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
@tdott,
Maybe this will have some information in it. The DoS manual on Naturalization and Oath of Allegiance to a Foreign State. 7FAM 1252 on page 3 is about Oath of Allegiance to a Foreign State.
The Mom posted about her experience. She was born dual and she took an oath of allegiance before a Justice of the Peace in order to relinquish. However, Toronto Consulate did not accept it. I don’t know the details. Here are links to her posts about it.
http://isaacbrocksociety.ca/renunciation/comment-page-2/#comment-191756
http://isaacbrocksociety.ca/renunciation/comment-page-2/#comment-191818
http://isaacbrocksociety.ca/renunciation/comment-page-2/#comment-191945
http://isaacbrocksociety.ca/2013/03/07/trapped-us-citizen-born-in-canada-what-should-he-do/comment-page-1/#comment-219342
http://isaacbrocksociety.ca/renunciation/comment-page-7/#comment-227414
http://isaacbrocksociety.ca/renunciation/comment-page-7/#comment-227535
I’m not aware of any other s. 349(a)(2) (oath) cases, and it’s really hard to extrapolate from only one case.
If you choose to go the s. (2) route, seems the worst that could happen is that your consulate would say no and (a) you could challenge it (I mean it wouldn’t make sense to go through the court system as that would presumably cost a lot more than $450 — but, if the consulate says you can’t relinquish,you could choose to *not* renounce that day and write to DoS Legal Department and see what they say; or (b) just renounce that day.
I know a fair bit about s. (1)s (naturalisation) and s.(5)s (renunciation), but not s.(2)’s. Sorry I can’t really be of help.
Further to this conversation here is a comment I made some time ago, followed by good comments to mine: http://isaacbrocksociety.ca/2013/03/05/possible-canadian-tax-relief-for-us-persons-in-canada/comment-page-1/#comment-213475
@tdott:
needs to be read alongside the INA, s. 349:
To this non-lawyer, “I solemnly declare that I am a Canadian citizen” = formal declaration of allegiance to a foreign state.
@pacifica777 thanks so much for this information. It seems straight forward to me. I fill this form out and have it signed with a consular. I can’t for the life of me see why they would take issue with this process. I’ll have to fly from dunedin to auckland which will be a pain but if it means being able to get this done I’ll do it. I am thinking I need to plan for resistance and if so it sounds like I will need to go through the DoS. If I contact the DoS and explain that the NZ consulate is not allowing me to present and have the form signed would the DoS be able to offer me a solution to that? Maybe one of their staff would contact the consulate and tell them it’s fine and to allow me to use this method, not sure. I’ll keep you guys posted. I know after I get the CLN I will need to clear up any back filings and such with the IRS, would I have a year to sort that out from the date the CLN is issued? I don’t make over the threshold and certainly don’t have many assets.
Thanks again, you guys rock.
@ Pukekonz,
Hoping you’ll hear back positive from Auckland after what you sent them last week. However, if they still insist on a renunciation, definitely contact DoS ACS for East Asia/Pacific in DC. They will then most likely contact Auckland and you’ll get a phone call or e-mail from Auckland.
We’re not talking the merits of the case here — we’re talking a procedural issue that’s very cut-and-dried – does the law allow a person to get a CLN based on naturalising with intent? which it definitely does. The few times a Brocker has had to go above the consulate level, things were resolved quickly. With one exception that took a few months, the others were fixed within a week. This matter being cut-and-dried, I think DC would definitely straighten it out very quickly.
BTW, Brock has reports of 37 s.(1) relinquishments, the applications having been made at Halifax, Toronto, Calgary, Vancouver, Hong Kong, Merida. Tel Aviv, Tokyo.
Re backfiling. If you notify the consulate of your relinquishment in 2013, you have until June 15th, 2014, to file the 8854, on which you certify that you [I forget the exact words, they’re on the 8854] are tax compliant for the five preceding years.
My understanding is that if you renounce you must first “come clean” with five years of taxes. Does this mean you also have to file five years of FBARS for those years?
I am dual …born in US to Canadian parents and left there in 1951. I have never lived there, worked there nor had a SSN. Unfortunately I acquired a passport to go on a cruise in 1995 as it was the fastest route to get one at that time.
I truly want to renounce as being a U.S. person is of absolutely no benefit to me and I do not need to be filing two sets of taxes each year at a great cost. It is also very disconcerting to be termed a “tax cheat” and most of all I stand to lose my whole life’s savings if I comply and also if I wait for them to come after me. What a nightmare!
Would appreciate any info regarding this issue.
