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
@Maz “If … a US citizen due to place of birth has never had a SSN, that person simply doesn’t exist as far as the US government is concerned. Such a person is not presently in the US tax system…”
That may be true, but it’s not the perceived threat. The threat for @Tortured (and other accidentals uncomfortable with hiding, deception, and non-compliance) isn’t that the U.S. State Department will pass a SSN on to the IRS and by so doing, put them into the U.S. tax system.
The immediate threat they fear is that their bank and the CRA will do the job of “putting them into the U.S. tax system.” And they are facing how to deal with what they feel is an essential part of their integrity.
Once in, getting the SSN is viewed as a necessary part of the path out.
@Shovel. The fact that the CRA passes on somebody’s account info to the IRS does not put a person into the US system. All the IRS would know at that point is that a bank noticed that the person had some sort of US indicia but without a SSN to match it with that info is useless. The mere existence of an account does not equal US tax liability and the IRS knows that.
Without a SSN the IRS really can’t do much with that info. The worst they could do is mail a letter of inquiry to the person. It is the act of obtaining the SSN and giving it to your bank or the US consulate during the renunciation process, or using it to file something with the IRS that gets a person into the US system and on the IRS radar. That’s what I don’t understand. Why would people needlessly put themselves in harm’s way? Heck, I DO have a SSN, I AM in their system (or at least used to be…I haven’t filed anything for years), and they aren’t bothering me. There is no risk to those who don’t have a number and have never been in the system.
In my opinion, those without a SSN would serve themselves best to just let sleeping dogs lie. I think the fear campaign of the last few years has driven people to react in ways that are not totally rational and are directly harmful to themselves. Perhaps because I was a Vietnam war resistor I am more comfortable with defying the US government than some others are.
Well said Maz. Canadians should not tell their banks where they were born and should not get a S.S.N. There are 250 million tax returns filed each year. Without aS.S.N. the computers are flummoxed
@Bubblebustin – I agree for the reason you gave. It is likely more accurate to say “Only you can decide what you think will help you sleep at night.”
@maz57 – In addition to the reasons you listed why some might put themselves thru the hassle of getting a CLN, I will add one that you’ll probably not agree with as being important (this assumes renunciation, not documenting a prior expatriating act) – renouncing stops the tax clock from ticking. Some people who this may be an issue for are folks who are sitting on a home in Toronto or Vancouver that has appreciated by a ridiculous amount, or even a home held for several decades in a less real estate crazy part of the country. Should they sell their home while still a USC, they could be on the hook for a high 5 or even 6 figure tax bill to the IRS. Should they die while still a USC, their estate could be on the hook for this massive tax bill. In the latter case, the executor is on the hook for any liabilities that were not paid out of the estate. This means that unless the executor is a trusted family member, and especially if the executor is a professional of some sort, the executor may very well feel the need to put the deceased USC thru Streamlined and pay any outstanding taxes – the result is less money for the inheritees (probably being deceased USC’s kids) and unearned money for the US government.
Now, in the case of selling the home, you could argue that the IRS would have no way of knowing about the sale. That’s probably true, at least at this point in time. However, the sale of a home that generates a large tax bill results in a very concrete liability that the IRS would pursue should they ever get wind of it. And I would expect that would keep some folks from sleeping well at night (YMMV).
@tdott
I’m glad you brought up executors – it’s something I’ve been wanting to address in this thread.
Is it ethical to not disclose one’s tax obligations when appointing a power of attorney or executive to one’s estate, when such designation will make them liable to the US government on your or your estate’s behalf?
@maz57
I fully agree with your view. I do not have a SSN and will never get one. I will not comply with the USA’s unjust tax laws just because I was born there.
@WestCoaster
I have crossed the border a number of times in the last 5 years (Canadian passport with US birthplace).
I have never been asked to get a US passport. A friend of my wife’s (an “accidental” like myself) has crossed many more times than me; she was told once a few years ago to get a US passport, ignored it, and continues to cross frequently with no problems.
