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
@Medea,
Thanks, but I refuse to travel on the US passport, even if it is possible. There’s nothing urgent, so I’ll just wait.
@Karen, well I guess it depends on whether you want to disappoint mum or not.
Interesting numbers here.
https://www.dhs.gov/sites/default/files/publications/2014_table3d.xls
The number of Canadians emigrating to the US and gaining permanent residency has declined steadily from 21,900 in 2005 to 11,600 in 2014 . Seems like we’re wishing up.
Hope this isn’t out of place to put here.
This is new and is apparently ‘under review’, but available fulltext at SSRN:
Fraser, Erin L., The Escape Hatch (Expatriation): The Roots and Fruits of Section 6039G (August 22, 2016)
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2827716
I haven’t read it and don’t know anything about the author. Admins, if it would be better somewhere else, feel free to move it – don’t want to derail this thread.
@Badger,
One thing I learned from the paper you link to is that applying tax rules retroactively is common. To which I reply, “WTFO?”.
Was wondering do I have to file my expat taxes for 2015 before I renounce my citizenship. Or is it better to do the irs filing after renouncing? I moved to Australia in 2012 on a holiday visa, then married my husband here. I did not work from 2012-2014 July of 2015 we started a partnership business together. When we filed our returns in Australia this year I was told I had an obligation to file my U.S taxes for 2015 and was in complete shock. So, questions questions galore I am having atm. Do I go ahead and complete this 2015 filing I am in the process of getting all of my information and tax return from Australia the tax agent in America needs…or do I do the paperwork to renounce first and then do my taxes after? Do not want to mess anything up in this process. Do I fill out the paperwork myself for renouncing or do I need an attorney? Ty for the info in advance!
@ ANGIE,
A person can file the required tax forms before or after their renunciation.
Quite a few people have renounced first to get the citizenship ended as soon as possible. Then, to neatly check out of the IRS, you have til June 15th of the year following renunciation to complete tax filings.
Dept of State basically doesn’t care about one’s tax status, as the citizenship itself (and the issuance of the CLN) is not dependent on one being tax compliant.
Here’s some info and links about the role of Dept of State and of IRS in renunciation:
(1) Dept of State
DoS’s involvement/connection with tax is the following:
(a) At the consulate the person signs DS-4081, Statement of Understanding of Consequences; one of the 12 items on it is Item 10, that renouncing “… may not exempt me from US tax income taxation [etc] …”
(b) The questionnaire, DS-4079, at q. 13 (e) asks “Do you file US income or other tax returns?” The tax question on the DS-4079 is one of several about indicators of your ties and connections to the US. These indicators are important if you’re claiming to have relinquished some years ago (in which case you’re trying to illustrate your lack of ties/connections/citizenship behaviour).
For renunciations, it’s irrelevant if you have ties/connections/citizenship behaviour or not, so many consulates do not require the DS-4079 for renunciations (only for relinquishments). But if your consulate does require it for renunciation, 13(e) won’t affect things anyway.
(c) Dept of State is to provide IRS with a copy of each CLN they issue as per DoS Interagency Coordination and Reporting Requirements, 7 FAM 1243(a).
(2) IRS
To log out of IRS and avoid covered expatriate status, IRS requires that the person file their exit tax form (8854), their final year form, and the five-years-previous-to-final-year forms, by June 15th of the year following the renunciation.
FWIW, if a person chooses not to file, the citizenship itself remains terminated and the CLN remains valid.
Tysm all the information I needed.
Ah one more important question. When I make this appointment with the consolate do I need to pay the fee at this appointment for the renouncing?
@ Angie,
Yes, you pay at the appointment.
Also, I just noticed your last question in your first post.
You can definitely do that yourself. Most people do, as it’s a pretty straightforward procedure – much more paperwork than it needs to be, IMO, but the paperwork itself is pretty straightforward. If you have questions, you can ask here. Lots of people commenting here have renounced and are happy to reply.
The tax side of it is more complicated. Some people do it themselves, some use an accountant. Once again, whether you’re doing it yourself or using an accountant, if you have questions, just ask and someone(s) will reply based on their experiences.
Ty again! So glad this site was posted for me to find.
I think there was a post among the many thousands here that explained why the IRS form 8854 should be sent to two addresses, but after a long time searching sorry I cannot find it. Please can anyone remind me what the two addresses thing is about for a non-covered expatriate.
@fn0,
Does this help? I don’t know much about 8854s, but sounds like you send your 1040, possibly with the original 8854, to some address (presumably in the 1040 instructions?) and send either the original or a copy, depending on circumstances, of the 8854 to Philadelphia.
8854 instructions, page 2, column 3:
Hi Angie,
I renounced in Sydney earlier this year. They did not require form DS4079. They were pretty quick with scheduling the appointment. You can pay the fee on the day of your appointment with a credit card (in USD) or with cash or bank cheque (in AUD). The staff at the Sydney consulate were polite and professional.
