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
@Barbara
yeah, I hate to say it, but it appears there’s no value in coming forward, declaring, or even renouncing unless you can renounce with one of the known loopholes to avoid taxation. and even if you submit for a CLN under a loophole, you can be denied and will be left “outed” and free game. so even then it may not even be worth it for those who don’t even have any taxes to do!
many of us are not on any registry in the U.S whatsoever. the only thing that ties many of us is a birth certificate, which if we lost, this would all be over forever with 0% of reprisal.
am I wrong?
CaptainCanuck, I guess you are pretty wrong. If your (non-U.S.) passport/ID card shows a place of birth in the U.S. you will be subject to interrogation next time you open a bank account anywhere in the western world due to FATCA.They will ask for your U.S. SSN (Social Security Number) because they are requested to deliver your data to the IRS every year. If you are born in the U.S. you can’t deny your U.S. Citizenship – unless you have a CLN… If the balance of all of your accounts at one given bank is >= $50.000 last year and your place of birth is known to the bank, you are already on file. Your data is ready to be send to the IRS latest this September.
Even if you don’t have a SSN or you won’t tell the bank, the bank will send your account information to the IRS anyway, with your date of birth and your current address. And then you are on registry in the U.S. for sure.
@CaptainCanuck,
Birth in USA brands you as USA’s person. Even if your dog eats your birth certificate, your birth on the plantation still shows up on your non-US passport.
Of course this does not mean you cannot lie to the nice lady at the bank if necessary – tell her about the incident with the dog, and tell her that you are deathly afraid of airplanes so don’t have a passport. If you are lucky enough to live in a country such as Canada, that allows you to open bank accounts without having to present a passport, then this is still a viable option for many of USA’s persons; a way to weather the storm until cooler heads prevail and this whole mess becomes history.
@Dreamer, unfortunately your ideas simply wouldn’t work. If the bank suspects/knows that you are an American then they will insist that you present them with either a CLN or some other document as outlined in the IGA to prove otherwise. If you can’t then the bank will treat you as a US citizen.
“Notwithstanding a finding of U.S. indicia under subparagraph B(1) of this section, a Reporting Canadian Financial Institution is not required to treat an account as a U.S. Reportable Account if:
a) Where the Account Holder information unambiguously indicates a U.S. place of birth, the Reporting Canadian Financial Institution obtains, or has previously reviewed and maintains a record of:
(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);
(2) A non-U.S. passport or other government-issued identification evidencing the Account Holder’s citizenship or nationality in a country other than the United States; and
(3) A copy of the Account Holder’s Certificate of Loss of Nationality of the United States or a reasonable explanation of:
(a) The reason the Account Holder does not have such a certificate despite relinquishing U.S. citizenship; or
(b) The reason the Account Holder did not obtain U.S. citizenship at birth.”
https://www.fin.gc.ca/treaties-conventions/pdf/FATCA-eng.pdf
MedeaFleeceStealer re: ” If the bank suspects/knows that you are an American then they will insist that you present them with either a CLN or some other document as outlined in the IGA to prove otherwise. If you can’t then the bank will treat you as a US citizen.”
Then don’t give them any reason to suspect anything. Upon account opening, or if there is a mass sending out of ‘are you a US person’ letters, keep your dirty little secret, a secret. Disclaimer – this will only work in countries like Canada, where a passport is not a requirement for opening an account.
Unfortunately, many of us have shown our passports to a bank. They may even have mine. Problem is, I’m not sure how do we find out. And so, for those of us who are unsure, filing for a CLN is useful.
But, I’m also weighing the opportunity cost. Is it cheaper/better to be “caught” first and just fight it? Filing your taxes, you know you’re going to pay.
I don’t see it as being “caught” because the rule to ship us off in trains to tax camps seems unlawful. I also remember what happened the last time they said the train isn’t going anywhere bad.
re: $50,000 rule
Canada is not supposed to report our RRSP to U.S. So, they would only be counting whats in our cash accounts right? So, a protective measure (and one that is good for you anyway), is to put all your money into your TFSA & RRSP and tell them to go to hell.
http://www.cba.ca/en/consumer-information/40-banking-basics/597-fatca-and-the-canada-us-intergovernmental-agreement-iga-information-for-clients-
The following registered plans are exempt from reporting:
Registered Retirement Savings Plans (RRSPs)
Tax Free Savings Accounts (TFSAs)
CaptainCanuck re: “Unfortunately, many of us have shown our passports to a bank ”
There is a difference between showing a passport, and the bank maintaining a record of what was shown.