Ironically, with all the current attention on Trump’s ban on people born in the 7 Islamic countries, I think that likely the last thing on a US border agent’s mind would be to hassle someone actually born in the US.
Crossing frequently without problems is no guarantee that you will not eventually encounter the border agent who hassles you.
How f*cked-up have we humans made “our” world? We erase, eliminate, or make extinct. All in the name of “healthy competition”. Worse? We allow sociopaths to hold high office! They need to be studied & then brought into asylums.
I think, “corroboration/compromise/collaboration” looks better. And before anyone rants about full-on Communism, we are an intelligent bunch who ought to be able to hammer things out– unless the sociopathic overseers (who have worked for generations to amass wealth/power whilst giving the illusion of “choice via voting” are asked?) put a stick in it to frighten the sheeple away from such a thing.
@Jane
Buddhists are so right with their “middle path” idea. Everything in moderation. The balance between capitalism and socialism has been lost so many times in one direction OR the other. Why can’t human beings be balanced?
Thanks to all for your responses. Greatly appreciated.
I was not aware one had to have a SSN to renounce. I do understand you must have one to comply with the taxes the following year.
I was also not aware you had to have a passport to obtain a SSN
I will go back over your comments and make sure I was understanding what I was reading.
I will be back!
Just wanted to add, I feel my biggest problems are/will be with banks and CRA than with the US/IRS. Not meant to excuse them for this mess.
@fn0
Of course not. Who knows what the US gov. will start doing tomorrow? But experience to date has shown that no Canadian passport holder with a US place of birth has been detained or denied entry at the border. For whatever reason, they are not enforcing that “must have a US passport” law on Canadians.
In my opinion (and personal experience), WestCoaster’s comments are generating unnecessary fear. Ever since learning about FATCA, I do not like travelling to the US. I go there as little as possible and will no longer take family vacations in the US.
@Tortuted you DON’T need to have an SSN to renounce, absolutely not. Renunciation has absolutely nothing to do with your tax status, they can’t even ask you if you’re tax compliant. They can point out that you’re supposed to deal with any tax issues, but that’s all they can do.
Nor do you need an SSN to get an American passport. IF you have an SSN then you need to put that on the application form, but if you don’t then you can do the following:
“If you would like to apply for a U.S. passport, and you don’t have a Social Security number, you will need to submit a statement, signed and dated, which includes the phrase, “I declare under penalty of perjury under the laws of the United States of America that the following is true and correct: I have never been issued a Social Security number by the Social Security Administration.”
https://travel.state.gov/content/passports/en/passports/FAQs.html#SocialSecurity
I can see no reason why you’d need a US passport to get an SSN. After all let’s face it, most Americans don’t have a passport.
@Tortured
Good news! You can now apply for a SSN in Canada, so you do NOT need to get your US passport renewed or cross the border.
https://ca.usembassy.gov/u-s-citizen-services/social-security/
You don’t need the SSN to renounce, but you do need it if you want to sever ties cleanly with the IRS. A friend of mine tried to do this with a TIN (tax identification number) but was informed that she needed a SSN since she was filing papers for a period of her life when she was still American and TINs are for non-citizens.
@Mr. A.
Sharing my experience about crossing the border on my Canadian passport and being asked for my US passport in order to cross generates “unnecessary fear”? My policy in life is forewarned is forearmed; Tortured might not have been aware that it is illegal for US citizens to cross the border into the US without a valid US passport, so I felt it would be irresponsible not to tell her. As it turns out, Tortured can apply for a SSN without having to go to the US, so it’s a moot point.
Tortured Glad to see you haven’t been driven away by all the conflicting replies.
This is a current list of what is needed to renounce (from a Canadian consulate via a friend who has an appointment soon)
Note. – You probably never had a U.S. passport, Report of birth abroad, or Cert. of U.S. citizenship . so you would need a birth certificate. It is best to obtain a modern one. The easiest way is here.
https://www.vitalchek.com/birth-certificates
– you do NOT need a S.S. card if you don’t have one.
Honestly, why bother?
