Please Note: The US State Department under John Kerry, who served in Viet Nam, is now charging $2350 to receive any CLN whether one has relinquished or renounced. So if you are coming to this only now, you are SOL when it comes to getting a free CLN.
See also Relinquishing your US citizenship in Germany
Those of us who have participated in the Expat Forum have seen that one of the first things that many many newbies say is, “I am going to renounce my US citizenship as soon as I have my Canadian citizenship.” Now, I want to suggest that one should never renounce their citizenship if they can relinquish it instead. Months ago I wrote a post on this subject, which I provide below.
But first, some explanations: Renouncing is one of seven ways to lose your citizenship. It requires swearing an oath in front of an official of the US government and it now has a $450 fee attached to it. Relinquishing does not require a US government official, for it is one of several acts that a US citizen can perform that can result in a loss of citizenship, provided the person intends to lose it. Then, the former citizen must only inform the State Department, not so as to validate the relinquishing act, but to make sure that the US government understands what your intent was when you performed it.
It has become clear that there are several advantages to relinquishing over renouncing:
(1) Relinquishment takes the act of losing your citizenship out of the hands of the US government. This has two benefits. (a) There should be no fee because it doesn’t require a US government official–it doesn’t take place in a US Consulate–you only go to the consulate to inform them of a fait accompli, and it only takes one visit, unlike renunciation which usually take two visits. (b) This saves you $450, or it should, because you are not requiring the services of the Consulate–you are there only to inform them of your intention when you committed a potentially expatriating act such as making a pledge to a foreign power.
(2) Relinquishment is usually a positive act which cannot be confused with an expatriation to avoid taxes. You do it so that you can take part in foreign government or to vote in the country you live in, not so that you can avoid US taxes.
(3) Relinquishment is not a renunciation of your citizenship, so much as a positive act vis-a-vis your new home and country. It is not a repudiation of your country but an acknowledgement that dual citizenship is an unworkable absurdity. Thus, relinquishment comes with less stigma, potentially.
Finally, a caveat is in order. Don’t do one thing and say another. That is don’t relinquish your citizenship then travel on US passport, pay tax in the US, register your children born abroad as US citizens, or take up a residence or a job in the USA, except as one holding a legitimate permit to reside or work in the US as an alien. If a person does any of these things, the State Department may not accept your relinquishment. Those who desire to lose their citizenship but who have done such things after the relinquishing act, may need to renounce their citizenship after all.
So without further ado, here is my original post, “Renunciation of US citizenship: On avoiding the new $450 renunciation fee (update 2), which explains in greater detail, what would constitute a relinquishing act:
Renunciation of US citizenship: On avoiding the new $450 renunciation fee (update 2)
I’ve been pretty upset that it would cost me $450 to renounce my citizenship now that the US consulate in Toronto has instituted a fee. But today I was looking at the various government websites: Consider this website from the US state department and its explanation of how to renounce US citizenship:
Section 349(a) of the Immigration and Nationality Act (8 U.S.C. 1481) governs how a U.S. citizen shall lose U.S. nationality. Section 349(a) states:
A person who is a national of the United States whether, by birth or naturalization, shall lose his nationality by voluntarily performing any of the following acts with the intention of relinquishing United States nationality:(5) making a formal renunciation of nationality before a diplomatic or consular officer of the United States in a foreign state, in such form as may be prescribed by the Secretary of State; or(6) making in the United States a formal written renunciation of nationality in such form as may be prescribed by, and before such officer as may be designated by, the Attorney General, whenever the United States shall be in a state of war and the Attorney General shall approve such renunciation as not contrary to the interests of national defense.