My understanding is that there are pretty strict laws/rules re: what the bank can keep on file regarding your personal data so as to minimize identity theft. I remember the nice lady at the bank telling me one time, that although they may take photocopies of your ID for various reasons, they have to destroy those paper copies after a very short time period.
Of course FATCA changes things, but point being that even if you used a passport or birth certificate in the past to open an account pre-FATCA, the bank will not have copies of these, and will likely have no record of your US birthplace.
If you think your bank has record of your US birthplace, perhaps consider moving to a different financial institution, where you will NOT use a passport or birth certificate as ID at time of account opening.
Captain Canuck. You raise all sorts of possibilities. Here are some more.
Deal with a non reporting credit union. If you ‘re not sure if your bank has your passport info, change banks. Transfer your non registered assets to your non-outed spouse. Adopt the attitude ‘ if my bank reports that I have an account- so what?’ If you get a note from the IRS return to sender . Or answer the note with garbage info. As in ‘ how can my bank account down the street be foreign?’ You could keep that going for years. Remember, they can’t collect anything in Canada.
Here is another: split your assets between multiple banks/CUs, not because you are a tax cheat who is ‘structuring’ but because you feel it is safer to keep your eggs in multiple baskets in case of bank insolvency. And on and on. Be happy we live in Canada, and can beat the rigged game longer than USA’s persons living elsewhere can.
Of course, none of these methods of delaying detection negate the fact that FATCA must go and winning the Canadian lawsuit is key in setting the dominoes in motion worldwide.
I like to throw in these reminders now and then…
The $50,000 reporting threshold is only an _option_ (in Canada, at least). Each bank can choose to use this threshold or not (and report all balances).
Dealing with a non-reporting credit union is safe and legal. The are provincial ones such as VanCity in BC and some in Ontario, and online CUs such as Achieva, AcceleRate and Implicity. I think there is a thread with a list here somewhere.
Refusing to cooperate or lying to a bank in Canada regarding FATCA is breaking Canadian law, not US law, thanks to the IGA we signed.
@Dreamer
And thank goodness we live in a country where our banking info is still somewhat safe from theft, corruption and terrorists (that is if you don’t include the US).
@Dual Citizen/Germany, “If you are born in the U.S. you can’t deny your U.S. Citizenship – unless you have a CLN…”
If you have committed a relinquishing act under 8 US Code at anytime you absolutely must NOT misrepresent yourself as a US Citizen!!!
A CLN does NOT make you not a US Citizen, its the relinquishing act itself. If you relinquished but do not have a CLN you MUST deny being a US Citizen because you are not a US Citizen.
If you are SOLELY a expat US Citizen then you are up the creek.
It is now very wise for anyone who has relinquished to document their relinquishment one way or another. This could include a CLN, it could include your Certificate of Citizenship from _______, it could be a sworn statement before a lawyer. The IGA does provide for a reasonable explanation and in fact the Netherlands have actually gotten very good on this……
Further some that have relinquished do have drivers licenses, other government ID and even passports that either have no place of birth or the place of birth could be in the USA or could be in Timbuktu.
@George
There’s been some discussion around the ability to provide a record that one was allowed to enter the US under a foreign passport even though the US expressly forbids a US citizen from entering the US on any passport other than US. If one were to provide to the bank a record of entry into the US plus the State Department’s web link to its statement about needing a US passport to enter, do you think the bank would accept that as a reasonable explanation that the US doesn’t recognize that individual as a US citizen? I know it’s a bit of a stretch, but if the bank’s willing to give the customer the benefit of the doubt…
Sorry to be a nag, but can I repeat my question (lost at the bottom of the last page): Has anyone here who has renounced, filed all the forms, received CLN, then been audited by the IRS afterward? If anyone has personal experience with this, it would help me to know. In my case, an oversight (an unreported account that has no US indicia whatsoever), for which I’ve never been challenged or audited, would be so expensive to rectify to be fully FBAR compliant, that I’m considering renouncing without fixing it, in the hope that it won’t be found out, just as it hasn’t been for the past many years.