@tdott.
“Now, in the case of selling the home, you could argue that the IRS would have no way of knowing about the sale. That’s probably true, at least at this point in time. However, the sale of a home that generates a large tax bill results in a very concrete liability that the IRS would pursue should they ever get wind of it. And I would expect that would keep some folks from sleeping well at night (YMMV).”
IF the IRS got wind of a large capital gain on the sale of a Canadian house and IF they tried to levy a large tax claim due to that sale (a couple of very big ifs), the IRS would be stopped dead in their tracks due to the fact that the CRA doesn’t assist the IRS in collection if the tax payer was a Canadian citizen at the time that that so-called tax liability arose. In other words, the only way the IRS would ever get a penny would be if that Canadian citizen volunteered to pay them. I don’t know about you, but I sure as hell wouldn’t send them any of my money if I found myself in that situation. (I would, however, contact the local media to tell the story. That would be good fun.)
Aside from the general immorality of such a tax claim, for many older Canadians their principal residence forms an integral part of their retirement planning. Sending a large chunk of their net worth off to a foreign government would be a financial disaster. This is a good example of the incompatibility of the two tax systems and why trying to comply with all the silly US rules is totally impossible. There is no doubt that there are some people who are losing sleep over all of this, but I’m not one of them.
In response to Karen
I have not yet filed my last return 8854 and 709. It is on assets in my country of residence and acquired after leaving the US.
@WestCoaster
I was referring to your statement:
“Speaking of bad advice, you are recommending Tortured ignore the fact that it is illegal for US citizens to cross the border into the States without a valid US passport.”
Tortured or anyone else reading this could easily get the impression that the US border agents are going to treat them as an escaped felon if they dare cross the border with their Canadian passport. Nonsense. And you yourself admit that you haven’t crossed the border in five years. Enforcement is not “on the rise”. In the last few border crossings I’ve had, the US agents have been downright friendly! I think that the situation has been the same for years – always the chance of running into the less than charming agent, but in the end entry will be granted.
Until someone with a Canadian passport and US place of birth is actually denied entry into the US, there is no reason to believe otherwise.
Re: the list of required documents needed to renounce US citizenship that Portland posted above.
Am I the only one that finds it totally ridiculous that the Consulate first insists you must prove to them you are a US citizen before they will allow you to renounce that citizenship? Why on earth would a person who is not a US citizen pay $2350 and go through all the rigamarole to get rid of something they don’t have? Its a sure bet that anyone who shows up for their appoinment is a US citizen and wants to fix that problem once and for all.
@Mr. A.
We’ll have to agree to disagree on what constitutes fear-mongering. I never once stated that I was treated like a felon, nor did I imply anyone else has been or would be. Nor did I ever say anything about border staff being anything but professional.
I stated a fact (namely, that is illegal for US citizens to cross the border without a valid US passport) and shared my own personal experiences crossing the border (which often resulted in being asked for my US passport when I only showed my Canadian passport).
@Robert1
I am confused by your latest statement , it seems to be a non sequitur to Karen?
There have been responses to the previous question that you asked (re gifting and expatriating in the same year) in the thread….
http://isaacbrocksociety.ca/2016/05/23/reminder-why-it-is-good-to-question-what-you-are-told-by-the-tax-compliance-industry/
Your last return, 709 and 8854 should be filed by June the year after your expatriation, but they cover previous year up until the day before expatriating. The 8854 should cover your entire net worth worldwide on the day before expatriation. If gifts were given before this date then they can be excluded in your net worth calculation.
The 709 gift tax form hopefully should not trigger any tax liabilities and count towards your unified credit depending on the amount and to whom you have gifted. Phil Hodgen has only just changed his opinion re this and it is still open to interpretation. Many have done as you have done, (both gifted and expatriated in the same year) and there have been no reports yet of a problem
Before deciding what to do re filing 709, maybe an email to Phil asking if he has encountered any problems in the past .
