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
@Polly
I didn’t have an AU passport but did have my citizenship form.
Not sure if statelessness actually matters? Maybe John Richardson or Allison Christians could enlighten?
Countries may not collect for the IRS but what about extradition? Would a tax debt incured while a US citizen be a reason to be extradited to the US even after USCship is relinquished?
“Just rereading your post, 6 years is a long time to wait for a passport by investment and to hold your nerve.
You could continue to fill your usual tax returns and omit the new fbar and see if anything happens. There have been reports of statements from agents of ignoring those abroad because of the lack of the ability to collect. You always have the choice to stop filing at a later stage.”
Better to stop filing altogether than to file partially over a p-o-p jurat.
Extradition is very expensive and reserved for multi millionaires. They aren’t going to extradite for a few fbar penalties.
The IRS are nasty but are realists.
@jane
We did first suggest statelessness to Barbara but I think it would have been impossible for her to open another bank account and buy an investment /passport property as a stateless person.
Thanks for the feedback. It does seem that opinion is trending at IBS and at other forums that those off the radar should absolutely stay off and that those on the radar like me should strongly consider dropping out. Well, hubby and I have until June to decide. Maybe if our paperwork comes through soon for our investment visa, we’ll feel more confident about considering such a big step as non-compliance.
When I search my heart, the idea of not filing anymore starting this year actually makes me feel much more peaceful than the thought of the annual stress when submitting our US tax forums and FBAR. This is indeed the peace I seek.
Statelessness is out of the question. In the meantime I expect some heated discussions during our evening walks.
@Barbara
I do hope it does not cause too much discord while walking, you can always try running 🙂
We had a fair amount of conflict between us until the decision was made and the deed was done.
I came out of that Embassy happier than I have ever been and we have never had a moment of regret. I wish you and your family a safe journey through this process.
barbata
how can the irs audit someone who is no longer a us citizen and has no us assets nor bank accounts?
impossible.
@patrick
Barbara is one of the unlucky ones who does not have access to another citizenship except through a citizenship by investment program offered by some countries but this can take some time and a fair bit of money.
The IRS has 3yrs to audit you after renouncing your citizenship.
“The IRS has 3yrs to audit you after renouncing your citizenship.”
You mean, under US law?
Once you’ve renounced you’re no longer subject to US law.
@ Patrick
The IRS can audit within 3 yrs of your final tax return but they cannot collect unless you have funds in the US or your country is one of the 5 that has a tax collection treaty with the US that is
Sweden, France, Netherlands, Denmark, Canada, BUT these countries will not collect if you also hold their citizenship.
http://isaacbrocksociety.ca/2016/11/01/dual-citizens-of-sweden-france-netherlands-denmark-canada-take-note-your-country-will-not-collect-for-the-u-s/
How are you doing with your appointment and SSN problem ?!
Plaxy
Yep, we know, just saying, but you may get a letter, what you do with it is your decision.
@Plaxy
Some here have more than just themselves to consider when dealing with the IRS, they may have US heirs and want to exit cleanly, that’s why it’s always best to be in full possession of the facts, (or the enemies tactics) or however you like to think of them. I got some post renunciation IRS letters (not an audit) that I did not ignore and managed to sort out and I am pleased I did.
“Yep, we know, just saying, but you may get a letter, ”
Some may know, some may not. It’s important for those renouncing or contemplating renunciation to know that the IRS doesn’t have the power to audit former citizens.
“The IRS can audit within 3 yrs of your final tax return but they cannot collect unless you have funds in the US or your country is one of the 5 that has a tax collection treaty with the US that is
Sweden, France, Netherlands, Denmark, Canada, BUT these countries will not collect if you also hold their citizenship.”
More to the point, they can’t audit or assess, so the scenario of the IRS getting a foreign country to collect US taxes from a resident is simply unreal. No need for renouncers to fear the US.
