me to contact the IRS, see this is what worrries me as I am not sure what the implications are if I choose not to. Say 5yrs from now I’m asked to attend a family funeral in the US, or 20yrs from now I inherit money from an America (who knows). Does a CLN remove you from the crosshairs? I have seen statements about renouncing at that renouncing does not absolve you from IRS issues (not that I have any, I make under the threshold and don’t have much in assets). Hmm..

18. PK Do your due diligence. It is unlikely they will have the resources to bother a Kiwi.

19. @If one is worried or feels that one may need to visit the US, then it is best to do what is necessary to be in good standing with the IRS. I forgot the exact figures, but I believe that the risk of an audit is 3 years and that it takes about 10 years to be become completely liberated from the US System.

20. Swisspony, in that case I am back to square one and might have to bite the bullet, get tax compliant and renounce. I guess once tax compliant then I renunciate instead of renounce not sure about that yet or do I just go the whole hog and renounce. Or- maybe I renunciate, then work with the IRS? But that could leave me open to issues trying to break ties before becoming tax compliant. I will go through and read the case studies of others who have renunciated.

21. pukekonz (what a name) SwissPinoy exaggerates the risks. There is no evidence so far that the IRS talks to US border protection. The risk of an audit is nil if you don’t file and they don’t know you exist. do some homework. I’ve had my say. Cheers.

22. @pukekonz, if you qualify for a relinquishment, then do so by all means. Otherwise renounce.

    According to the GAO, a renounced individual is at greater risk if they are a first-time FBAR filer than if they filed nothing at all. I sent in one FBAR for 2011, and now I regret doing so since that puts me into that category of being a “first-time FBAR filer”. Similar could apply to taxes, where an audit cannot take place when no information is available to provide reason for such.

    So, it’s kind of a catch-22. I’d say, go to TurboTax online, punch in the figures for the latest year, print it out and do the same for the other 4 years. Then, mail that to the IRS and renounce or relinquish afterwards. Since you are renouncing, I don’t know if it is good to file FBAR or not. Yet, maybe the least risk is to send in the 5 years of FBARS while listing any interest on the schedules.

23. @KalC, I was thinking more along the lines that if one chooses to not be tax-compliant, that one should then avoid any travel to or over the US for safety reasons. It is certainly possible that nothing will happen if one travels to the US, but it would still be best to avoid the US to avoid the risk of having a problem.

24. I’m not sure you’d be able to relinquish pukekonz. NZ has always allowed dual citizenship and the US has also in recent years. What you’d need to prove is that you intended to relinquish your US citizenship, i.e. you’ve never filed US taxes since, never applied for or used a US passport since, never voted in a US election, that sort of thing. If you haven’t done these things then it might be possible to argue that you “intended to relinquish” by taking the oath to NZ. Here is a blog on the subject:

    http://isaacbrocksociety.ca/2011/12/12/relinquish-dont-renounce-if-you-can/

    Whether you relinquish or renounce you will be issued with a CLN. No, it does not absolve you which is why you should do the necessary filing regardless of how your lose your citizenship. As you have filed before it shouldn’t raise too much notice when you complete the necessary back filing. And no, a CLN doesn’t remove you from the cross-hairs, only being compliant will do that. It doesn’t matter whether you file before or after you renounce, so long as you’re tax compliant by the time you file your final 8854 form which is done a year after you’ve given up your citizenship. I recently renounced and am just getting my filing obligations done at present (never filed before). I will need to do one last filing next year along with the 8854 and, providing I don’t owe or have paid any outstanding tax, I will be tax compliant.

    What you need to check with the embassy in NZ is how many visits you would need to make for the process. If you relinquish it should only be one as you are effectively telling them about something that has already happened. If you renounce then some embassies insist on two visits some months apart; this is supposed to give you time to reflect on the seriousness of the situation so they can be sure that you really want to do this. Unfortunately some embassies require two visits for relinquishments as well, which is why you need to check. Obviously if you can relinquish with only one visit the whole time for the process is shortened.

    Your CLN is vital as it proves to banks, border control, etc, that you have given up your US citizenship. Particularly if you have a US birthplace shown in your NZ passport questions may be asked at the US border about why you aren’t travelling with a US passport as required by US law. Having a copy of your CLN with you shows the officials that you are no longer a citizenship and don’t need the blue book.

    I can’t see any reports of anyone visiting the NZ embassy to give up their citizenship, but there are a couple from Australia listed here:

    http://isaacbrocksociety.ca/wp-content/uploads/2013/05/Consulate-Report-Directory-2013.05.12.pdf

    as well as many others so have a read and get a feel for how things have gone for others relinquishing/renouncing.

    Finally, no the Reed Amendment has never been used. The general consensus seems to be that it’s unworkable and unenforceable, although a few consular officials have used it “unofficially and improperly” to deny a visa to ex-US citizens. But proving that you relinquished/renouced for tax purposes is very difficult, especially if you’ve done the necessary filing to become tax compliant.

25. Thanks Medea, very helpful! You stated:

    What you’d need to prove is that you intended to relinquish your US citizenship, i.e. you’ve never filed US taxes since, never applied for or used a US passport since, never voted in a US election, that sort of thing.

    i haven’t filed taxes since
    haven’t applied for passport since
    haven’t voted since

    So I guess that is something. Last time I visited the US 4 yrs ago to see family I even entered on my NZ passport, I didn’t know at the time I was supposed to use US and no one said anything.

    I have written my consular general here and stated I wish to relinquish based on my citizenship and oath ceremony in 2008. I supplied some details to make a case that I have not had ties with the US since and I should have relinquished after the ceremony but did not understand the logistics at the time. I suppose I will try to obtain the relinquish then work on my tax filings similar to what you are doing. It’s all so ridiculous sigh.

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