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
@calgary411
How on earth do you always know when to appear? 🙂
@WhatAmI:
No, not a covered expat. Thank you for consulting with a lawyer. I would be amazed if even they can answer that with 100% certainty. As you say, there are so many unknowns right now. But if one is not a U.S. citizen and one has no SSN, it makes logical sense that an ITIN would not just be the best option, but the only one.
Regarding whether one is able to renounce without first acquiring a citizenship – I don’t think there is any certainty on this question. Of course all of the info I’ve collected is anecdotal, but if the stories are true there are people who have been able to do it. There are also people who have been denied this. Hard to believe something this important would be up to the discretion of the consulate, but hey, I’ve heard a lot of things that are hard to believe lately!
Actually my original question was not ‘will the CRA protect me from past delinquencies with the IRS?’ but ‘ Is there any reason to wait [to renounce] for [my citizenship] to come through, or do I act now?‘. I did ask earlier whether renouncing would make me a target of the IRS. I am aware that the IGA signed by Flaherty states that the CRA will not collect taxes and penalties from Canadian citizens on behalf of the IRS as long as the person was a citizen at the time the taxes and penalties were incurred.
Also, to be clear, if I refer to my “delinquencies” there is a reason I put it in quotes. In my case a “delinquency” means an unfiled form (what the IRS considers noncompliance). I don’t in any way consider this a real delinquency on my part since not only is citizenship-based taxation inconvenient, it is outright wrong and probably breaks one or two international laws, too. Of course the U.S. will not acknowledge the legitimacy of the International Criminal Court and it is easy to see why. But that discussion is beyond the scope of this thread…
Re: SSN application ( @WhatAmI, @tdott, @iamquincy )
I suppose it is good to know that a Canadian citizenship is worth something to those of us trying to deal with this mess, but unfortunately I don’t have one yet. Which means this may all lead to my sitting tight until my final papers come through. I don’t mind this terribly much for myself, but my sister has not even applied and it would be a much longer wait for her.
Also, even if it were convenient for me to cross the border to apply (it isn’t), I do not want to until this mess is dealt with.
(That’s not to say I don’t appreciate all of the experiences that are being shared here! They just don’t necessarily apply to my situation.)
@WhatAmI
I emailed son’s partner to ask her about her experience getting a SSN recently. She said:
“it was easy. It was getting the proof of citizenship that was more difficult. I had been put on a US registry at birth by my [parent] and had an expired passport from 1973 but this was not recognized as proof (as I could have renounced in the interim). So I had to apply for a certificate of proof of Birth Abroad [LM NOTE: she probably got this from the Embassy in the country of her birth]. Once that came through we booked into a Social Security office. My appointment was in the afternoon. I had to bring proof of identity (proof of birth abroad, Canadian passport and driver’s license showing current address). The appointment was brief–not more than 10 minutes. The lady was helpful and friendly and recognized we were in the US for under 24 hours. She gave me a second appointment time for 9 am the next day when the office re-opened to give me my SSN. This was done to ensure I didn’t have to wait in line and potentially miss [transport back to Canada]. At the follow-up appointment, she gave me my number on a scrap piece of paper. The official letter with my SSN arrived two weeks later.”
I know it is a bother going down into the States for many but hopefully this info will be helpful to some of you out there.
Well, I don’t understand this SSN application business at all. Why does a non-US resident have to go to such lengths to prove they have lived outside of the US for decades if the same person can walk into a SS office in the US and only prove their US citizenship and current non-US address???
@WhatAmI
I know, right?
But now I am wondering if when it comes to applying for an SSN, maybe having a VALID U.S. PASSPORT might be a good thing. Would this make it easier to get an SSN? Thing is, once I put my application in for an SSN, I am officially on the IRS’ radar before I’ve had time to comply/make my move. Call me paranoid, but I am really not crazy about this idea.
Wren –
Re: I am aware that the IGA signed by Flaherty states that the CRA will not collect taxes and penalties from Canadian citizens on behalf of the IRS as long as the person was a citizen at the time the taxes and penalties were incurred.
