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
@Jane
8854 is filed twice – with the 1040, and separately (to Philadelphia).
Although a bit dated, see: http://hodgen.com/step-by-step-tax-filings-for-a-noncovered-expatriate/
And for the Philadelphia address, see “Where To File” in https://www.irs.gov/pub/irs-pdf/i8854.pdf
@Mona Lisa….you still have the spark and spirit of America inside you, they can never take that away from you. I hope you smile with those words.
I too have taken the same attitude, I am no longer a USC. Its documented with the USA, I suffered because of it, I just do not have a CLN. But I now also have US entry stamps on my passport. 😉 Those stamps as I am sure you will agree are priceless!! The first time I was stamped I felt like a kid at Disney getting one those round the world passports stamped at Epcot….I wanted to go back in line and get my passport stamped again. 🙂
Soon enough….I need to get my kids unraveled from all this and thats going to cost more and more money.
@monalisa
I’m still waiting for my appointment date – but once I’m out, I agree with you – the biggest worry is that they will try to make it difficult to visit family back in the states.
@Jane
http://auspost.com.au/parcels-mail/international-delivery-options.html?ilink=mm-international-delivery-options-1
You can get tracking with Courier or Express options. When I sent in my tax returns, I needed to put in a phone number for the recipient – I just put in one of the IRS 800 numbers.
@Jane – ICYMI there’s a discussion about filing 8854 here: http://isaacbrocksociety.ca/2012/01/23/attorney-cpa-ea-or-registered-tax-preparer-your-choice-of-dance-partner-tax-compliance/comment-page-3/#comment-7574207
Okay, the duplicate 8854, I can “get” since it’s right there on that form. The tax accountant has replied this to me (re fbar & 1040nr) & I wonder your thoughts? I’ve gotten extremely paranoid now…it’s all so ridiculous & horrendous!
No FBAR (since you would not be classified as a U.S. citizen as of 31/12/2015).
Your Final Return will be the one you are filing (1040) as long as it has been accepted by the IRS. Your tax filing ends on the date your expatriation has been accepted.”
I just want OUT… 🙁
In reading the FBAR how-to, it says this:
“15. Ma x i m u m value o f a c co u n t d u r in g ca l e n d a r y ea r .”
Which makes it sound as if I could be (if more in my acct. AFTER relinquishing but before 31 Dec?) reporting PAST my mid-year relinquishment date??
Jane. You’re overthinking this. Don’t worry. If you decide to file FBAR ( there is a school of thought here that it isn’t required because they are not tax returns), take the max value up to the day you renounced.
They are receiving tens of thousands of these things. They won’t look twice at yours. Be happy-you are free.
@Jane – I’m not there yet, so I haven’t done this for myself. But my understanding is that you file a dual status return in the final year with a 1040NR (filled with zeroes if you have no US source income post-renunciation) and a 1040 as an attachment (covering up to the day before you renounce). I don’t think the IRS will reject a filing with just the 1040 for the part year, and I’m sure there are plenty of people who have filed that way (because how would a mere mortal know to do the convoluted 1040NR filing).
As for FBAR – what Duke said. If you don’t have assets in the US, it will cost them more to come after you than they can collect in penalties. If it helps you sleep at night – file them reporting up to the day you renounced.
It does not cost them more to come after you than they will get. It is not their money they are spending, for one and for another, they are not coming for us. They are forcing our banks and local governments to turn us over.
Jane –
Many are Brockultists. I am a philophil. Here’s what Phil sez:
http://hodgen.com/expatriating-without-filing-fbars/
@UsXCanada
Sure, you can ignore what got us here and past actions by the US in regards to these issues.
Yes, our banks are turning our info over to the US because of FATCA, but the IRS can’t just pull money out of your account (other than under specific withholding provisions). So, if they want to collect a penalty, such as an FBAR penalty, they will first ask “nicely” (with a demand letter). If you don’t roll over, they will have to either go through the courts or through your local tax agency (if there’s a mutual assistance treaty) to collect. I doubt local tax agencies will be happy enforcing FBAR penalties on normal people when there’s no fraud, money laundering, or crime involved. Of course, if you have assets in the US, they will go after those first.
As for filing FBARs in the final part-year – I plan to do so. I like sleeping well at night. Plus, I still have a bit of retirement savings in the US that I can’t withdraw without penalty. However, I can see that others would decide differently.
@Jane, as Duke of Devon said you’re overthinking. If you decide to file a FBAR then it’s only for any amount up to the date of your relinquishment, not the date you visited the embassy/consulate, not the date the State Department approved it. Your relinquishment date is your exit date, that’s what is on your CLN and that’s the date that counts for everything.