“I got some post renunciation IRS letters (not an audit) that I did not ignore and managed to sort out and I am pleased I did.“
Which is fine. That’s not scary. The thought that the IRS might have the power to audit and collect is scary. I agree people need full information – especially information on what the IRS cannot do.
@heidi
how can they audit you if you have no us assets ?
send a letter to you in a foreign country then ask you a bank statement from where?a bank they do not know of and then what?
To collect funds you have to assess how much is owed and then collect it…
@ Patrick
You had directed your question to Barbara who had only American citizenship and had been compliant taxwise for many years, she was trying to come to a difficult decision, it is not the same for us all.
Of course they can audit you if they have all the tax and bank information and they have an issue with it, but collection is another thing entirely. You are mixing up the two processes.
If they have no information taxwise then they are in the dark except for bank reports on US persons who could at some stage receive a letter from the IRS , …so what?!
“Of course they can audit you if they have all the tax and bank information and they have an issue with it, ”
No. They can’t. They can assess tax due if the renouncer has filed. They can’t audit and they can’t collect.
Presumably a renouncer who files is likely to include payment for any tax due – otherwise why file. End of story.
If the IRS has a problem they obviously can send a letter asking questions. The renouncer can answer or not. as they choose.
Exactly
That’s why I and others advised Barbara to go for option 4!!
Those who are tax compliant and there are some… can officially be free of the IRS after 3 yrs or choose to ignore any letter if they choose.
“Presumably a renouncer who files is likely to include payment for any tax due – otherwise why file. End of story.”
NO, MANY WHO FILE, DID NOT OWE ANY TAX, I DIDN’T .AND EXITED CLEANLY.
No – a person who renounces is no longer a US citizen once they swear the oath.
Of course. That’s what I said: a renouncer who files is likely to include payment for any tax due: if zero, then zero payment. The question of auditing wouldn’t even arise.
Plaxy
We are arguing small points here.
Of course the IRS can question whether I owe them zero or what ever takes their fancy. I always knew I had to continue file as I had just retired ‘back home’ after living for many years in the US and in a way the Swiss banks made up my mind for me. I wanted out of that naturalized US toxic citizenship asap.
Barbara is in a different situation to both you and I and so I think is Patrick, so we really can’t equate them, just give them the facts and let them come to their own conclusions.
“We are arguing small points here.”
It’s not a small point for anyone who’s trying to decide whether to file that final year. They need to know that the IRS cannot audit them for three years after they renounce. That’s why I’m repeating it.
Most forums are read by lurkers, looking for information. This is a cheering bit of information they need to know: renounce and you’re free of CBT. No need to worry about being audited by the IRS.
@Plaxy
It all depends on what they have been doing up to this point, what they are comfortable with…
To file or not to file that is the question
Audit versus covered expat status, it’s all here for the digestion thereof.
Chose your poison.
The IRS can’t collect the exit tax either. That’s why California’s trying to figure out a way round that little problem.
https://www.jrviola.com/tax-news/2017/12/08/enforcing-exit-tax-expatriates-california-state-bar-recommends-change/
(Of course it would be sensible for anyone planning to renounce to
(a) remove any US assets from US jurisdiction like the gentleman says; or (b) file all forms and pay any tax due and respond to any subsequent IRS queries. And some may choose (b) even if they don’t have any assets.)
@Plaxy
“It’s not a small point for anyone who’s trying to decide whether to file that final year. They need to know that the IRS cannot audit them for three years after they renounce. That’s why I’m repeating it.
Most forums are read by lurkers, looking for information. This is a cheering bit of information they need to know: renounce and you’re free of CBT. No need to worry about being audited by the IRS”
It’s also not a small point to know that if renunciants have US heirs and they don’t want them to incur a 40% withhold on their NRA estate then they should attempt to be compliant and file returns before they expatriate. Lurkers often don’t know this fact either.
That is why I try to give all sides of the argument and let people make up their own minds.