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
@kabby
Yes it is hard to let go of the past. I also have good friends and great memories there but my renunciation does not change any of that, I go back at least once a year and visit as if nothing has happened. In fact my passage through immigration has proved to be a lot smoother as I am often welcomed to “ have a good vacation” rather than “how long have you been out, what was the purpose of your visit abroad?”, third degree type questions I received when I was a citizen!
I can spend up to 120 days a yr there rolling average, I can buy a holiday home there, if I chose to , but I can think of other nicer, safer, places I would rather spend my time
I have left childen behind there and after the first shock , they don’t seem to care one way or another that I renounced.
My spouse was a little more reluctant and wary of renouncing but after we did, we both felt a sense of relief and release with no regrets except for the inane US laws that forced us into doing this. US citizens abroad are only ever out on loan, they are never truly free.
A December 27 post on the Serbinski Forum:
Hi all, hoping to get some insight here. I filed forms 3520 and 3520-a this year in May after extending my 1040 in April. I just received a letter from the IRS stating that a $10,000 penalty has been charged due to failure to file form 3520a. I haven’t called the IRS yet as they are shut. It seems that the penalty is for a late filing of the 3520-a.
I looked back and read the 3520-a instructions in more detail and realized that it was due on March 31. I did not file the 7004 extension for it as I assumed that the 3520-a would go with the 3520. The 3520 and 3520-a was for my tfsa that i closed in 2017.
I filed the 3520-a under the name of the foreign trust tfsa account with all the relevant information and attached the grantor and beneficiary statements to the 3520. So basically the 3520-a filer was ‘My Name-TFSA account’. This is the way our accountant had done in the previous 2 years. This year, I decided to file on my own. So I guess the 3520-a was not a substitute 3520-a as the trust (myself) filed the 3520-a.
Just wondering what my options are now? Will the IRS abate this penalty? I have filed all my FBARs, included all my income from my TFSA in my tax returns and filed all other returns on time and owe no amounts to the IRS. This was not something willful. Has anyone gone through this? What was your outcome? Any suggestions will be appreciated.
Can you imagine? The guy tries to be compliant. He makes a mistake and the IRS slaps him with a $10,000 penalty!!! This is sick!
My parents emigrated (separately, met over there) to the USA, so I was the first generation born in the USA. Perhaps that’s why I found it easier to let go, in addition to the fact that I’d left the USA at 21 and have resided in the UK now for 32 years.
I also found it easier travelling back on my UK passport than my USA ones–far fewer questions!
I haven’t told my parents. I have told my sister, who thought I’d already lost US citizenship when I became a British one in 1993. When I explained re CBT etc, she said with sympathy, ‘It was too expensive for you to keep US citizenship.’
It was the right decision for me, and I have no regrets. When I listened to the Queen’s Christmas Message this year, I was proud that she is my sovereign. I feel very much at home in the UK, and I feel as if I’ve finally and fully committed to this country.
@formerpatriot
There is no reasoning with them, thats why so many chose to ignore their filing requirements. They are a rogue organization and out for what they can get (bonuses)
As someone here said, put the letter at the bottom of your birdcage, if you have no assets in the US there is nothing they can do to collect. Only 5 countries have collection agreements BUT also will not collect if you were also a citizen and resident at the time .
http://isaacbrocksociety.ca/?s=Country+will+not+collect+canada
@formerpatriot
The serbinski forum seems to be a tax accounting website. This may be a plant to encourage people not to file themselves but to get ‘help’ from their tax accounting firm. Who knows who here is a plant ??
@Heidi
I realize that Serbinski is an accounting firm but I doubt very much that they would invent such a story in order to scare people into hiring their services. Their forum is very active and it has helped a lot of people over the years. It is probably the best source of free advice for people with cross-border tax issues, regardless of their citizenship. I could be wrong but I doubt they would invent such a story (IRS penalty of $10,000 for someone who missed a deadline with some 3520 or 3520-A form) in order to scare people into seeking expensive professional help. I would think that the good reputation of their forum in important to them. The Serbinski person who answers most question uses the nickname “nelsona”. [Or maybe “nelsona” is actually different people at different times?]. To this day he (she?) has written more than 15,400 posts. I must have read a few hundreds of those posts. He (she?) always answers the poster’s question. He has never written anything like “You should contact one of our experts”. On some very rare occasions he has written something like “You may want to consult a lawyer”.
But, as I said, you never know…
@formerpatriot
There have been many ‘posed’ questions on this site from professionals looking for business, so many of us here have learned to not treat everything at face value
Interesting to see what ‘advice Serbinski will give.
Business is business and Brock is Brock.
@Heidi
There were a few back and forth exchanges and 2 other people added comments. But in the end nelsona wrote “It would be worth seeing a US tax pro on this; probably cost you less than $10K”.