This is just a thought for those who take the oath of renunciation of U.S. citizenship, left their U.S. passport, as required, at the Consulate, but may need to enter the U.S. for whatever reason before they receive the CLN. It is possible that a U.S. border guard might be upset that you, still a U.S. citizen, are not entering the U.S. with your U.S. passport.
My suggestion is that you ask the Consular official at your renunciation for a letter, stamped with the seal of the Consulate/Embassy, describing what took place and stating that your U.S. Passport Number …. issued on … etc. has been retained by the Consulate — and that a replacement passport will not be issued. The Consular official should be willing to provide this simple statement of fact letter.
— As to another possible renunciation site in addition to Iceland, I mention Bahamas (flight costs are “low” from Canada), although it appears that actual renunciation appointment times will only be made beginning in October (I could be wrong on this). Bermuda and Barbados told me that they serve only local residents (see also Eric’s post: http://isaacbrocksociety.ca/2016/04/07/almost-no-u-s-citizenship-renunciation-appointments-left-during-2016-in-dublin/)
Like Karen’s experience above with the Sydney Consulate, I found all of the staff at the Iceland Embassy to be “polite and professional.”
— Next year I will renounce my tax citizenship from the IRS by filling out the 8854 (I will do this myself) and the 2016 1040’s (an accountant will do this as I have never figured out how to do the calculations even though I never owe any tax). The new draft 8854 form and instructions for 2016 are now out and look to be about the same as those for 2015. Following Phil Hodgen’s blog advice, I will also file early in 2017 the IRS 4868 automatic no cost no downside extension to October 17 filing because you never know what may happen that could cause a delay.
@Badger
Erin L Fraser just popped up on the American Expatriates Facebook page with these nifty graphs and charts from his Taxmonger website:
http://www.taxmonger.com/2016/08/26/the-escape-hatch-expatriation-2/#axzz4IdilgUYX
His bio is easily found on LinkedIn, complete with links to a treasure trove of articles he wrote on US tax as it affects Americans living abroad.
@fn0, to add to what Pacifica noted re the address for the form 8854 that goes to Philadelphia as well as accompanying your last return.
Important to note:
Filing the copy of the incomprehensible form 8854 to Philadelphia – in addition to the one that is supposed to accompany your last return) has a potential gotcha trap in that it has no alternative delivery address for delivery to Philadelphia via courier; http://hodgen.com/you-cant-file-form-8854-via-fedex-or-ups/ . I checked the source that Phil cited, and the 8854 is still not on this list https://www.irs.gov/uac/where-to-file-forms-beginning-with-the-number-8 . You can check by trying (TRYING because the # is long distance, not tollfree, and in Puerto Rico, and when I tried I was on hold for long periods and cut off, and paid a big long distance fee – so try Skype instead maybe).
Just a flag of this mostly undiscussed problem (which I’ve only see Phil H. address). And that last problem is like the coup de grace – a last potential trap for the unwary, coming after all the other efforts to achieve perfect holy US ‘compliance’ and renounce as per US instructions. Cause of course not filing timely comes with the usual threat of potential $10,000. penalty and the threat of being deemed a covered expatriate.
I checked, and the IRS hasn’t addressed the problem, doesn’t note it for the unwary, and hasn’t added an alternative courier address for the Philadelphia copy of the 8854. Obviously they don’t want to help anyone actually do what they demand as “the right thing”. Obviously they are content to continue to pretend that we’re all filing the 8854 from INSIDE the US. Obviously they’re content to pretend that there isn’t any problem with assuring and proving timely filed 8854 delivery to Philadelphia from OUTSIDE the US. Obviously they don’t give a shit about those outside the US.
So glad its over – yet another reason the US can kiss my Canadian only.
@ Stephen Kish
My husband received just such an interim letter as you describe from the Calgary consulate, back in 2014. The wording of thatletter is containted in this comment:
http://isaacbrocksociety.ca/renunciation/comment-page-83/#comment-1131208
It sounds like you have carefully planned your exit (guess nowadays they’d be labelling it a Kexit) and I hope your CLN arrives quickly so you can send in the final paperwork long before that extension is needed.
@Stephen and all, watch out for the form 8854 delivery problem http://hodgen.com/you-cant-file-form-8854-via-fedex-or-ups/ . Major pitfall only to be found out at the last minute when trying to file timely and prove it for the copy that goes to Philadelphia.
Oops meant to type … The wording of that letter is contained in this comment:
Finger spasms or brain burps today … not sure which.
Watch out Canadians, apparently still some caught in citizenship limbo;
https://www.thestar.com/news/immigration/2016/08/28/bc-woman-fights-to-get-citizenship-back-after-obscure-rule-leaves-her-stateless.html
@Stephen, Badger and all:
Regarding Phil Hodgen on form 8854 delivery problem:
http://hodgen.com/you-cant-file-form-8854-via-fedex-or-ups/
He says, Since you are relying on an unreliable delivery mechanism, at a bare minimum get every sort of proof of mailing that your country’s Postal Service gives you. I have gone through these battles with the IRS (IRS: “You did not give us your piece of paper”; You: “Oh, yes I did”) and you can win them.”