Now perhaps it would interest readers to know that this government website is not telling the whole story: The U.S.C. 1481 lists several other ways that a natural born US citizen may lose their citizenship. Here is the full text (emphasis mine):
§ 1481. Loss of nationality by native-born or naturalized citizen; voluntary action; burden of proof; presumptions
(a) A person who is a national of the United States whether by birth or naturalization, shall lose his nationality by voluntarily performing any of the following acts with the intention of relinquishing United States nationality—
(1) obtaining naturalization in a foreign state upon his own application or upon an application filed by a duly authorized agent, after having attained the age of eighteen years; or(2) taking an oath or making an affirmation or other formal declaration of allegiance to a foreign state or a political subdivision thereof, after having attained the age of eighteen years; or(3) entering, or serving in, the armed forces of a foreign state if
(A) such armed forces are engaged in hostilities against the United States, or(B) such persons serve as a commissioned or non-commissioned officer; or(4)
(A) accepting, serving in, or performing the duties of any office, post, or employment under the government of a foreign state or a political subdivision thereof, after attaining the age of eighteen years if he has or acquires the nationality of such foreign state; or(B) accepting, serving in, or performing the duties of any office, post, or employment under the government of a foreign state or a political subdivision thereof, after attaining the age of eighteen years for which office, post, or employment an oath, affirmation, or declaration of allegiance is required; or(5) making a formal renunciation of nationality before a diplomatic or consular officer of the United States in a foreign state, in such form as may be prescribed by the Secretary of State; or(6) making in the United States a formal written renunciation of nationality in such form as may be prescribed by, and before such officer as may be designated by, the Attorney General, whenever the United States shall be in a state of war and the Attorney General shall approve such renunciation as not contrary to the interests of national defense; or(7) committing any act of treason against, or attempting by force to overthrow, or bearing arms against, the United States, violating or conspiring to violate any of the provisions of section 2383 of title 18, or willfully performing any act in violation of section 2385 of title 18, or violating section 2384 of title 18 by engaging in a conspiracy to overthrow, put down, or to destroy by force the Government of the United States, or to levy war against them, if and when he is convicted thereof by a court martial or by a court of competent jurisdiction.(b) Whenever the loss of United States nationality is put in issue in any action or proceeding commenced on or after September 26, 1961 under, or by virtue of, the provisions of this chapter or any other Act, the burden shall be upon the person or party claiming that such loss occurred, to establish such claim by a preponderance of the evidence. Any person who commits or performs, or who has committed or performed, any act of expatriation under the provisions of this chapter or any other Act shall be presumed to have done so voluntarily, but such presumption may be rebutted upon a showing, by a preponderance of the evidence, that the act or acts committed or performed were not done voluntarily.
I swear or affirm that I will be faithful and bear true allegiance to her Majesty Queen of Elizabeth the Second, Queen of Canada, Her Heirs and Successors, and that I will faithfully observe the laws of Canada and fulfill my duties a Canadian Citizen.
An individual who has performed any of the acts made potentially expatriating by statute who wishes to lose U.S. citizenship may do so by affirming in writing to a U.S. consular officer that the act was performed with an intent to relinquish U.S. citizenship. Of course, a person always has the option of seeking to formally renounce U.S. citizenship abroad in accordance with Section 349 (a) (5) INA.
Update 2: Today a consular officer called me from the US consulate in Toronto. She confirmed what I’ve said in this post, that relinquishing US citizenship and renouncing US citizenship are two different processes that are treated in a different manner by the consulate (including the fee structure).
Good post. As I understand it, “renunciation” is just one of the ways of “relinquishing” U.S. citizenship. It’s just that with “renunciation” (because the services of the U.S. government are required), there is the $450 fee. I would have thought that since U.S. citizens are required to pay taxes, that this would be a service that they should just expect from the U.S. government.
It is way 5 of the 7 ways to leave your lover. The $450 fee is also unconstitutional because it becomes a barrier to expatriation which is constitutionally a fundamental right. You cannot make people pay $450 to vote, can you?
Has it been confirmed that the IRS recognizes relinquishment of US citizenship terminates the ex-citizens US tax obligation to the US Government? It is my impression, that it does not, but it is important that this be clarified.