An ambiguity seems apparent in your references of this kind. You mean either
(a) A Canadian citizen becomes safe from CRA enforcement on behalf of IRS because of the Canadian citizenship, so long as any IRS attempt to collect occurs after the person has become a Canadian citizen
OR
(b) A Canadian citizen becomes safe from CRA enforcement on behalf of IRS provided that, during the period against which the IRS attempts to enforce, the person has been a Canadian citizen
My understanding has alway been (b). In other words, CRA will enforce on behalf of IRS against a Canadian citizen whose “offense” occurred prior to acquisition of Canadian citizenship. Corollary: Canadian citizenship is not an all-purpose bulletproof vest.
The only purpose here is clarification. The only concern arises from a sense that you may mean (a) rather than (b) and therefore stumble into a trap. This all assumes that my understanding is correct, which it may not be.
Any real tax lawyers who care to comment on this split hair?
@usxcanada:
You’re right. That wasn’t very clear. My understanding is that it is (b) as well.
@LM,
My previous comments, re: SSNs and Canadian passports were intended for you as well (long day). I’m sorry if you have answered this already but when did this happen?
I’ll call USG office next week about this SSN business and be sure to mention my citizenship status.
@ Wren
Son’s partner did this in Fall 2013. Good luck
@Wren
You said: “But if one is not a U.S. citizen and one has no SSN, it makes logical sense that an ITIN would not just be the best option, but the only one. ”
I agree completely, but I can’t rely on logic when it comes to the US government, or even my own government for that matter.
I’ve read in various places that Social Security and SSNs do not relate to citizenship. For example, you can renounce US citizenship and still receive your monthly SS benefit for the rest of your life. Given that fact, it’s not too much of a stretch that the IRS & SS people would insist on a SSN just because you used to be a US citizen. Stupid and makes no sense, no doubt about it.
I doesn’t seem like you can take any action about US citizenship until you have your Canadian papers. I’m not sure that I see any advantage to renouncing now or a year from now. That gives you a lot of time to continue your research. In the end, you either renounce or not, and you either file or not. If you do decide to catch up with filing obligations, you are a USC and you can do that now. No reason to wait until you renounce if you decide you want to file. For example, you could do the Streamlined Procedure now with 4 years of taxes, and continue to file going forward until you do renounce. The downside is you might end up filing one more year of FBARs and taxes in the end, depending on the timing.
I fear exposing myself to the US in various ways if I ultimately decide to ignore all obligations. But if you decide to file, and you apply for a SSN, I don’t see the fear in exposing yourself to the IRS. You are just about to file, which is what they want. Clearly, a person who applies for a SSN has never filed before and is now entering the system, not evading it. (Ha! here I am arguing logic…)
@Wren,
I’m not sure that my suggestion _not_ to renew your US passport has any validity. Renewing it before you applied to Canadian citizenship wouldn’t have been a problem. Renewing it after you get your final papers and take the oath etc _would_ be a problem in that it appears inconsistent to the claim of intending to relinquish your USC when you naturalized. Renewing sometime during the application and final papers, which could be over 2 years, is more of an unknown.
Whoa, wait a minute! Look at this post by @LM:
So, a person who has since renounced cannot get a SSN??? Why is a certificate of birth abroad accepted? Once could also have renounced in the interim.
Nothing makes any sense to me…
@WhatAmI
I’m as puzzled as you are.
Given the enormity of the US and the SSN administration, one really wonders if there are rules that EVERYONE in the system follows 100% of the time or if there is a lot of fudging going on (just like the difference in what and how one is questioned at border crossings and US security at the airport – – it can be a crap shoot.
I think Wren should make some calls to whatever Social Security office might be easily accessed in the US (when visiting friends or family or just taking a 2-day trip) and see what they say. Most of the folks at SS (like most of the folks at the US consulate) are very professional and will do their best to help.
