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
I should add, copy of receipt until you receive your CLN.
Chris. Glad you found us. A couple of points to get you started.
Forget about a social security number. Forget about 8854. Forget about streamlined. Forget about the IRS. You are no longer a US citizen. There are 2 groups the IRS are interested in. Rich people living in the US with offshore accounts and those foolish enough to expose themselves to them. They are overworked and underfunded and haven’t the resources for ‘minnows’ They don’t know you exist so don’t make the mistake of telling them.
That leaves your bank. They are the problem. Tell them you are British and not an American and that’s all they need to know. There is no provision in the UK -IRS IGA for the banks to assure years of compliance and so on. There are only provisions to provide account numbers and interest income for US persons. Switzerland is different. Lucky for you you are in Britain. You are not a US person.
There is a provision that states
The self certification is a W8-BEN form on which you state you are not a US person. The reason you don’t have a CLN is that you haven’t yet received it. There are long delays. The waiting list to get an appointment in Toronto is a year.
Good luck.
@Chris, welcome though I wish I didn’t have to say that for your sake.
A quick look at the UK/US IGA seems that’s it’s Model I agreement rather than the Model II which Canada and Switzerland have – though what the exact differences are I couldn’t tell you.
The main thing is that you need to tell your bank asap that you’ve renounced your US citizenship and what date you did it. Send a copy of your receipt as The Mom suggests. When you get your CLN send them a copy of that too for their records. They should send you a W-8EN form which you fill in and return to them – keep a copy for yourself if they don’t provide you with a spare. That should be the end of the matter as far as the bank is concerned. That’s all they really want to know as they have to report accounts that fall under the IGA, yours no longer do.
Trying to file now would be a big headache. You’ve already renounced anyway and getting an SSN is a pain even when you haven’t. I seriously doubt that the IRS is going to come after you if you don’t file, after all you’re not in their tax system as you don’t have an SSN. They can’t match you to their records as they don’t have any basically.
The only possible problem will be if your bank insists on seeing proof that you’re US tax compliant. A few here in Switzerland have, but they’re running pretty scared of the US due to the various court penalties they’ve incurred. The UK banks may be totally different in how they’re dealing with compliance if they’re doing it at all. However, let them know about your renunciation first and see what they say. There’s no point in trying to tackle this if it turns out it’s not necessary.
Canada has a Model 1 agreement. The wording is virtually identical to the UK one. There may be slight variation in interpretation.
@Chris
So that you have a bit more information with which to make a deliberated decision, keep in mind that 1) there is a $10,000 penalty for not filing 8854, 2) in theory, those unfiled tax returns will always be an issue (there’s no statute of limitations on unfiled returns).
So, you may want to look into whether Britain would help the US collect, should it decide to go after you (for $10,000 penalty and, taxes and penalties from “substitute returns”). As of now I don’t believe anyone in that situation has been gone after (at least if they’re a minnow), but that doesn’t mean it would always be the case. For a comparison, the Canada-US tax treaty would not require Canada to help the US collect in a case like that, assuming the person was a Canadian citizen when the liabilities were incurred. Whether the US could strong-arm Canada into a treaty change is another story.
Also, travel to the US *could* at some point be an issue. As of now, no renunciants with liabilities who have traveled to the US have been hassled. However, with ever increasing inter-agency and inter-governmental sharing of information, that *could* change. I have no clue what the probability of that happening is, but it’s not zero.
So, you could
1) do nothing and with any luck not have any practical issues in the future, or
2) you could at least file 8854 to get that $10,000 penalty off the table, or
3) you could file 8854 and 5 years of returns and properly log out of the US tax system
Only you can decide what your personal situation is and what you’re comfortable doing.
BTW, as you are no longer eligible for a SSN, you would have to use a TIN (Taxpayer Identification Number), should you decide to file. TINs are dead easy to get and I *think* you could even apply for one along with a tax return submission. FWIW, in a previous email exchange with Phil Hodgen, he confirmed that they get TINs for their clients who are in a similar situation.
Lastly, the person who you spoke with at the London US embassy clearly either did not know what he was talking about, or gave you an incomplete picture. Are you sure he was an IRS agent, or was he just an embassy employee? If the latter, then he wouldn’t necessarily be expected to know about IRS tax matters for renunciants. And I thought all offshore IRS offices had been closed down.
Thanks for highlighting the above, tdott. That is great information, confirmed by Phil Hodgen, for those who were under the impression that they did have to have a SSN before back-filing. The solution is to renounce and THEN apply for a TIN instead of SSN. The process to obtain a SSN is just too unwieldy and doesn’t make sense anyway if one has determined they will renounce anyway! And, as we know, filing back returns, etc., does NOT have to be accomplished before one’s renunciation.