Send all the paperwork by registered/recorded delivery post and use the tracking number/s you receive to check the progress right through to when they are delivered. Once delivered print copies of the tracking process off and keep with your copies of the documents so you have proof of delivery. I printed off both my Swiss Post and the US Postal Services tracking info so I have to two separate confirmations that the stuff arrived. Then sit back, have a drink of something you enjoy and relax. You’ve done what’s needed and it’s over. Celebrate.
The Finance Minister of Canada stated in 2012 and the CRA confirmed that “PENALTIES imposed under FBAR will not be collected by the Canada Revenue Agency (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, 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). This leaves only the possibility that residents of Canada who are not Canadian citizens may have IRS taxes (but not penalties) collected by the CRA. I don’t know if this has this changed or what the situation is in other countries.
@Frank
This point I am very unclear on. If an expat has FBAR penalties, can they get a CLN? If not, then the CRA need not go after them for the USG to get its wish. If the expat loses their bank accounts or worse has them frozen until they can prove compliance, the expat is screwed.
As those who were once no longer USCs suddenly had USCship retroactively reapplied to them via a court case in what was to them at the time a foreign power, what is to prevent the US from later saying that a CLN is no longer enough and that we all then need to get a RCLN, ReCertifucation of Loss of Nationality? If it happened once, it can happen again. Then secall have to go through whatever nonsence they come up with or risk losing our accounts, etc again.
Personally, I am not worried about my local taxing authority collecting taxes for the US. I am worried about all the data on myself and spouse being open to anyone, losing my passport and having to leave my family or losing my bank accounts and thus my ability to earn money. Gov. assurances that they will not collect taxes for the US do not address any of these concerns.
@JapanT
Dept of State will not deny CLN for tax reasons. AFAIK the only reasons they can use to deny a CLN based on renunciation are that a) you are not renouncing voluntarily or b) you don’t have the mental capacity to understand what renunciation means.
Yes, it is a worry that they have retroactively restored citizenship in the past. However, I don’t think they can force you to accept it. In any event, I’m willing to wait and see as I think the probability of the US forcing citizenship on unwilling renunciants who paid dearly for their CLN is remote.
And, yes, the privacy aspects are very worrying. After I renounce I will be moving as much as possible to new accounts.
There’s nothing much to prevent the US from making new rules in the future. If they decide it’s important to teach you criminals a lesson they will, regardless of whether that’s what you really are or whether the penalties are fair. Aliens who have participated in extrajudicial killings are inadmissible to the US, yet it’s OK for USCs in Arizona to do that with drones.
If the relinquishing act was performed after 3 June 2004, the relinquishment date for tax purposes is not the date of the act, but rather:
26 US Code 877A(g)(4)(B)
8854 instructions, p.1, column 1
@Frank
Exactly.
@usxcanada
I’m up-to-date on everything, including FBARS. What worried me is the accountant not thinking I should file this in my final (feels like the stages of acceptance of death, actually) process…What Karen has said makes the most sense, as I (a tax “lay-person”) see my tax liability ending at my CLN dated form date.
I’m also STILL upset at US Embassy listing accountants who they wash hands of in the same screen…
@Jane
The advice I received from the IRS when I went through this nearly a decade ago was to file a part-year FBAR covering up to renunciation and note this on top of the form. At the time there was no e-filing of these things, so I have no idea how this would work with FinCEN 114. I am also reasonably sure the IRS respondent involved made up their answer on the spot — I have never seen any regulation or ruling on this, either before or since. I filed it as ‘advised’ because a) it contained no surprises, just stuff already reported in prior FBARs, and b) the only FBAR of value to the IRS is one that is not filed, so filing gave them nothing of value.
@Jane
My accountant said to file a part-year FBAR covering up to the point of renunciation. There is no penalty for over-reporting accounts, so if it makes you feel better, file for the whole year.
In either case, you file, which goes against what your accountant is saying.
@Karen You said, “And, yes, the privacy aspects are very worrying. After I renounce I will be moving as much as possible to new accounts.”
Are you saying you’re going to close AU bank accounts & then open new ones? What would this alleviate?
@tdott Well, that’s what I would have thought, too. I had even given the guy my account totals…So much for “here are some knowledgeable accountants for you”…courtesy of the US Embassy website.
@Watcher “I am also reasonably sure the IRS respondent involved made up their answer on the spot — I have never seen any regulation or ruling on this, either before or since.” This, is exactly how ALL of FATCA feels– and considering the possible penalties, it’s just insane that there is no one authority who can speak to the rules, definitively.
@Jane – FinCEN now has all of my bank account details (plus name, address and SSN) – submitted electronically. I’m not convinced that they will keep that data secure from hackers. I probably won’t close all of my current accounts, but I will likely move my savings and brokerage accounts (who knows, I may even open a managed fund account once I no longer need to fear PFIC treatment).
I doubt there’s much hackers can do with AU bank details and US SSN – but for the larger accounts, better safe than sorry.