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.
Participants will need to provide their e-mail address (real or fake) and an alias. The only written rule is that participants must use a same alias each time they post (and not “anonymous” or derivatives thereof).
Bear in mind that any responses that you get from participants is peer-to-peer help, and it is not intended as a replacement for professional advice. Also, the Isaac Brock Society provides this disclaimer: neither the Society nor any of its members are professionals. We offer our advice here only in friendship and we recommend that our readers seek professional advice if they need it.
If you wish to receive an e-mail notification of comments, check the box to that effect when making your first comment.
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
@ WhiteKat
If no bank account closure but still reporting is part of Flaherty’s “great” IGA negotiation then I am not the least bit relieved. I’d rather have a closed account than have all my financial information sent to a foreign country via my own sell-out country no less. It has always been about the privacy issue for me.
@Em, agreed for sure, it doesn’t relieve me either.
I’m thinking that if banks won’t close accounts, all Canadians should just tell their banks to stuff it when asked about their birthplace, and then the banks can send EVERYONE’s account details to CRA to spen inordinate amounts of time and money trying to figure out which ones are OK to send to IRS and which ones are not!
And while they are busy trying to smoke out the ‘US persons’ at CRA, we can work on our many, varied class action law suits.
@Em, America didn’t plan any bank closures in Switzerland, Europe, Asia or anywhere else. They gave no warnings, no notices, didn’t offer any relief, didn’t have a disaster strategy plan and didn’t even apologize. Instead, they made threats while expats struggled to cope with what was thrown at them. I hope that things work out better for Canadians. If worst comes to worst, then Flaherty will shrug his shoulders on the way home.
@Swisspinoy,
You guys were guinea pigs; maybe Flaherty learned something the suffering in Switzerland, and at least negotiated in a ‘no accounts will be closed’ tidbit – as if that will appease the enraged ‘anti-fatcanatics’.
It does make me smile to imagine the ex-US person with CLN in hand, or the non-US person, or even a real, live ‘US person’ saying ‘Its none of your business’, when the nice lady at the bank inquires about birthplace, and then automatically ships off that persons account details to CRA to add to the growing pile of suspected criminals.
@WhiteKat, about a year ago, Americans in Switzerland were told that FATCA had been modified to prevent Americans from being denied financial services. 9 days ago, the Swiss press wrote:
The American response is to threaten the banks more. In response to the threats, the banks reject US clients. America accuses the banks reject US clients to cheat on taxes. The banks argue that they are FATCA compliant since they don’t have any US clients, which is true.
Maybe Canada has it all figured out, but America doesn’t have a clue.
@Swisspinoy,
I don’t think anyone can figure FATCA out. One difference, with Canada, as opposed to some other countries (and I presume Switzerland), is that currently place of birth is not asked for, nor is a passport required to open an account. Thus banks have a lot of ‘US person’ clients but do not YET know who many of them are. This gives ‘US persons’ here a little more of an advantage than in countries where banks already knew who most of their US person clients were even before FATCA.
@WhiteKat This is what I have been fussing over. You are correct – I want to renounce so that I am not considered a US person by the banks here. I have all joint accounts with my partner, a Canadian citizen, and I want to protect my accounts. I don’t want to bring myself to the attention of the US but I am not sure I have a choice. Unlike some who are stay at home parents, for example, I am a high earning Canadian citizen who has lived all of my adult life (and most of my childhood) in Canada – I cannot afford to be without banking / financial services and I can’t afford to have my partner’s accounts affected.
I appreciate your point that all of us, Canadians both solely and those considered dual, should refuse to provide banks with info about place of birth. However, I am concerned that banks will close accounts for anyone who refuses to provide that info (and my faith in human beings is limited – I don’t think anyone not directly affected by FATCA is going to take a risk of having all banking services cut off) and I cannot function in my country without banking / financial services.
@DM56, rumour has it that Canadian banks will not be closing accounts under a Canadian IGA, but as Swisspinoy pointed out, the reality could be quite different, and you need to do whatever helps you sleep better at night.
@DM56,
Have you seen this article by Phil Hodgen titled “Deliberately Choosing Covered Expatriate Status’?
http://hodgen.com/category/expatriation/page/2/
I spoke too soon. With regards to my recent post that I have not heard back from my email request for an appointment with Calgary ACS, I just received this:
I can’t see how to comment on Phil Hodgen’s blog. I would point out however, that whereas he was pretty dodgey on whether the CRA would collect a penny from the goat, the answer is absolutely not under the current treaty since the person is a CDN citizen, and the CRA doesn’t collect for the IRS from CDN citizens. Also, there is no extraordinary rendition. The extradition treaty between the United States and Canada does not allow for extradition due to a tax liability. Obviously Hodgen is stronger on the US questions than on the Canadian questions.