@Tortured –
FWIW I filed five years of back returns as preparation to renounce, and the only peeps I’ve heard from the other side were: 1) an economic stimulus cheque for $300 or so (not that I minded, but it turned up without any covering letter or context) and 2) a request from the FBAR people in Detroit for a reasonable-cause letter, which I sent and never heard from them again.
@Tortured, no you don’t. You can renounce and then do the taxes. That’s what I’ve done. Yes, if you have any “foreign accounts”, i.e. not based in the US, you will have to file FBARs for 5/6 years.
Tortured, we are so pleased to hear from you again. There are comments we have made regarding your last comment at Isaac Brock, taking place on other threads and we would like to transmit all those to you (offline).
No. 1, your present question — to renounce US citizenship you do not have to have filed five years of US tax returns and FBARs (before the actual renunciation). However, after you have made that renunciation at a US consulate / embassy, you have until June 15 of the next year (so if you were to renounce in 2013, you would have until June 15, 2014) to file five years of US tax returns and the partial year 2013 US tax return, plus with that last return IRS Form 8854, in which you certify that you have met all of your US tax obligations — and will have no others after that point. We can certainly direct you to links to help you understand this process. Believe me, we here understand every word you are saying in your most recent comment.
No. 2 — Your previous comment http://isaacbrocksociety.ca/2013/05/27/traumatized-by-the-irs-and-us-reaching-into-canada/comment-page-2/#comment-371528 has been discussed here. I don’t think you realize how important is the information you gave us. Yours is the first report of a bank in Canada refusing to actually open an investment account jointly with your Canadian spouse — and, to add insult to injury, threaten you with freezing your RRSP. Things like this are happening in Europe and, especially, Switzerland but we have not heard of this in Canada prior to your comment. I tried to contact you offline but the email address you used for this site produced an “undeliverable” message back to me. If you can send a confidential email (as below), we would like to give you all of the discussion that resulted from your comment and, hopefully, get more information about how the meeting with your bank proceeded — and what bank that is. I have also encouraged you to write to Canada’s Department of Finance as a submission regarding our objections to Canada signing an IGA with the US. There are also journalists that are interested in your information.
Here is what Pacifica sent to you yesterday. We would love if you can contact her offline.
@Tortured, I haven’t read anything requiring FBAR compliance for renunciations and nobody ever asked me to file FBAR. I filed one FBAR for the current tax year of 2011 and never heard anything since. Granted, my bank accounts are not interesting. As for tax returns, one can choose to become compliant after renouncing. If you renounce now, then you have until June 2014 to file 5 years of tax returns to be compliant for 8854.
Hi Tortured,
It’s not necessary to first file five years tax forms before renouncing. Dept of State only concerns itself with matters of citizenship and they don’t even ask about it.. In fact, the renunciation meeting tends to be brief with the focus on that the person is aware of the consequences of renunciation and that their documents are in order.
A person then needs to “log out” of the IRS system. To log out of IRS, you have until June 15th of the year following renunciation to file all required forms with the IRS. On the 8854, you have to certify that you have been tax compliant for the five preceding years. If a person does not “log out” of IRS, it has no effect on their loss of citizenship, which remains terminated as of renunciation day.
… and, Tortured, the Canadian Finance Minister has made promises to US Persons in Canada regarding Canada not collecting penalties for the reporting obligation FBAR, which I will find and add to this comment.
@Medea Fleecestealer, I’m not so certain about that. The GAO and at least one tax professional suggested that filing past year FBARs with a note attached may trigger penalties. As I understand it,the IRS wants to get people into the system, meaning that one should be fine with filing FBARs from this point on going forwards if one had no prior tax due.
Here’s the famous Flaherty promise again … for what it’s worth. I do wish he would break his silence and give us some indication of where we are headed and whether or not we will one day be under the tires of a big black FATCA IGA bus.
“Penalties imposed under FBAR will not be collected by the CRA: The Canada-United States Income Tax Convention contains a provision which allows for the collection by a country of taxes imposed by the other country, including civil penalties. This provision does not apply to penalties imposed under laws, such as the U.S. Bank Secrecy Act, that impose only a reporting requirement (as opposed to those that impose taxation along with reporting requirements). Also, the CRA does not and will not collect the U.S. tax liability of a Canadian citizen if the individual was a Canadian citizen at the time the liability arose (whether or not the individual was also a U.S. citizen at that time).”
__ Finance Minister Jim Flaherty
Tortured. You do not HAVE to do anything. At the moment they don’t know you exist.