I’m NOT asking for advice, only actual evidence that one is at high risk of an audit after the whole thing is through.
@Bubblebustin Proving to the bank you entered in the US on a non-US passport won’t be very helpful if that non-US passport (which in this scenario presumably you’d need to show to the bank) shows a US birthplace.
Canada will, upon your request, issue you a passport (if you are a Canadian citizen) that shows no birthplace at all, but they also will warn you that there are a dozen or more countries around the world which won’t admit into the country anyone whose passport doesn’t show their birthplace, or who after being grilled in secondary screening can’t prove where their birthplace is. The US is one of those countries, so if you have any need or desire to cross into the US you’ll need a passport and it needs to have your birthplace printed on it. (I checked this out with Passport Canada in Ottawa on behalf of someone else a while ago, and that’s what I was told by Passport Canada.)
Too much of a stretch I’m afraid.
As an aside: it is my impression that most FIs in Canada aren’t going to go on a witch hunt when you open your account with them. As I reported on another thread, maybe at Sandbox, when I converted my RRSP to my RRIF my FI asked me to update their “Know Your Client” form. I was asked “are you a US citizen or a US resident for US tax purposes?” I truthfully answered No to both, but never needed to show my CLN (a copy of which I had with me in a pocket) and was never asked where I was born. Easy peasy, no muss no fuss, the agent didn’t pursue the issue and I sure didn’t either — and they correctly have me down as a Canadian citizen and they have no US indicia on me AFAIK. The FI guy was just covering his butt with the minimum effort; he asked a question, I answered and signed the form saying my information was complete and truthful. (If it isn’t and they find out, they could probably sue you in court for any damages that result to them, or have you charged with uttering a false document which is a criminal offence, but I’ll leave it to the gentle reader to decide what the risks are under their own scenarios and what their risk tolerance is.) If you don’t consider yourself to be a US citizen or a US resident for US tax purposes and are prepared to sign/swear to that, I doubt many FI employees at the working level are going to push or dig, unless they actually have an “indicia” on file that rebuts what you say. But that’s just my opinion based on a limited number of observations.
I’m not advising anyone to do anything; I’m just reporting what my experience and impressions have been. Draw your own conclusions and decisions as you see fit in your own situation.
… and BTW my FI wanted current photo ID for their file on me, so I let them copy my Ontario Driver’s License (which doesn’t show a birthplace, only date of birth) and that was acceptable to them. I don’t think FIs in Canada are legally allowed to require a passport for identification on opening account, though they will accept one if it’s offered. They might include “your passport” in a list of acceptable ID (legally they aren’t supposed to do that, but I had that happen to me once when I was cashing a bank draft) but they can’t require a passport and will always take a driver’s license if it has your photo on it, which I think they all do in Canada. So no need to bring your passport to your FI when opening an account nor when updating the Know Your Client form (investment firms generally want to do the update at least every two years, in my experience, so don’t get paranoid if they ask for an update this year and you haven’t done one in a while).
@ Barbara
Sorry it took me so long to find this but in answer to your question about being audited after a CLN … the sad answer is YES, it happened to Swanee, post-renunciation but pre-CLN arrival. However Swanee was in OVDI so that probably had a lot to do with it. Petros was questioned about his final 1040 but not the fact that he never filed FBARs (as far as I know).
http://isaacbrocksociety.ca/2013/09/19/question/
Sorry, I meant to give the direct link to Swanee’s comment …
http://isaacbrocksociety.ca/2013/09/19/question/comment-page-8/#comment-5608428
EmBee and Barbara. There is no comparison between OVDI and what Barbara is asking. Just Me’s experience tells us that OVDI was like the inquisition. Barbara -don’t hold your breath. I doubt anyone will come forward with an answer one way or the other.
@Dreamer, @CaptainCanuck
Any “tricks” to avoid revealing “US person” status may work in Canada (at present, who knows what the future will bring), but they are quite unlikely to work anywhere else. They certainly wouldn’t work here in Germany. Here you must present a passport or ID with place of birth. If you have a US place of birth, nothing less than a CLN will free you from “US person” status. Period.
@ All
As noted, this (fighting back by not complying / hiding ID) doesn’t work in some countries. And even in Canada, some of us may have no choice, as they already have flagged themselves to the IRS in some way.