@calgary411
I’d like to send something to you. Can you provide your email please.
Thanks
@Chris, in the UK a receipt in theory of payment should work but it might be better to spend fifty quid, go before a solicitor and swear a statutory affadavit that you renounced on ______ .
The UK has signed in full The Multilateral Convention On Mutual Administrative Assistance In Tax Matters.
The US signed it but reserved, meaning dropped out of everything relating to collection, what this means is that the UK will not assist the US in collection.
The US is actually rather proud they reserved…..
https://www.jct.gov/publications.html?func=startdown&id=4550
You could do a DIY streamlined and then call it a day by filing 8854. You could also do nothing….
tdott,
I sent you an email.
Dear Mr. Chris,
We heard you might have been a US citizen at one point. We also think you may have had a bank account. Therefore you owe us $10,000. Please remit ASAP or we will send you another letter.
Sincerely IRS.
Chris Seriously, they don’t know you exist. Do yourself a giant favour and keep it that way.
As far as travel to the US is concerned, you have the same right to go there as every other British citizen.
CLNs are sent to the IRS, so the IRS either knows or will know that Chris exists. Whether the IRS will act on that information, perhaps in the distant future, is another matter that I believe nobody can speak of with any degree of certainty. The best folks can do is make hopefully educated guesses about what the future may bring, and act according to what will give them peace of mind.
@tdott, Chris – yes the IRS know that a Chris renounced his US citizenship at the London embassy and has a CLN. So what? With no SSN he’s not in their system so cannot be traced. What are they going to do? Ask every bank in the UK to send them details of every Chris who has an account in hopes of finding the right one? They simply don’t have the time or manpower to go after someone like that. They have to focus on “known” people who may owe tax, not ghosts who are impossible to find and probably won’t end up owing anything if they could be found.
Chris, unless your bank insists on proof of US tax compliance forget bothering with it. If they’re happy with a copy of your renunciation receipt and later your CLN then that’s you done. Don’t get dragged into the tax side unless you absolutely have to.
@Chris
I cannot believe an IRS person at the US embassy told you that you don`t need to do anything more.
That is against everything one has heard! I honesty don`t know what to say. Can you write a letter to the US embassy asking for clarification? That way, at least you would have documentation of some sort about what you were told. Like- in writing you could say “This is what I was told by an IRS agent at the embassy ( do you have his name?). Is this right?” Of course then you are putting yourself out there. But worst case would mean streamlined and 3 years of perhaps very little/nothing to pay and no penalties.
Because honestly- people who renounce and don`t file are automatically put into the “covered” status. And Great Britain is America`s biggest friend and wants to assist them. I don`t know if you will sleep well in limbo for the future. In the meantime, I think the computer analyses are getting more and more refined. I have heard of somebody who had an account with his US mother who died about 10 years ago being asked by his bank for further documentation on her. Like he had to find a death certificate and I don`t know if it is over yet. What total insanity. America is broke and they desperately need money and I don`t think it is going to get better in the future- so the insanity might grow if legal action is unsuccessful.
@Polly and Chris
If Chris decides to go the streamlined route he will have to file 5 yrs of tax returns to log out of the system and to attest on the 8854 that he has done so. Filing only 3 yrs would deem him to be ‘covered’
3 yrs is only for those US persons who want to become compliant but stay US persons.
@Heidi
So much opposing information out there. How do they actually expect anybody to understand and “follow the rules”? I understood that “covered” filed 5 years, not covered only 3. That would make more sense too wouldn’t it?
@Polly. If you look at the 8854 you have to sign to confirm that you have filed the last 5 yrs of tax returns to correctly check out. If you cannot attest to this they will put you in the covered category. You also get covered status if you don’t fill in the 8854 at all.
The streamlined procedure was introduced to bring all those non filing Americans back into the system by filing 3 yrs of back tax returns. I guess they thought a carrot to keep the ones who stayed and a stick for the ones who leave.
@Polly/heidi – unless his bank insists on compliance proof there’s no point in Chris bothering to file. So he becomes a covered expat. Again, so what? HE’S NOT IN THE US TAX SYSTEM! Nothing they can do to him as they don’t know he exists tax-wise. There’s no way to match him up to the IRS records because they don’t have any.
IF his bank gets snotty over compliance then he may need to look at doing something. But the problem with Streamlined is you can’t file it with a ITIN, only with an SSN. As you say it’s designed for people staying in the system rather than those leaving it. I used it myself, but I already had an SSN which Chris doesn’t. It’s simple enough to add the extra 2 years for 8854 if you need to. Only thing I can think of is to file the 8854 (which you can do with an explanation of why you don’t have an SSN) with zeros for the previous 5 years and call it quits that way – but only if the bank insists on proof. If they’re happy with the CLN only, then Chris should leave it at that.