@SwissPinoy, but if you’ve never filed before you don’t know if you owe any tax or not. The guy doing my tax stuff says I don’t need to file anything but the FBAR’s as I have no income, but he wants them all the way back to 2006. With the streamlined questionnaire and a disclosure letter, I’ll send them all off together and then do the 8854 form and FBAR for partial 2013 next year. Certainly the amounts given on the FBAR’s will need tax paying on them I think.
Em –
It’s nothing but black humor amusement to watch Brockers recite the Flaherty mantra as their “promise” and prayer.
Here’s another promise from a politician: “We are not about to send American boys nine or ten thousand miles away from home to do what Asian boys ought to be doing for themselves.” – Lyndon Johnson, 1964
Time to haul out the old saw about how you can tell whether a politician is lying: Are the lips moving?
Sauve qui peut!
@ usxcanada
I agree. That’s why I added “for what it’s worth”. Sauve qui peut, indeed, but I have warned Brockers elsewhere to find their own way out, if possible, because the outcome from my way is yet to be determined. Actually I don’t think it hurts to keep bringing up Flaherty’s promise if for no other reason than to print it, wad it up and throw it at him when he breaks it or bends it with a FATCA sell-out.
@Tortured,
My situation is similar to yours – born in USA to Canadian parents, but left as an infant. I never had a SSN either. So far, my bank knows nothing about my ‘other’ citizenship. Recently, I opened an investment account at TD Waterhouse. I believe the application form had a section for ‘US citizens’ to fill out(cannot remember how it was worded). However the nice lady at the bank whom I have known for years pre-filled out the form for me ignoring that section of the application, so I ignored it too, and signed as she instructed me too. My thought at the time was that they were gearing up for FATCA, but were not yet actively pursuing US persons, thus explaining why she ignored the US citizenship section of the application – either that or she just assumed I was not one.
I know it is too late for you to adopt a ‘don’t ask, don’t tell’ policy with your bank since the ‘fatcat is out of the bag’ so to speak, but maybe you might want to consider moving all your banking business elsewhere and starting fresh, soon before US person questioning starts to become the norm. In particular, you might want to look into a credit union (the smaller the better) since they are not as affected by FATCA, at least not yet, and probably not asking too many questions at this point.
I just found the video of the Senate Finance Committee hearing in 1995 where they discussed the exit tax. They also discussed the general concept of citizenship-based taxation. The Chief of Staff from the Joint Committee on Taxation, one of the witnesses in the hearing, raised important concerns about the exit tax regarding double taxation and tax treaties, while most senators seemed to attack him for supposedly defending people who renounce US citizenship. The Assistant Secretary for Tax Policy from the Treasury Department, another witness, defended citizenship-based taxation. Senator Max Baucus made an incorrect statement about US taxation, was corrected by the JCT Chief, and seemed to oversimplify the subject. Senator Bill Bradley seemed knowledgeable about US taxation, but showed lack of interest for other countries, dismissing Cape Verde and mispronouncing Monaco. Keep in mind that Senator Daniel Patrick Moynihan strongly comdemned the Reed amendment later.
Have fun watching the video. here is the correct link to the video.
@Shadow Raider,
Incredible 18 year-old video accurately representing some current thinking:
“… not paying their fair share…they are going to great lengths thousands of miles ….like burning the flag…giving up their most sacred possession [citizenship]…for a tax loophole…turned their back on our country… greedy unpatriotic people….” (Baucus)
@ShadowRaider, that’s a fantastic find.
@IRSCompliantForever, I agree with your comments.
I find the video profoundly depressing in demonstrating the ignorance of the Senators involved about the lives of most of the several million US citizens and former citizens who choose to live outside the US. There is the assumption, both implicit and explicit in the discussion, that almost no one would choose to live outside the US permanently and give up their US citizenship except to avoid taxes. The tax laws those Senators have produced are like pesticides designed to control a few undesirable species (“rich tax avoiders”) but also destroy much larger populations of harmless or even helpful species whom the pest controllers haven’t bothered to notice.
I’m so glad I’m no longer a US citizen.
Not sure if thus has been answered or not but does one have to have a SSN to renounce.
To file five years taxes & the 8854 after renouncing, which I understand is required in the following year, one would need a SSN to file these.
Further to that you could still be taxed after renouncing & obtaining your CLN….. Is that correct?
What does “covered expatriate” mean
@Tortured
“Covered Expatriate” means that the US IRS has determined that you are subject to their Exit Tax for the privilege of expatriating. No one should willingly aspire to be a “Covered Expatriate.”