Hopefully we fight this down and it gets abolished so everyone has freedom. Right now they are hunting people down like Terrorists and that’s not right. Especially if you are American, this is making people not want to be American at all. The spirit of the law is Un-American.
Hopefully when Obama’s gone, this will be gone. There is evidence of this being a possibility.
@Barbara, I understand that it is rare to be audited post-renunciation if below the $ 2 million asset level and ‘uncovered’. Your dilemma is that you could potentially get into huge trouble if your undeclared ‘foreign’ account was ever subsequently discovered. I would consider it risky to certify five years full compliance on 8854 if you have knowingly not corrected the previous years’ FBARS.
There is however a school of thought that FBAR compliance is not the same as tax compliance when answering about certifying five years tax compliance. This isn’t advice but perhaps the most sensible thing would be to just correctly declare the missing account on FBAR going forward, especially if its maximum balance and income were low (under $10,000).
I do agree though that it looks potentially more willful if someone has already been filing FBARS and missing out accounts or not declaring all income on a tax return.
I suffered a huge degree of fear and uncertainty when I made a quiet disclosure several years ago pertaining to under-reported investment income on my earlier tax returns. I was terrified that the IRS would deem me willful since I’d already been filing tax returns for many years….It seems to me far easier to feign ignorance of tax responsibilities if one has never filed at all.
I hadn’t known about FBARS either so it could have looked as though I was being willfully blind. We don’t have to declare ISA income on our UK tax returns so naturally assumed that the tax treaty was protecting me from double taxation so assumedint was not necessary to declare this income on the US tax return or worry unduly about FBAR. …and to top it off, most of my investments were in the dreaded PFIC s so wound up with a five – figure tax bill to the US.
The whole thing was the scariest situation I’ve ever been in, especially as was afraid I’d be forced into OVDI and wiped out. Thankfully though, apart from some minor tax adjustments, it’s been four years and have not been hit with either nasty FBAR fines or PFIC audits.
I was, however, denied my foreign earned income exclusion in my final tax return so wound up having a few hundred dollars taken from my final refund. I didn’t think it was worth contesting it because the accounting fees would have been far higher plus was concerned that it might increase the risks of the IRS opening up nasty audits on my still – open earlier years involving the PFICS.
Some of these amended tax returns were extended to six rather than three year statutes of limitations due to the degree of corrected income reported. I also worry that they could even now still contest a more recent year that involved PFICS because the computations were so complex and open to interpretation. I thus won’t feel fully safe for at least another three or four years though a reasonably optimistic that I will have managed a clean break; so I am quite optimistic for you too, especially if the amounts involved are modest and you don’t still have substantial assets located within the US itself. It helps to not be a low-hanging fruit!
Perhaps you’d be wise to seek legal counselling, such as from John Richardson.
Monalisa, thank you for your story. That’s exactly what I wanted to know. My husband and I have more or less decided to wait for the Senate Finance Committee report, then if, as we expect, there are no positive developments regarding FATCA, FBARs or CBT, we will begin the process of naturalization where we live, in a country that requires us to renounce prior citizenship to complete the process. Even if we start quiet disclosure going forward this year, we will not officially be FBAR compliant for six years by the time we renounce, which is what makes me nervous. I will take your suggestion and seek legal counseling, though I expect I’ll be advised to go for Streamlining, which opens us to accusations of willful noncompliance for the same reasons you stated.
Man, I’m starting to sympathize with those who like to fling Nazi metaphors. I feel like those individuals whose liberty depended upon forged travel passes.
@Bubbles..”a record that one was allowed to enter the US under a foreign passport even though the US expressly forbids a US citizen from entering the US on any passport”
Thats absolutely brilliant thinking, a tip of the hat. Reasonable explanation is not defined but your approach would be a reasonable explanation as it shows that you do not consider yourself a USC and the USG recognized you at that.
I do not have a CLN but I have other USG letters directed specifically to me that clearly state and affirm I relinquished my USC and was no longer a USC. Whilst my passport does not have an unambiguous US place of birth your passport stamp defense is a nice backup if ever needed, thank you.
@Schubert, “Proving to the bank you entered in the US on a non-US passport won’t be very helpful if that non-US passport (which in this scenario presumably you’d need to show to the bank) shows a US birthplace.”
The concept Bubbles has created is the fail safe if you have been outed already.