I mailed form 8854 by Canada Post to:
Department of the Treasury
Internal Revenue Service
Philadelphia, PA 19255-0049
You can get a tracking number and signature upon delivery. I kept all the paperwork for my own peace of mind.
EmBee, the text of the interim renunciation letter that was given to your husband is almost identical to that provided to me by the Iceland Embassy. I have the feeling that if (my co-renunciant and I) had not asked for the letter, it never would have been provided.
@PatCanadian, thanks.
Canada Post kept telling me in previous attempts to mail stuff to the IRS and assure a guaranteed timely delivery with proof, that they could not guarantee delivery by a certain time – via registered mail to the US – as they said once it crossed into the US it was then mingled with the regular US mail stream (the station I used also had an internal memo to that affect taped to the wall behind their station). They said they were not responsible once it crossed into the US. I was worried because the Canada Post receipt date isn’t recognized by the IRS as proof of timely mailing.
That is why I kept using FedEx overnight instead for most of my correspondence and submissions to the IRS (at substantial cost). I got tired of hedging by Canada Post, and though more expensive, FedEx provided more assurances. But ran into the snag and realization at the last hour that the 8854 Philadelphia address doesn’t have an alternative delivery address listed for couriers as do all the other forms I had filed before https://www.irs.gov/uac/where-to-file-tax-returns-addresses-listed-by-return-type https://www.irs.gov/uac/submission-processing-center-street-addresses-for-private-delivery-service-pds . I couldn’t get through to the IRS domestic helpline and the international one is in Puerto Rico and I’d been on interminable hold and cut off that one before. I had run into a time crunch because my US preparer sat on the 8854 for months and months and kept producing incorrect versions up to the last (she didn’t understand the form at all, I had to keep giving her copies of info from here and elsewhere to help her, and making corrections as far as I could understand what was required – ex. valuation of future pension plan benefits – as per instructions posted here thanks to @LM http://isaacbrocksociety.ca/renunciation/comment-page-97/#comment-1338642 ). She even made a currency exchange mistake and expressed the values inconsistently in CDN vs. US dollars). I myself did not send the Philadelphia 8854 via Canada Post or the US postal service. There was no info anywhere to be found re courier delivery, and it was before the helpful clarifying post by Phil. I sent it via FedEx overnight to the IRS Philadelphia address for international taxpayers https://www.irs.gov/uac/contact-my-local-office-internationally which of course is not as per instructions. I decided better to file the Philadelphia copy timely to IRS Philadelphia International office via IRS blessed FedEx overnight ( https://www.irs.gov/uac/private-delivery-services-pds ) with proof than to take a chance on Canada Post after they hedged (with the potential 10,000. penalty and covered expat status threat for not filing the 8854 copy to Philadelphia timely). I also sent a copy with my last return via FedEx.
That was years ago – and haven’t heard anything, and in any case, I am done as far as I am concerned. I kept everything as proof. They weren’t going to get anything more from me.
With enough lead time, what you suggest is probably best. Or, for those near the border, and if able to cross into the US without trouble, then perhaps one could drive it to the nearest US post office.
I didn’t do it as per spec, I did it the best I could in the time I had. Imagine the stupidity of that form having no courier delivery address when we’re outside the US, and the IRS doesn’t recognize foreign postal service dates as official for timely mailed = timely filed ?
More useless UScompliance related costs that sucked savings from my Canadian family, and benefited no-one but private courier companies. The US Treasury got not one single dime from me after all those dollars, hours, turmoil and energy expended to get my freedom papers in the manner they prescribed. They had to process all those pages, spend US tax dollars to do so, and made no profits. That of course may change since the IRS ‘Future State’ plans to generate income for the IRS via user fees http://taxpayeradvocate.irs.gov/reports/fy-2017-objectives-report-to-congress/volume-2 .
@PatCanadian, a correction. I think I used the address; Submission Processing Center, 11601 Roosevelt Blvd., Philadelphia PA 19154 to courier my Philadelphia copy of the 8854 to, (not the one listed on the International Taxpayers page as I cited above).
I used this list below because I didn’t know that the form 8854 copy to go to Philadelphia had no street address for couriers to deliver to.
http://www.irsmanual.info/internal-revenue-manual-table-of-contents/part1-organization-finance-and-management/part1-196/
Cautionary note to all readers. That is NOT the address given on the IRS 8854 instructions.
The 8854 instructions https://www.irs.gov/instructions/i8854/index.html say only;
Department of the Treasury
Internal Revenue Service
Philadelphia, PA 19255-0049
Which does not identify a street address, and thus private Couriers cannot deliver to.
I am not recommending what I did.