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.
Participants will need to provide their e-mail address (real or fake) and an alias. The only written rule is that participants must use a same alias each time they post (and not “anonymous” or derivatives thereof).
Bear in mind that any responses that you get from participants is peer-to-peer help, and it is not intended as a replacement for professional advice. Also, the Isaac Brock Society provides this disclaimer: neither the Society nor any of its members are professionals. We offer our advice here only in friendship and we recommend that our readers seek professional advice if they need it.
If you wish to receive an e-mail notification of comments, check the box to that effect when making your first comment.
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
My registration of birth abroad was filed in the late 60s when I was in diapers. My mother was told at the Canadian border that she was doing it just in time to get it in under 2 years.
@WhatAmI
Thanks for that. Would be interesting to find out when and why the 2 year limit was changed, but I guess for all intents and purposes it’s irrelevant considering both mothers and fathers can now confer citizenship retroactively.
I also suppose that “dual” status at birth isn’t relevant, unless of course one may be subject to the US exit tax, or, if one were to use Canadian naturalization as proof of relinquishment. Had I not done anything to reaffirm US citizenship after I’d taken the Canadian oath, I could have technically been able to relinquish, but as the Mom points out, the 2009 amendments could throw a spanner, so to speak, into that if the US was to be made aware of the fact that I was a Canadian citizen all along (albeit retroactively). Regardless of that, if at the time of taking the Canadian oath of citizenship you’d think that had I intended to relinquish US citizenship, how could the US argue? As I said, if one is subject to the US exit tax, one would choose one’s options very carefully…
@emty
You could consider renouncing your US citizenship, suck up the extortionate fee and then … do nothing. I present a two part case for doing so.
PART 1: There no actual mechanism for the US to collect an exit tax from you in Canada.
PART 2: Examines this issue in the larger context of the US inability to enforce their own laws within their own borders.
PART 1
This is a campaign of FEAR, not of substantive enforcement.
It sounds like you have been a Canadian citizen for decades … or possibly all your life.
The US cannot collect taxes from Canadians in Canada (or anywhere else outside the US for that matter). The Government of Canada will not assist in collecting US taxes from any Canadian citizen, unless the tax debt proceeded their date of Canadian citizenship.
That’s the summary paragraph from legal opinion article.“US Tax Collection in Canada”, published in “Canadian Tax Highlights” Vol. 19, Number 9, Sept 2011-10-14 Canadian Tax Foundation. The authors are: Erin L. Frew and S. Natasha of Reid Thorsteinssons LLP, Vancouver (leading tax law firm).
This article documented the difficulty of enforcing US tax claims in Canada.
In summary:
– Canadian courts have not enforced US tax revenue claims in Canada
– Under the Canada-US tax treaty, Canada Revenue Agency cannot collect US taxes from Canadian citizens, unless the tax claim proceeded their date of citizenship.
PART 2
The practicality of enforcement is dubious. There are an estimated 6 million people whom the US may consider so-called “US-person living abroad”. Canada has the largest concentration estimated at 600,000 but this figure is unverified. However according to published statistics regarding US tax returns filed from abroad, it seems that less than 15% of the possibly 6 million “US persons living abroad” have been filing any kind of US tax forms.
By comparison, the Pew Institute estimates there are 11.2 million illegal immigrants (or undocumented migrants) living permanently within the US. That is as if the ENTIRE population of Ontario up and moved into the US illegally.
While there is heated debate about this – notoriously the moronic statements of Trump – in actuality the US can’t seem to do much about it. The conservative think tank American Action Forum estimates that removing all illegal immigrants from the US would cost $400 to $600 billion, take about 20 years of concerted law enforcement effort, and would shrink the US GDP by $1.6 trillion. In reality, the 11 million so-called “illegals” living in the US make an important contribution to the US economy – they are almost 7% of its workforce.
http://americanactionforum.org/research/the-budgetary-and-economic-costs-of-addressing-unauthorized-immigration-alt
So if the US cannot muster the political will and resources to even begin to deal with 11 million individuals within its own borders, who’s very presence and economic activity is by definition illegal, how are they going to collect foreign tax revenue claims – claims that neither Canadian courts nor the Canadian government will enforce – from a Canadian citizen living in Canada who left the US as a baby and never lived or worked there again?
Now multiple this by the estimated 600,000 Canadians whom the US may consider so-called “US-persons”.
In summary: this is campaign of fear …
To clarify WhatAmI’s comment, under the former Citizenship Act, children born abroad to Canadian mothers between Dec 31, 1946 and Feb 15, 1977 were eligible for Canadian citizenship if the child was born out of wedlock (and if the birth was registered within two years).