It is my understanding, too, that renunciation is 1 of the 7 ways of relinquishing one’s US citizenship (Immigration and Nationality Act, s. 349(1)-(7)). They started charging in 2010, but as the law is written, the $450 charge only applies to s. 349(5), renunciation.
The problem is that the HEART act and some earlier laws require the filing of Form 8854 and the last five years of 1040. If you are a “covered expatriate” then there are further obligations. But this act was passed in 2008, and other legislations I believe with the Reed Amendment, no earlier than 1996. Thus, if I am not mistaken, the law was that a person did not have to inform the Consulate of their expatriation and that relinquishment was valid. These later acts, therefore, if applied to someone who relinquished before a certain date in 1994 or 1995 (which we have not yet determined) is in my view ex post facto.
In any case, the right to expatriate is a fundamental right enshrined in American democracy by the Declaration of Independence, the US Consitution, and the Expatiration Act of 1868–not to mention international law and the United Nation Declaration of Human Rights. Placing obligations on ex-citizens who are outside the country, whose income is outside the country, and whose assets are outside the country, cannot be valid under anyone’s laws–not the laws of Canada, and not the laws of the world, but most of all, not the laws of the United States.
So the long answer to a short question, is that the IRS is acting in a rogue manner if it does not acknowledge back dated relinquishments. And frankly, I don’t care if they do, I am have no more truck with the IRS (except perhaps 1040 filings up to the date I became a Canadian citizen–February 28, 2011).
As it has been now 10 months since my relinqishment and I still have not been informed of the arrival of the CLN, I am still waiting to hear the answer to this question of $450. In any case, I am no longer a citizen.
Petros,
Just to be sure, it might be wise to stay out of US territory. My impression is that having relinquished your US citizenship rather than renouncing it; you are still “red meat” as far as the IRS is concerned. It would likely require a ruling of the Supreme Court to get the IRS out of your pockets.
As for consular fees, US citzens are required to pay essentially the same consular fees as non-citizens when availing themselves of their services. Paying US taxes does not provide either free or cut-rate services from the consular service.
Thanks, Mr. Conklin:
Well, to be sure all unnecessary travel to the United States has ended. Do I want to end up in jail for my subversive activity in this website and elsewhere? Criminal FBAR? I write under Petros, but I also write under my real name, Peter W. Dunn.
I count myself lucky at this point that the Toronto consulate gave me copies of the paperwork–other consulates have refused to do this for Peg and others. So if they need to travel to the US before the CLN arrives, they must travel with a Canadian passport with no accompanying paperwork showing that they have relinquished their citizenship along with their US passports. Thus, the border guards may refuse them entry.
So this is what I’ve stopped doing: I’ve ended my membership in the Society of Biblical Literature (including the once a year trip to the US), I’ve stopped going to Hawaii or another US sun destination every other year, and I stopped investing in United States (though I sometimes still use the OCC for to sell put options, on Canadian companies–I am actively shorting the US in my personal investments).
One day may be, all of us rejects living abroad will receive a presidential pardon. This is the only way I see out of this mess that the Obama adminstration has created, albeit with the aid of decades’ worth of bad laws vis-a-vis expats. I left the United States to study abroad. I have a PhD from Cambridge. I speak three languages. But now I live in exile from my country of birth because of these laws. So I have turned my pen to ridicule this government and to help others to realize how their rights are being violated. Thank you so much for your efforts in having them appealed.
Petros, you have taken the bull by the horns and I congratulate you. One additional word of caution: If you do enter the US with your Canadian passport and the immigration officer notices that it states you were born in the US, he may ask you for your US passport or certification of renunciation. If you have it, fine, but if you do not you may be held until the IRS investigates to confirm that you are current with your US tax fiings and the required reports on your foreign bank accounts. This has happened with at least one Canadian I am aware of who did not even realize birth in the US to Canadian parents made her a US citzen and subject to US tax laws. She fouund out the hard way.
There is a famous case of Boris Johnson trying to enter the US on Continental and being refused.