If anyone has access to the journal Tax Notes International, it would be good to know what this article discusses:
Jaime Arora, ‘IRS Criminal Investigation Division Looking Into U.S. Citizenship Renunciations’, 2014 TNT 41-8 (3/3/14)
The article was noted by Jack Townsend, but with no real commentary. http://federaltaxcrimes.blogspot.ca/2014/03/irs-ci-is-looking-at-renunciations-of.html He states that “The article is nonspecific about what the IRS is looking for and the consequences might be if they found something.” I can’t read the article as I don’t have access, and there isn’t even an online abstract. For those who have access to university or law library databases, Tax Notes International is usually accessible via Lexis Nexis.
Regardless of this, the renunciations and relinquishments will continue. It is our right to choose where to award and withdraw our allegiance. And, we do NOT have to give US officials a reason for expatriation.
Holy moly, I think I may have found an answer regarding which tax identification number (TIN) to use on your tax returns when
• you have relinquished your U.S. citizenship
• you don’t have an SSN
Could it be… none?!
From the instructions on Form 8854 (Initial and Annual Expatriation Statement):
“Identifying number. Generally, this number is your U.S. social security number. An incorrect or missing identifying number may result in a continued obligation to file U.S. tax returns as a citizen or resident of the United States for persons expatriating after June 3, 2004, and before June 17, 2008, and/or a penalty of $10,000. If you were never issued a social security number, please attach a statement explaining the reason.”
(http://www.irs.gov/instructions/i8854/ar01.html#d0e452)
So theoretically this means after relinquishing I could fill out 5 years’ worth of 1040s and file them along with the 8854 and an explanation of why I never had an SSN. (All before the next June 15 of course.)
Hopefully it won’t turn out that I’m getting all excited over nothing. @Medea Fleecestealer pointed out these instructions in a post from last November, but in a later post @Medea also warned that there may be risks in doing that.
Thoughts?
@Wren
You’re going to find yourself on a roller coaster of emotional ups and downs as you learn something bad and then something good and then something that negates some glimmer of hope that you found.
I’m writing this from memory:
I saw that FBARs don’t require a SSN/ITIN. I read that you can use a foreign passport number and birthdate.
The 8854 doesn’t require a SSN or ITIN, but you have to certify that you are compliant with filing obligations, which can only be done with a SSN or ITIN. What does that even mean?
To avoid non-filing penalties, you need to use the Streamlined Filing Procedure. It requires a SSN or ITIN. The ITIN, if you qualify to use it, may be attached to your submission to the procedure. I’d be leery of sending my originals to a system that never reports back on your filing.
@badger, this is good news. An investigation will help the US government to realize that it is doing something wrong which is causing people to renounce.
@LM: I’m confused. Can I not contact a Social Security office from Canada?
@WhatAmI,
I take it you are still sorting out a plan of action? How long have you been working on this? From my endless searching of posts it looks like you’ve been around awhile.
I’ve got a good 5 years left on my US passport so not too concerned about renewal.
I was going to go Streamlined until I found out I would have to apply for an SSN. And since I am relinquishing, anyway, which would require I file two more years of returns, there just doesn’t seem to be much benefit to it.
Like most everyone else, I just want _out_.
Rollercoaster – indeed! Already feels that way.
The 8854 doesn’t require a SSN or ITIN, but you have to certify that you are compliant with filing obligations, which can only be done with a SSN or ITIN. What does that even mean?
Hoo boy, I have no idea. But the instructions clearly state that if I was never issued a SSN I should attach an explanation. Would they really attempt to penalize me for following their instructions? Never mind, don’t answer that. Ugh.
If one relinquishes then files the obligatory 5 years of returns, would that qualify as “quiet disclosure”? I wouldn’t think so, since a relinquishment followed by Form 8854 seems pretty “noisy” to me.
Replying to what you said about the Social Security system being separate from citizenship – yes, I am aware of this. In fact, a family friend (in his late 60s) renounced years ago but received Social Security benefits after the fact. His payments mysteriously stopped awhile back, and now that I’ve informed him of all of this stuff he is reluctant to inquire about it, and even regrets asking for them in the first place.
What a stinky mess.
Another thought: if applying for a SSN means providing school records and so on for each decade I lived abroad, I wonder how I would account for my time spent living in that mining town up north (after we first arrived) that essentially doesn’t exist anymore.
