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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

 

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

  1. One thing BSandford hasn’t mentioned here but has talked with me about – he has filed 5 or 7 years of tax returns. I presumed he meant recently but don’t know for sure. So I think that would explain a bit more, why he feels he is ‘on the radar.” Not implying anything here, just passing it on. Not covered.

    I have seen some pretty unusual cases (at least from my understanding) of relinquishment via 349(a)(4) be accepted. What is the date of the employment?

  2. Re BSanford. What possessed him to file? I imagine he got lousy advice from a compliance condor. He still has the option of doing nothing further.

  4. @Tricia Moon/BSanford, then we need to know when he filed them. If it was before he did his government service when he may still be able to go for a relinquishment and save the $2,350 fee. If it was done recently/after taking up the government job though then a relinquishment wouldn’t be possible and he’d have to go for a renunciation.

  5. I have a question about my defined benefit pension plan in trying to determine my net worth.
    I have determined the present value, but realized that I cannot access or take out the principle. It is locked in. Do I still have to include this in the determination of my net worth?

  6. @Mike Shepherd

    My understanding is that you do indeed need to include the PV of your DBP in your net worth determination. Hopefully, that’s not pushing you above the magic $2 million threshold. Even if it is, there may be remedies available (more info would be needed).

  7. Mike Shepherd,

    Yes. Ridiculous, isn’t it. About twenty years of pension not yet collected has to go on your 8854 net worth statement as you prove to the US that you have complied with requisite number of years of US taxes.

    Welcome and good luck.

  10. Mike,

    Based on what was submitted for my 8854 and reviewed and sent by Moody’s Gartner…

    Canadian Pension – OAS, GIS, CPP? NOT APPLICABLE (I think)

    vs

    Your Employer’s Defined Benefit Pension? APPLICABLE with Present Value (which is discussed elsewhere on this site)

  11. Mike,

    Note that it is documented that you do not need to pay for an expensive actuarial valuation of your pension, you can just make your own best guess estimate. As mentioned previously, there are instructions somewhere on this site.

  12. Mike, The present value of a DBP is guesswork at best. As you probably know, it involves guessing how long you might live-i.e. which of dozens of actuarial tables to use- and what interest rates might do well into the future. Nobody knows what interest rates will do. It is also difficult to know your cost base- do you include what your employer contributed? or not. Who can say?
    Bear in mind that hardly any 8854s are audited unless you are extremely wealthy in which case you would want serious professional help.

  13. It’s not hard to guess why @BSanford might have filed 5 to 7 years worth of tax forms with the IRS. It was not easy to find information about alternatives just a few years back when the IRS first started it’s enforcement blitz on citizenship based taxation and the press was full of warnings and stories about some Canadian families who were hit really hard. That was also before the whole uproar about the IRS singling out apparent Tea Party related organizations for audit that resulted in the Republicans in Congress deciding to punish the IRS by cutting their budget.

    Their are also many of us who aren’t gamblers – at least not when the stakes are so high.

  15. talking about 8854’s,(section v) where would RRSP’s go? I imagine a residence is real property. Where are these numbers used? Could they produce a tax liability aside from the exit tax? (which I would not face)

  16. @BSanford

    RRSPs and any other non-US pension values (either real or actuarial/guessed) go on part V line 7. It’s hard to come up with usable ‘US adjusted basis’ and ‘gain or loss’ for pre-tax retirement accounts, so I usually just give up and write ‘0’ here for both. Somtimes ‘n/a’. They only matter if you are a covered expat who has not been a citizen all their life up to now.

    As long as you are outside the exit tax — less than $2mm in assets, some $157k annual US tax liability, dual from birth, and so on — then any numbers you write in here won’t produce any extra tax liability. The total on part V line 25 is your ‘net worth’. It flows to part IV line 2 but from there, onwards to the exit tax misery of part IV section B only if you meet the ‘covered expat’ conditions (which it sounds like you don’t).

  17. i am Canadian from birth plus do not meet the income and asset thresholds. I have filed all of my returns and do not know of any issues beyond that I forgot to initially fill in a healthcare exemption form. (I sent it in now). How can you verify for sure you are ok on all of that? I phoned and she said she person said she didn’t see any money owing etc. She did see all the returns filed. I know FBAR’s are all submitted. Other than this year they likely have already been reviewed. Only the last 5 years matter according to the condition and I should have 9 so I think I am good since no one has ever said there is an issue. Is there a way to confirm for 100%

    You do 8854’s a fair bit watcher?

  18. i am Canadian from birth plus do not meet the income and asset thresholds. I have filed all of my returns and do not know of any issues beyond that I forgot to initially fill in a healthcare exemption form. (I sent it in now). How can you verify for sure you are ok on all of that? I phoned and she said she person said she didn’t see any money owing etc. She did see all the returns filed. I know FBAR’s are all submitted. Other than this year they likely have already been reviewed. Only the last 5 years matter according to the condition and I should have 9 so I think I am good since no one has ever said there is an issue. Is there a way to confirm for 100%

    You do 8854’s a fair bit watcher? Would those rrsp’s become taxable if somehow I had forgotten a form somewhere? would I be able to still submit it to be compliant if that had happened?

  20. BSanford. You could stop fussing. Since you are dual from birth and if you live in the country where you are a citizen, very little of this BS applies to you. There is an exception for duals from birth to the net worth and income tests. You are, however, supposed to file 5 years of returns which you appear to have done. On the net worth balance sheet you could write “not applicable- dual from birth” and be done with it.