But this is the first I’ve heard of a Canadian being refused in this manner: i.e., that the border guards actually contact the IRS. My understanding is that there has not been any real communication between the various agencies. If your story is confirmed, this would be a most chilling, facist move yet by the Obama government. It would confirm our worst fears.
Would you be willing to provide more details or have your Canadian friend come here and tell her story?
It was in a story reported by ACA-Ameirican citizens abroad, an organization of US citizens headquartered in Geneva, of which I am both a member and on its board of directors.
It used to be that the IRS and Immgration did not communicate with each other, but Congress enacted legislation that changed that. I am sorry that at 80 years of age I am not as organized as I used to be and can’t lay my hands on that story. But it was a Canadian lady resident of British Colombia. She had been born in San Diego of Canadian parents who were students there who returned with her to Canada as a baby shortly after her birth. She was interrogated by a US immigration officer when she made one of her frequent cross-border visits to the US and, although it was determined that with the foreign earned income exclusionan and Canadian foreign tax credits she would have owed no US tax had she filed US tax returns, she ended up paying $80,000 in penalties for having failed to do so. Up until she was apprehended at the border she did not even realize she was a dual US-Canadian citizen.
Amazing. I am saddened by this story. It is robbery. We obviously need the Canadian government to put a stop to this kind of nonsense. It is a casus belli.
If it is on the ACA site, perhaps one of our operatives here who has the time can dig it up and post on it. But if you are on the board, perhaps it was never published.
Mr. Conklin:
Could you could find the story of the lady born in San Diego who paid all the fines. The description you give sounds like:
1. IRS thuggery at its finest; and
2. Quite arguably an example (this is why it is important to get more information) of the IRS acting unlawfully.
The IRS is barred by the FBAR statute 5314 from collecting FBAR fines if there is a “reasonable cause” AND the FBARs are filed.
But, even if the FBARs are NOT filed, they still have the discretion to issue a warning letter. I am getting extremely angry just reading this.
So, assuming the accuracy of these facts, and assuming no extraordinary additional circumstances, the IRS is either or total thug or could be in violation of the law or both.
Please help by locating this story – let’s this is NOT true.
When it comes to the IRS, it is a question of trust:
http://renounceuscitizenship.wordpress.com/2012/01/09/taxpayer-advocate-vs-the-irs-its-a-question-of-trust/
Petros,
As you wrote above, the US signed (and probably drafted) the UN’s Universal Declaration of Human Rights in 1948.
Article 15 of the Declaration reads:
(1) Everyone has the right to a nationality.
(2) No one shall be arbitrarily deprived of his nationality nor denied the right to change his nationality.
It appears that the Exit Tax could be deemed an obstacle to changing nationality and therefore may be on shaky ground as per international law.
http://www.un.org/events/humanrights/2007/hrphotos/declaration%20_eng.pdf
It will be interesting to see the outcome if it ever gets challenged.
@BoiledFrog, yes, but what can we do? The way I see it is that we can either play their game and pay the $450 and travel expenses to be free (and hope you don’t have to pay an exit tax). It’s a good warning to Americans and foreign nationals with links to America: THERE IS AN EXIT TAX SO BEWARE. UN Human Rights? Ha! They do whatever they want to do. Just the Patriot Act steps on 4-5 Constitutional Amendments. Yes, I would like to see someone challenge it as well….
@Petros, I don’t think there’s anything subversive here. All we are doing is discussing FBARs, FACTAs, Renunciation, Relinquishment, US Policy, and Tax laws. After all, these are US laws!! I don’t think there’s anything subversive about not wanting to be a US Citizen, when you are practically punished for living overseas.
Thanks for helping me make my point. The following paper by Peter Spiro might also be relevant, though I have still to read it.
I know, the USG ignores the Bill of Rights of its own Constitution, UN Universal Declaration of Human Rights, Geneva Convention and just about every other Treaty they ever signed throughout history.
Renounce and never return is really the only thing an individual can do.