@Wren
I’ve been at this for a couple of years and even then my plan keeps changing. As everyone says, don’t rush to do anything yet!
You said:
I have no idea what you are trying to say above. I’m having a hard time determining what you understand about all this and what possible alternate plans are on your table. It is indeed a stinking mess. It makes no logical or moral sense, and there is little aid in understanding it all.
For you, the only difference between relinquishing and renouncing is $450 and the timing. You could pay $450 and renounce today, if they will let you renounce without proof of other citizenship, or you can wait until you have Canadian citizenship and then inform them of your relinquishing act of naturalization and save yourself $450. Both will get you a CLN.
There is no difference in either case when it comes to your filing obligations. It’s not clear yet if and when if ever you could get an ITIN instead of a SSN. It’s not clear how much easier it is to get an ITIN over a SSN. I think it’s clear that you cannot meet the 8854 filing obligations (IE 1040 tax returns) without a SSN or ITIN.
The difference between the Streamlined Procedure and Quiet Disclosures is that the Streamlined Procedure gets you off the hook for non-filing penalties. If you are going to renounce or relinquish, either way you have to fill out the 8854 which requires 5 years taxes and 6 years FBARs. If you do a QD, will you get caught? Do you feel lucky? What’s the point of risking a QD in your case? You can’t do either without a SSN or ITIN.
The Streamlined procedure is actually meant for people who catch up and then continue to file. They have to file 3 years taxes and 6 years FBARs. It giving up US citizenship and the Form 8854 which requires the extra 2 years of filing, not the Streamlined Procedure. One case where a QD makes sense is when you start filing now with 2013, and continue going forward, and never play catch-up with prior years. You save paying an accountant to help with 2 years of taxes and 4 years of FBARs, or whatever the case may be.
Without a SSN or ITIN, the only thing you can do is renounce or relinquish as explained above, and then never file and never enter the US and hope that the IRS never bothers you or if they do, Canada will keep its promise and not go after you for IRS claims. Oh, I just remembered, you have the problem of IRS infractions while not being a Canadian citizen. My interpretation is the same as most others, in that the protection is only for the case of Canadian citizens at the time of the obligation, which is not you.
Have you decided that you are indeed going to file taxes and FBARs? With regards to the quote above, what do you plan to do instead of the Streamlined Procedure?
@WhatAmI
Re: “I have no idea what you are trying to say above…”
Sorry about that. I’m not sure how to state it more clearly.
Re: “Without a SSN or ITIN, the only thing you can do is renounce or relinquish as explained above, and then never file and never enter the US and hope that the IRS never bothers you…”
How do you know this? What about the instructions on the 8854 that state that I can include an explanation for never having acquired a SSN? If you think this is unworkable I would be interested to know why.
The relinquishment stuff is pretty clear to me. It’s the problem of timing of relinquishment and TINs that I am trying to solve.
I don’t really want to go into FBARs at the moment because I don’t want to obscure the answers I am trying to get related to the issues mentioned above.
I think we are having some difficulty communicating and I suspect it might be related to the different ways in which we are attempting to process all of this information. I just can’t be constantly trying to process the big picture. I have tried this, and it is overwhelming. There is just too much information and too many variables. So what I am trying to do is zoom in on one or two things at a time so that I can increase my understanding of things overall. This will ultimately lead to what I hope will be a workable solution (or set of solutions) for me and my family. This approach won’t work for everyone – and I apologize if it frustrates you in any way – but it does work for me.
That said, I appreciate everything you contribute, but I want to emphasize that you are not obligated to work out my problem. You have your own situation to deal with, which is burden enough for a person. When I ask a question, although it may ultimately lead in all sorts of interesting directions, I am really focusing on that one question, which is why I really try (maybe not always successfully) to be precise,
The 8854 is not a tax “return” form, It is a form that they use to determine if you are a covered expat and subject to the Exit Tax and other nasty things. On the 8854 you certify that you are compliant with IRS filing obligations which of course includes 1040 tax returns. You can’t comply with those IRS filing obligations without a SSN or ITIN to file your 1040 returns.