This discriminated against children born to Canadian mothers who were married at the time of their birth (to a non-Canadian father). These people were later given an extension period to apply for Canadian citizenship, but this period expired on Aug 14, 2004. This was one of the reasons why the Citizenship Act was amended in 2009, making every person born outside of Canada, within one generation of the native born or naturalized Canadian citizen parent, a Canadian citizen (retroactive to date of birth).
@Emty
You are a “dual citizen at birth” and exempt from the US expatriation (“exit”) tax if the State Dept. does not accept your relinquishment argument of provincial govt. employment and you choose to renounce. In addition to the five years of tax returns, I believe that the US also requires six years of FBAR filings to be exempt from the exit tax. Have you done this?
I agree with Wondering that this is a campaign of fear. The only people that have been hurt so far
by the IRS are those that have come forward and offered themselves up. However the US has not received any Canadian FATCA account information yet, and no one really knows exactly what they will do with it. Will they really try to collect FBAR penalties from Canadian citizens living in Canada? They may send out computer generated notices but if the recipient ignores them then what?
My situation is similar to yours and I have done nothing with the US govt. (no tax returns, no FBARs, no Consulate contact – I don’t even have a US social security number and never plan to get one). We are Canadian citizens from birth and, as Wondering notes, have lifetime protection from the CRA collecting supposed US tax debts from us. Some people are concerned that these protections could be removed in the future – no one knows. Wondering’s argument about the realistic possibilities of the US trying to collect from thousands of Canadians makes good sense to me.
Emty. Your head may be spinning by now. One comment and one question which may help others.
You filed 5 yrs of tax returns. Renouncing or relinquishing if you can will leave only 1 or 2 more tax returns and a relatively easy 8854 to be completely free of this mess. You are more than 2/3 of the way there. FBARs come under a different statute. You can state you have complied with tax filing without doing the FBARS. That’s what Peter Dunn did. He hasn’t heard a word
Did you get a social security number for your tax returns? For many of our friends seeking help, that’s the biggest hurdle of all. Best of luck.
At this point in time I don’t think the exit tax would apply to me anyhow as I don’t have many assets or much money. My parents are concerned about inheritance for me in the future though, which is why they have suggested I get this resolved.
I wish I hadn’t started this process so I could fly under the radar for a bit longer and see what happens, but I have started so I feel like I should resolve it now. I have filed 6 years of FBARs and did get a social security number for the taxes as well. I’ll have to decide whether to try to pursue the government angle, but I’m not sure that I can prove that my position is a government position. I was just really hoping to find a way around the $2350 as that is a good chunk of my savings.
With regards to the 2 year requirement. The canadian citizenship act of 1946 5(a)(2) states:
The fact of his birth is registered at a consulate or with the Minister, within 2 years after its occurrence or within such extended period as may be authorized in special cases by the Minister, in accordance with the regulations.
It is my understanding is that the Minister extended the deadline every year until 1977 when the citizenship act was amended and the registration requirement was removed.
Before 1977 you received a “Registration of Birth Abroad” card, after 1977 you received a Citizenship Certificate.
MT. The finish line is in sight. Go for it.
I am the child of a Canadian born mother born in wedlock outside Canada in 1956. I guess my circumstances weren’t special enough to grant me citizenship, forcing me to (or my mother, on my behalf) to apply for landed immigrant status in 1968 when I entered Canada. My mother also had to prove to the Canadian government that she hadn’t naturalized as a US citizen while she lived there.
As an aside, here:
Some will be interested in knowing that the ADCS lawsuit isn’t the only run-in Justice Martineau’s had with the Harper government.
In a landmark case in 2006, Justice Martineau ruled in favour of a 61-year-old son of a British war bride and World War II Canadian soldier who Harper’s government claimed was not a Canadian citizen.
Federal court Justice Luc Martineau ruled that by denying Joe Taylor citizenship, the Conservative government — and especially the citizenship and immigration ministry of Monte Solberg — was in violation of the Canadian Bill of Rights, the Charter of Rights, the principle of due process, the “right of an individual not to be deprived to life, liberty or security,” and was contravening the principle of fundamental justice.”
The government appealed and won, but eventually the man was granted Canadian citizenship due to the pending amendments to the Canadian Citizenship Act in 2009.
@ Emty
Since it was your parents who started you down the FATCA trail of horrors, perhaps they would give you an advance on your inheritance to buy your freedom (the $2350 renunciation fee). You have done the tax and FBAR filing so why not make a renunciation appointment and be done with it? It might be hard to get an appointment this year so you’ll probably end up with a partial year filing for 2016 but those are the hurdles the USA has placed, You’ve jumped higher ones than that so far … what’s a couple more?