Best of Luck
@Robert1
It appears to me that you have 3 options (there are probably more):
1. File the forms you expected to file when you renounced – take the unified credit as a US citizen. As noted in the other thread, this is a very complex area and no one seems to be entirely sure of the answer.
2. Apply Petros Principle #1 – How will the IRS know that form 709 should have been filed?
3. File the 709 without the unified credit and pay the gift tax.
In my response to your original question, I asked which country you were in. I understand your reluctance to answer – here’s why I asked: There are five countries with treaties, like Canada’s, that say that the local tax agency will NOT assist the IRS in collecting a tax liability that accrued while you were a citizen of that country. If you’re a dual citizen living in one of those countries, then that might help you sleep at night.
The gifted assets are not US-source. If you have no US assets, then the IRS will have trouble collecting, if it should determine there is tax due (even if you’re not in one of the countries listed in the link above). I don’t believe any minnow here has had their final returns audited – and no one has reported having a 709 audited in this situation either.
As I said on another site:
Of course, this is just my 2cents. You need to choose the course of action that helps you sleep at night.
Regarding the US law that requires US citizens to use a US passport when entering the US:
I believe this law has been on the books for a long time but for years was little known and little enforced. I remember crossing for decades with nothing but a birth certificate and experiencing no trouble at all. Then 911 happened and the US rapidly got way more picky about who was coming into the country. They gradually ramped up the WHTI (Western Hemisphere Travel Initiative) and by about 2007 they insisted on a passport (or some other type of secure travel document from a very short list) to enter the US. I think that was when they revived that old law.
At that point I had no choice so I applied for a US passport because I was not yet a Canadian citizen. A few years later I did become a Canadian, immediately got my Canadian passport, and have entered the US many times since on that Canadian passport with no trouble whatsoever. Most of the time the subject is not even raised but occasionally one of the border guys will take notice of my US birthplace and tell me that I could get a US passport, should get a US passport, or must get a US passport. I always nod politely and I’m soon on my way.
The worst experience at the border I ever had was when I was still using on my US passport. The guy suspected I might try to work down there, overstay my allotted time, or God knows what so he dragged me into the office and raked me over the coals for about half an hour. That guy was totally confused because entering as a US citizen I had the perfect right to move to the US and never set foot in Canada again. What’s the moral of the story? No matter which passport you use there is no guarantee you won’t have a problem because everything is at the whim of the individual border guard and if he is having a bad day, you will have a bad day.
I actually feel safer entering on my Canadian passport because they at least seem to give you a little more respect. If a person ever did get into some sort of trouble down there at least the Canadian government could potentially assist whereas if you enter as a US citizen the US can do whatever they want with you.
Agree with all of the above. Over the past ten years I’ve only once been stopped for using a Canadian passport with US birthplace, and that actually came up during a long whiny conversation about how a business trip to see a client for a couple of days was “working” and needed a visa. After that, despite all the notes he typed in, I’ve continued to use my Canadian passport, unmolested.
Weirdest thing that ever happened was back in the 90s, long before the passport requirement, when I went to grad school in the US for a few years. Flew home for a long summer visit, borrowed my in-law’s car to pop over the border and pick up something I’d shipped by UPS, and was told that as a US citizen I could not bring a Canadian vehicle across the border because I might “import” it. I had to go in and explain that no, I wasn’t going to drive my in-laws ancient rusting camper van from Vancouver to Chicago just so I could make a fortune by selling it south of the border. They got upset when they noticed that I had two licenses, one BC and one Illinois, and tried to take the BC license. I said forget it, this is a motor vehicle license not a passport, if Illinois didn’t make me give up my old one, I’m keeping it for when I move back home. After much grumbling I was allowed to continue.
@Maz57
That border guard was an idiot. When one asks me how long I’m staying even when I show them a US passport, I’m tempted to say “however long I’d like”, but that might result in me missing my plane.
Funny how Canada just gave a couple months notice and now won’t let any Canadian who doesn’t have a Canadian passport enter Canada. Have to wonder how many Canadian who missed that bulletin are going to find themselves “denouncing” Canadian citizenship at immigration.