That does not mean that the original post was “planted” by the Serbinski firm. Perhaps nelsona is just being honest. Perhaps the story is real and the advice is appropriate. I don’t know.
I’m just glad that I have convinced my family members to renounce.
@Kabby: Cancelled 3 weeks before. I prefer to keep my reason personal, but it is not related to the renunciation, something else required my attention and the fee. I was told if I wanted to reinitiate mt renunciation process, I would have to do so from square one and that is what I did.
A few weeks ago, I signed up for the “Expatriation only” newsletter at https://hodgen.com/newsletters/.
The newsletter is sent once a month, usually on the first Tuesday of the month.
This morning I received my first “Expatriation only” newsletter.
++++++++++++
In defense of Hodgen:
I do not work for Hodgen.
I gain nothing from referring people to that newsletter.
I just think that it is a useful source of information.
You try it and you be the judge.
Sure, Hodgen hopes to recruit new clients.
But I can read their newsletter for free and I don’t have to hire them.
I have a MasterCard.
Sure, MasterCard would like me to load it and pay lots of interest.
I always pay my MasterCard bill on time and I never pay one cent of interest.
@formerpatriot
Yes, Hodgen is oneof the few tax lawyer/accountants who is generally respected on Brock. He deals mostly in super rich clients yet has written extensive information freely to help minnows , I believe he has also posted on Brock in the past.
They aren’t all like him.
https://mailchi.mp/hodgen/expatriation-tax-liabilities-and-your-form-8854-balance-sheet-2640113?e=62942debda
Hodgen ‘s Jan expatriation blog. An exquisitely clear explanation. More to follow.
I could see that the ‘exit tax’ might be justified for those who have lived and worked their entire lives in the USA and are now leaving.
I do not accept that this should apply to anyone who has spent their entire working life outside of the USA, and only have assets in that other country, paid for by income taxed in that country.
So I shall not be filling in this form!
This issue of the newsletter seems to be being written by Debra Rudd rather than Hodgen.
I don’t agree with this bit:
“…Canada (residence-based) allows its citizens to live abroad and be taxed as nonresidents, while it is impossible for the US (citizenship-based) to do so. The US has tied nationality to taxation.”
Holding’s bill, though perhaps unlikely to become law, shows it’s not impossible.
It’s impossible for the foreseeable future. Unless of course one chooses to fly under the radar (which most do). As explained, Holding’s bill is going nowhere.
“The United States is not the only country that has an exit tax. There are other countries that impose similar rules. But the United States is unique in that it ties the exit tax to immigration status.”
The US is unique in trying to tax future income: income that has not actually been received, and for which the US doesn’t even have taxing rights.
Portland:
“It’s impossible for the foreseeable future. ”
Yes – I was criticising the newsletter-writer’s explanation, rather than thinking about the probabilities of the US actually doing anything.
The current mess continues because the US doesn’t provide US citizens with a non-resident option – not because they can’t.
@birdperson
I agree that an exit tax on unrealised gains could be justified for those who have worked a good portion of their lives in the USA and then chosen to leave, but the nasty sting in the tail is the treatment of their pension plans if they are deemed to be ‘ covered’ by having over 2,000,000 in total assets, which is not considered super rich in this day and age for those who have bought property and also saved diligently into a pension scheme. The RRSP’s for covered expats are treated such that they are sold the day before expatriation and subject to tax on the deemed sale or failing that you must agree to a 30% USwithold on distributions and waive all claims to any reduction of the tax in any tax treaty, thus subjecting your pension to double taxation by your country of residence. That Is really nasty for those who have worked hard and saved for a decent pension. It means they are effectively a prisioner of the USA.
Surely unenforceable if you live abroad, and all of your income and assets are in that country…
@BP
Absolutely unenforceable if your assets and pensions are outside the US, but if your pension is in the US and you are covered it will not quality for any tax treaty, it will be taxed in the US and then subject to tax again in your country of residence.
Unenforceable for residence-country assets and income, and unnecessary for US-source assets and income, which the US already knows about and for which it continues to have taxing rights.
Wonder if Hodgen has ever/ would ever suggest noncompliance on the exit tax knowing that complying would put a client into financial hardship or worse. That would be the true litmus test for any professional integrity.
@Heidi
I accept that, but I wonder, how would the IRS know unless they were told? What if a person merely renounced, stopped filing (if indeed they ever did), and never completed the 8854, even with assets or pensions in the USA?
@birdperson
The pension fund is a witholding agent for the IRS, a 30% withold is done automatically unless a non resident alien tax treaty can be proven and claimed. A cln has to be shown a W8ben has to be filed, if your plan has over 2,000,00 an automatic W8CE must be filed before any distributions are released thus relinquishing any claim to a tax treaty.
Oh, wow, thanks for explaining all that. I left the USA as a young adult so my pensions etc are in the country in which I now reside.