@Medea
You may be right and you may be wrong. Whether he can be put into the US tax system is a wild card. But one thing is certain – Britain will help the IRS. I don`t know about other people, but a lot of this is about being able to sleep well at night. Having a possible case of ruination hover over one`s head is not good for sleep. Well- at least it is no longer 300% but now “only” 100% if deemed wilful. So this advice may be good advice and it may not. But advice given from nations which will not collect for the USA is not the same for those who are at the mercy of a government which will help the USA collect taxes, as well as extradite for criminal prosecution. ( Of course one has to wonder if their jails aren’t full enough already – but they seem to love it when people “owe” and with 20% late fees they can wait and collect forever.)
@Polly, whether the UK helps or not, how would they possibly manage to do so? a) IRS doesn’t know him from any other Chris who’s renounced and b) neither do the UK. Again, short of the UK government demanding that every bank in the UK pass on account info on all their Chrises to then be sifted through to possibly find the right one, what can they do? The IRS only know he has a CLN, they don’t know his UK address unless they ask the State Dept for it so how could they even try to find him or his bank? The IRS is too underfunded and overworked to pursue such cases without some indication that it may be worth their while.
I agree it’s a matter for Chris to decide which is going to make him sleep easier. But the remote possibility of the IRS coming after him would argue that course. If his bank wants proof of compliance though, as some banks here in Switzerland have, then he’ll have no other recourse but to try and find some way to satisfy them on that score if he wants to keep his account and not have it frozen/blocked – as has happened here too. This is his main problem, not some very vague possibility of the IRS somehow turning up on his doorstep demanding payment.
@Polly, “But one thing is certain – Britain will help the IRS.”
Polly, there is no legal basis for the United Kingdom to aid the collection arm of said FOREIGN Government.
The United Kingdom will only aid in the collection of tax based on the Multilateral Convention On Mutual Administrative Assistance In Tax Matters.
The United States opted out of all collection help. The USA will not help other countries collect in the USA and the USA as a result of the treaty can not receive help.
The duty of Chris is to obey the laws of the United Kingdom as both a Citizen and Resident. To be blunt its up to him if he wants to follow Saudi Law, Kenyan Law or even USA Law whilst in the UK.
To counter what I just said you could bring up Boris.
Boris could have told a foreign government to pound sand.
Boris paid up because he is paid book royalties probably as a large sum that said foreign government could have garnished because it was paid in said foreign country.
Under treaty between the USA and the United Kingdom the only thing the USA can do is send a nasty letter that will be delivered by Her Majesties Royal Mail.
They can then up the pressure…….and send another letter.
They can hold their breath, turn red in the face….and send another letter.
Chris is a British Citizen living in the United Kingdom.
In Great Britain, tax evasion is a felony and Great Britain will extradite. So yeah- similar to murder- there are agreements between some nations about “crime” and what to do about it. Whether they can figure out where he lives I would think would be easy. We live in different times. People cannot hide anymore. And it is going to get worse and not better. I am over 60, and I had to learn to stop seeing America as my hero, and altogether stop thinking with a brain stuck in the 80s/90s. The world is changing – we are going global. Things are not like they used to be and the old rules don`t apply anymore.
So in the end, it is up to Chris. But America is enforcing its laws globally with the blessing of many nations. And with all the constant advancements in technology, they have the power to do so and they will improve on it. If they can find Ossama Bin Laden who was very good at hiding where he lived, finding Chris should be peanuts. Just saying. I`m not happy about it either, but I dont see things getting any better – UNLESS a law suit is won. Fingers crossed.
@Medea.
The cln will have Chris’s UK address.
What is to stop the UK banks collecting for the IRS? With the threat of a 30% withhold they could be a law unto themselves. The swiss banks are behaving this way and witholding until compliance is shown.
@Heidi, “What is to stop the UK banks collecting for the IRS? With the threat of a 30% withhold they could be a law unto themselves. ”
UK Law will stop it as there is no basis in UK law to do so.
There is no basis in Swiss law but the banks do it anyhow and who has the money to sue them?
Again, how can the banks collect when the IRS doesn’t have him in their system? IRS is overworked and underfunded and it isn’t worth their effort, honestly. And the address thing is simple – move elsewhere and then no connection at all. Or better yet see if you can use a friend’s address for your banking stuff for a year or two.
Checking the IRS website Chris could possibly file using an ITIN application attached to the Streamlined forms. But, again, if his bank is happy with a CLN then there really isn’t the need to get involved in all this. The IRS has far too many legitimate applications to deal with, they’re not going to chase ghosts.