I don’t know why you can file the 8854 without a SSN/ITIN when you can’t file 1040s without a SSN/ITIN.
@Wren:
I’m confused. Can I not contact a Social Security office from Canada?
Yes, you can contact a SS office from Canada but I don’t think it is possible (or straight forward) to get a SSN when outside the country, which is why son’s partner traveled into the US.
@WhatAmI & Wren:
In fact, a family friend (in his late 60s) renounced years ago but received Social Security benefits after the fact. His payments mysteriously stopped awhile back, and now that I’ve informed him of all of this stuff he is reluctant to inquire about it, and even regrets asking for them in the first place.
Social Security is yours no matter where you live, certainly in treaty nations like Canada. If your friend was receiving SS payments and they stopped, he should be calling them to question this. One CAN renunciate and still receive SS payments. One CAN be a non-citizen and still get SS payments (e.g. a long-term green card holder who now is retired & lives in Canada). SS is like a pension plan that you & your employer have paid into & has nothing to do with IRS; it should not stop on renunciation. However, there are forms that you need to send in every couple years to SS to let them know if anything has changed (e.g. address, bank account #, AND if you have renounced); these forms are short, mailed to you at the last known address and fairly straight-forward.
@swisspinoy, I’m not sure what the portent might be. If anyone here has access to the fulltext of the article they could read it and give us a precis, but Townsend already said it was non-specific, so there may be nothing useful there. And since the US government policy towards expats is dedicated to the adversarial and punitive, it could be that they are just using their usual threat and scare tactics, or that they are mortally offended by anyone who exercises our Universal Human Right http://www.un.org/en/documents/udhr/ to CHOOSE where to award our allegiance, and to cut away the last vestige of any externally imposed US relationship, or they think that somehow schools of millionaires and billionaires are renouncing rather than minnows and krill and amoebas.
@Wren @Whatami There is one circumstance that I can think of, which is if one was below the filing limits (for example an 18 or 19 year old, or a non-working parent), you could check that you were compliant for 5 years without filing those returns as you did not need to do so. You could then file your 8854 without a SSN and explain why you didn’t have one. Probably doesn’t help many people.
@badger, good point. Past behavior does indeed suggest that It’s probably just another empty scare tactic aimed at scaring people from renouncing.
@Wren, if you’re going to ring the IRS with queries ask them about the SSN/ITIN issue and see what they say. If they’ll accept an ITIN application from an ex-citizen then renounce if you can find an embassy that will let you do so, become stateless and then file 5 years of returns and 6 years of FBAR’s under Steamlined with an ITIN application attached. Although Streamlined only requires 3 there’s nothing to stop you filing the other two years at the same time.
Frankly it would be very useful to know if the IRS do consider an ex-citizen to be eligible for an ITIN instead of an SSN.
@tdott @WhatAmI and anyone else interested in the SSN / ITN question :
This is copied from the instructions for Form W-7 (Application for IRS Individual Taxpayer Identification Number or ITIN):
SSNs. Do not complete Form W-7 if you have a SSN or you are eligible to get a SSN. You are eligible for a SSN if you are a U.S. citizen or if you have been admitted by the United States for permanent residence or U.S. employment.
To get a SSN, see Form SS-5, Application for a Social Security Card. To get Form SS-5 or to find out if you are eligible to get a SSN, go to http://www.socialsecurity.gov or contact a Social Security Administration (SSA) office.
If you have an application for a SSN pending, do not file Form W-7. Complete Form W-7 only if the SSA notifies you that you are ineligible for a SSN.
If the SSA will not issue you a SSN, you must get a letter of denial and attach it to your Form W-7. This applies whether you are attaching Form W-7 to your federal tax return or requesting an ITIN under one of the exceptions. However, students, professors, and researchers, see information for box “f,” later.
To me this says pretty plainly that you cannot apply for an ITIN without first applying for a SSN since I think it is highly unlikely the SSA will send out this so-called letter of denial without having one go through the usual processing.