    Dual-citizens and certain minors (defined next) will not be treated as covered expatriates (and therefore will not be subject to the expatriation tax) solely because one or both of the statements in paragraph (1) or (2) above (under Who Must File) applies. However, these individuals will still be treated as covered expatriates unless they file Form 8854 and certify that they have complied with all federal tax obligations for the 5 tax years preceding the date of expatriation as required in paragraph (3) above (under who must file)

  21. @BSanford

    What Duke says. You’re fully exempt from all of this exit tax nonsense, so the rest of it is merely t-crossing and i-dotting. Write down the best numbers you have and move on. If the IRS questions them you can defend, back up, or even correct them and it won’t make any difference. They know that too, which is why it wouldn’t be worth the postage to them to follow up with you.

    For people who are hit by the exit tax, RRSPs may fall outside the treaty because the exit tax demands instant income tax on RRSP balances. Now the question is, does the HEART law that gave us the execrable exit tax override US tax treaties? Possibly another ‘see you in court’ question. But you don’t have to face that.

  22. @BSanford

    If “BSanford” is Canadian citizen from birth, residing in Canada with solely Canadian assets and income, they are essentially judgement-proof from US revenue claims. The compliance condors are using fear to generate billings, without advising their clients of their fundamental rights and protections under Canadian law, so as to make fully informed decisions.

    Anyone in BSanford’s position should consider the following in making an informed decision before volunteering their personal information (and possibly significant money) to a foreign state.

    No foreign government – including the US – has any legal power or mechanism to directly collect taxes in Canada. Only the Government of Canada can collect taxes in Canada. Foreign governments cannot garnishee wages or seize assets or impose liens in Canada.

    Under the Canada-US tax treaty, the Government of Canada will not assist in collecting US tax claims from any Canadian citizen, unless the claim proceeded their date of becoming a Canadian citizen. A person who is a Canadian citizen since birth has utter immunity from assistance in collection. It is very unlikely this will change because it would require both Parliament and the US Congress to act in concert, and because there is no reciprocity the US fundamentally refuses to collect any foreign government’s tax claims against US citizens.

    It is also extremely unlikely that any Canadian court would enforce a US-based foreign revenue claim in Canada, especially against a Canadian resident citizen overtly protected by a current Tax Treaty against the same claim – and also because to so called “exit tax” is a highly unusual and egregious claim.

    On a practical note, the IRS has had its budget slashed, and a vindictive and ascendent Republican (GOP) majority in Congress has vowed to slash it further. This in retaliation for audits against “Tea Party”-style non-profit orgs – and also because the IRS is charged with enforcing certain aspects of “Obamacare” and the GOP want to cripple Obamacare by any means available. The enforcement of the controversial revenue aspects of Obama is an entirely new and massive task for the IRS, who are widely reported to be significantly understaffed, demoralized and increasingly unable to provide basic services to US residents.

  23. @Wondering You wrote “No foreign government – including the US – has any legal power or mechanism to directly collect taxes in Canada.” I would find all of this more reassuring if the same couldn’t have been said about the privacy of our financial information only a few short years ago. In a world where government agencies that are not authorized to negotiate treaties negotiate intergovernmental agreements instead that violate privacy legislation and fundamental rights and legislatures pass enabling legislation to back them up, where courts cavalierly expose thousands to jeopardies of taxation by a government which is foreign to them by changing that foreign government’s former legislation retroactively, where hopes are raised by the name of a Senate committee and some empty promises only to be dashed against the reality that corporations the only “persons” that matter to the majority of politicians on the committee it’s pretty hard to place my trust in the continuing protection of any of these measures.

  24. Hi All,

    So glad I found this website and hoping for some thoughts from the forum.

    I was born in America, but left when I was 6 and never went back. I am a British Citizen and never thought much of my American past. But about six months ago, I found out about how the US treats its ‘Citizens’ abroad…

    Since then, I have renounced my citizenship (the fee was heavy, but I thought it was better to get it done), and I thought that would be all there was to it. But… yesterday I got a letter from the bank about FATCA compliance, so looked into it more, and there was stuff that I had not seen or been told about before, about proving years of compliance etc and so on…

    I have never lived in the US as an adult, so don’t even have a social security number with which to file any returns. So in a somewhat frightened state, I went into the London US Embassy today to talk to the IRS about it. The rather rude man there told me that as I have no Social Security, there is no forms to fill. But when I asked him to put his advice in writing, he got rather annoyed, said he wouldn’t and threatened to call security if I didn’t leave at once…

    And now I have renounced (though don’t have my cert yet), I can’t even get a social security in order to close this all for good. Should I just do as the man said and leave it? Or will the US government be back to haunt me? I have no evidence that this ‘advice’ was given by the IRS man.

    Is there any precedent for someone without a social security submitting a Streamlined Foreign Offshore or an 8854 as a covered expat? (I have very little assets, so should not have to pay any more this way…)

    I am not even sure who I can ask for advice as the IRS website has no helpful contacts, and a return to the Embassy would doubtless not go well…

    It’s bad enough that I (and many others here) have to comply with their tyrannical insanity, but we even have to fight them and work around their dysfunction, just to allow them to abuse us more… what a world.

    Thanks :), Chris

  25. Hi Chris, sorry to welcome you to the club.

    The US can no longer call you a citizen, that’s what the bank needs to know. I’m not up on the British (UK, English?) IGA, just Canada’s. I’m sure someone with that knowledge will help advise you shortly. In Canada, however, the banks just need to know you are no longer a US citizen, which is usually proven with a CLN. I think you should inform them of that, providing a copy of your receipt from renouncing. Compliance proof should not be required by the bank because you are not a US person.

    Maybe George (I believe he’s somewhere in the UK) can better inform you. Don’t stress the worst is over. You are free.

    Like

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