What Am I?
It was a rhetorical question. I know I’ve been only a Canadian for over 40 years.
After some 2 years of research and preparation, and 16 months of waiting since my relinquishment appointment, my CLN arrived out of the blue. I had several claims but the certificate notes my municipal employment.
I don’t need to wax eloquent on how horrible the last few years have been, or how I feel now that it is over. Most people here are or have lived it themselves.
To celebrate, I made yet another donation to the ADCS.
The only downside that occurs to me is that now my wife has put the USA back on to our list of possible Snow Bird destinations. I’d prefer to pass it over for points further south.
Congratulations, WhatAmI!!! Now you have proof of what you knew all along.
Thanks for yet another donation and for all of your contributions here. We have all learned from you.
I relate with your view on passing over certain destinations — I hope you find that special snowbird destination that doesn’t have USA in it.
Congratulations, WhatAmI!
That was some wait. Really great to hear it’s over!
It’s obvious you’ve done a lot of research in dealing with your case. I’ve learned a lot from your comments. Thanks very much for sharing your knowledge and helping so many others!
A CLN will indicate how the renunciant obtained ‘foreign’ citizenship (note that a CLN is basically a filled in DS-4083 with appropriate seal and signature). For a dual from birth who was born in the US, it would say something like “birth abroad to his/her Canadian citizen parents”. I imagine for a someone who naturalized it would say something indicating naturalization (i.e. not born dual).
Since the CLN goes to the IRS (who may or may not look at it in detail, nobody knows), it becomes problematic to play both sides – i.e. naturalized for State, but born dual for the IRS. The cautious approach would be to pick one or the other (naturalized vs born dual) and stick with it, YMMV.
One thing I don’t know is what kind of documentation State requires for verification of born duals. If State is nitpicky about it, then getting an updated Canadian Citizenship Certificate which indicates the date of effective Canadian citizenship is one way to prove it – that’s what I did.
@Emty
As a nurse, you likely have been contributing to a defined benefit pension plan. As such, should you renounce and be deemed a covered expat, you would be required to pay tax on the present value of your DBP, and the exit tax exclusion could not be applied, so we’re talking real money here.
So, the fact that you don’t have many assets or much money is only part of it.
At any rate, you are already all caught up in filing, so a possible route (the one I would take) would be to finish up properly by relinquishing (one way or the other) and filing the final year return and 8854. That’s the approach that would tie up all the lose ends as best as can be hoped for.
Note that not filing 8854 makes you a covered expat. However, as others have pointed out, it’s debatable whether the IRS would a) go after you, and b) be able to collect if it did – not to mention that it likely wouldn’t even know about your DBP.
So, decide what will let you sleep at night, and pick your poison.
Should have added: the filing of final return and 8854 wouldn’t apply, as others have pointed out, if you relinquished before some date or another in 2004 as the rules were different. OTOH if you need to renounce, then tax returns and 8854 are supposed to be filed.
Emty. You need not worry about the value of your pension. As a ‘ born dual’ you will not be subject to the exit tax.
…unless you, for some reason, decide not to file Form 8854 after you have done all other required filing, Emty.
I suppose the choice to renounce/relinquish as a naturalized citizen/dual at birth would be dependant on which is more costly – the renunciation fee or exit tax, tdott.
Like calgary411 says, all required filings must be done in order to not be a covered expat and thus not subject to the exit tax. The only thing being born dual gets you is that you are not subject to 8854’s tax liability test and net worth test – everything else is the same.
@WhatAmI I was so happy to her you finally received your CLN. Congratulations. May you have many restful nights now. Thank you so much for all your help to me and so many others.
@emty, “I have been employed with the health authority in my province as a nurse since 2008, ”
I did a generic google search and the one provincial health authority I looked at was a seperate non-profit organization. That might not fly….
It needs to be employment as part of a “political subdivision thereof.”
Having said that I know people who have succesfully relinquished based on employment as follows in the EU;
1. Clerical type job with the the main NHS.
2. School teacher
3. Clerical type job employed with the Church of England, non-Ordained.
4. Doctor who was directly paid as an independent contractor with the NHS and not through a privately set up limited company.
You will need to be able to show that the employer is political subdivision thereof…….
Working for the BC provincial Tourism Board and filling pot holes for The City have both been approved, also, an administrator or clerk working in a hospital.
I don’t know what a “health authority” is. Is there in addition a provincial “health services” department or is that the main organization? For example in Alberta, we have Alberta Health Services which is definitely gov’t employment.
Yes, it is surprising what they consider a political subdivision, but these and other examples are in the archives.
@WhatAmI Yep, AHS would be the one. So you would consider that definitely government employment?