@WhiteKat – I had seen that and read it in a mild panic so had another look again. I guess I would say that I might want to be a happy goat. I want nothing to do with the US – not only because of this absurd FATCA business but for just about every other reason. The country and the way it functions revolts me and it disturbs and angers me that they have the power to insert themselves into my life.
I was debilitated by anxiety when I first heard about CBT (I was a happy Canadian, what would I know?) and FATCA . I might feel a bit different had I known about CBT and could have been filing and then renounced but I didn’t and now it’s a huge, costly mess. I won’t go to the US so renounced or not, that part makes no difference. I am only concerned about my banking in my own country. So, maybe the best thing is to say “never mind” when / if the consulate ever replies.
@WhiteKat looking again at the link you sent, doesn’t the goat scenario only apply if one completes Form 8854? Is that a requirement to get one’s CLN? If not, then couldn’t one just not complete that form and not come to attention as a goat? Or does the CLN not come until that form is submitted?
Thanks
@DM56
If you have no red flags (e.g. recently sold a principal residence with a gain above $250K or exercised employee stock options), then you may want to consider going Streamlined for a clean exit, if you qualify. The same Phil Hodgen referenced earlier advises getting out cleanly. As a high earner, you may even be able to afford to hire someone *reputable* to do the filing. From what I can gather, properly filed Streamlined applications are being approved with no hassles. Additionally, with any luck, foreign tax credits will result in you owing no tax to the US. Having said that, you seem to be saying that getting compliant would be a huge costly mess, so perhaps there is more to the situation than you have so far told us.
Of course, it’s up to you to determine the best course of action for *you*. And part of it will depend on things like whether you’re OK if you can never step foot in the US again (a future possibility for ostriches), and what your risk tolerance in general is, and whether a future change to the US-Canada tax treaty could have an adverse impact on you, and can you afford to get compliant, and etc, etc.
It’s a bitch of a thing to suddenly be confronted with, so good luck. On the plus side, the people of IBS are informative, amazing, and supportive,
@DM56
No, 8854 is not required to get a CLN. Once a person renounces, they are supposed to file 8854 by June 15th of the following year. [The CLN should arrive within a few months of renunciation, so you should have it well before that date.] Whether a person files 8854 or not, it has no impact on the loss of citizenship – the citizenship remains terminated as of the date of the renunciation.
As for coming to the attention of IRS, according to the Dept of State Foreign Affairs Manual, DOS is supposed to send IRS a copy of each CLN. I’ve no clue if IRS follows up on these CLNs or not, perhaps depends if the fruit is low-hanging or high-hanging.
@DM56
Could you post your birthplace and citizenship histories again? Searching here is not easy.
@DM56
I *believe* 8854 is NOT required to get your CLN. [Is a social security number required?]
However, be aware that there is a (surprise, surprise) $10K penalty for not filing the 8854. You would have to assess how much of a concern that would be to you.
Additionally, I believe information on renunciations is forwarded to the IRS (if it helps, mentally insert an expletive in front, I do). Assuming that’s correct, you will come up on the IRS’ radar in some manner. If you have a social security number, doubly so.
Arrrg, damn my slow thinking/typing – thanks, pacifica, for a definitive answer on the 8854/CLN question.
@tdott,
Social security number is not asked for on the DoS forms. I have heard that some consulates have been asking for it. [If you don’t have an SSN, it does not prevent you from renouncing.]
@DM56 –
The true out-in-a-blaze-of-glory approach involves filing only the 8854, saying that you don’t have five years of tax compliance, but showing (or asserting) that you’re under the threshold to pay the exit tax.
@DM56,
Sorry, I am no expert when it comes to renunciations and US forms, since I am playing the wait and see game for now. I just didn’t want to see you caught unaware of some of the potential pitfalls. It seems as though others here who’ve been through the process are giving you helpful advice.
@DM56,
Fora different perspective, you might also want to read this new article from Blaze over at MapleSandbox:
http://maplesandbox.ca/2013/canadian-protections-against-uncle-sam/
@SwissPinoy
Meghan L Weinstein gives the impression that renouncing US citizenship due to “increased filing requirements” could easily lead to being denied entry to the US under the Reed Amendment. She makes no mention of some dual citizens from birth being exempt from the exit tax although in her opening she refers to those being American citizens due to “the pleasure of being born on the other side of the border”. Makes you realize that for those in her profession it’s as much sales as it is advice.