Based on those definitions Petros posted I would have to say there is a case that someone like David Alward(the Premier of New Brunswick; for those you who are non Canadian essentially the premier is equivilent of a US state governor) reliquinshed either when he was elected to the New Brunswick legislature or was sworn in as Premier. My sense is that would apply to Diane Ablonczy at the Federal Level along a whole bunch people like Ted Morton and Cindy Ady who are provincial cabinet ministers.
I have to note the following article with interest as US Citizens are not permitted to travel to Cuba for the most part but Ms. Ablonczy in her whole as Canadian Minister of State for the Americas made an official visit to the island. If the US Treasury intends to uniformly enforce the embargo on Cuba to all US ciitizens wherever in the world they reside Ms. Ablonczy should at the very least obtain a strongly worded letter from US Treasury/OFAC
http://calgary.ctv.ca/servlet/an/local/CTVNews/20120108/ablonczy-signals-softening-stance-on-cuba-120108/20120108/?hub=CalgaryHome
http://en.wikipedia.org/wiki/Diane_Ablonczy
Notwithstanding the comments many American politicans make about Peoria, Il Ablonzcy is actualy “from” Peoria, Il
There was information circulated by ACA that the Canadian Prime Minister has recently taken a firm stand that the Canadian Government will absolutly do nothing to assist the US in collecting US taxes from Canadian citiziens who hold dual US ctizenship. He is also concerned about the recently-enatcted US legislation which obligates the IRS to vigorously pursue the collection of US taxes from persons who are US citizens, even though they have never lived in the US.
The link to the ACA website, open to everybody, is http://www.aca.ch. If you are a US citizen living in Canada let me suggest that you consider becoming an ACA member. The cost is modest and I can assure you that ACA has an army of volunteers who are dedicated to protecting the intersts of US citizens living outside of the US. There is a lot of documentation on the taxation issue on this website, and it grows daily. This a battle worth fighting.
With respect to the UN’s Universal Declaration of Human Rights, the US Interests Section, which operates in Havana under the flag of Switzerland, a few months ago erected an illuminated sign on its property quoting this Declaration. The Cuban government was quick to take actrion which resulted in its being quickly removed.
A few years back when the Cuban Government established the requirement that Cuban citizen college graduates permanenly leaving that country had to pay, in hard currency, the cost of their free University eductation before they would be permitted to leave, the US was very voiciferous in protesting this as a violation of that Declaration. It was recinded. But what the US does to create, through double taxation, barrers that make it impossible to survive living and working abroad where the tax system of the foreign country is different from the US so that foreign income taxes are insufficient to offset the US tax liability, is just as much a barrier to US citizens living and working abroad as was Cuba’s demand for monetary compensation in order to allow its citizens to live and work abroad.
Well, let’s see. I’ve taken very seriously the protection that the Canadian government has announced regarding FBAR. Therefore I’ve become a wilful violator of the law and I have suggested myself as an example. This may be subversive. Heck, I was banned from the Expat Forum for telling jokes about moderators, don’t you think there might be some in the government who see what I’m doing and are not laughing about it?
Mr. Conklin: Thanks so much for your participation here. I am deeply grateful. I found that the ACA site most helpful and can heartily endorse it and the organization, though personally, all I want now is to be treated like any other free Canadian.
There is a long and very interesting paper ACA had a link to that I posted below. Just from skimming it the issues are fairly numerous and complex but overall the paper seems to do a good job of going over all of the issues with renunciation.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1628568
Mr. Conklin,
To your knowledge has anyone ever actually challenged the legality of “citizenship-based taxation with no representation in government and no access to public services” from an international human rights law perspective?
This is exactly what every American living abroad is facing.
For example, Article 21 of the UN Declaration of Human Rights reads:
(1) Everyone has the right to take part in the government of his country, directly or through freely chosen representatives.
(2) Everyone has the right to equal access to public service in his country.
As a layman, it is clear to me that the USG is in blatant non-compliance with regards to its own citizens.
Do you think an organization such as Human Rights Watch would find this worthy of taking up? Or is there some other organization more suitable?