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).
I don’t really think it matters either way. I mean really…they have you over a barrel anyhow.
Besides, some of us do not have any choice but to renounce. I’m a dual citizen by birth–I can only renounce
@pacifica777
@Em
Thanks for the great advice (and calming of the nerves).
What about this business of supposedly denying re-entry into the U.S. for travel?
You think this is possible?
I live in Canada, so we don’t require visas to enter the U.S.
With “relinquishing”, would you get a letter from the State Dept certifying your loss of citizenship? This could become an issue; just a warning…..
Recently, an acquaintance who was born in the US (but lives in & is a citizen of Canada and renounced her US citizenship) tried to visit her family in the US (driving across the border from her home close to the border in Canada). However, she was stopped and turned away at the border (that is, not allowed entry into the USA) and now has concerns about future visits to the USA.
The border guard, looking at her Canadian passport, said, “You were born in the USA so where is your US passport? When you enter the USA you must show your US passport”
This acquaintance explained that she had renounced her US citizenship, but the border guard demanded proof of this, something she did not have with her at the time. The State Department letter she had received would have served as proof.
My hubby (who renounced in 2012) now has a copy of this official State Dept letter clipped to his Canadian passport just in case he runs into the same issue when coming across the US border (even though Canadian citizens are not required to have a visa or any other documentation other than their passport for entering the US as visitors).
@LM,
With either a successful claim to relinquishment or renunciation at a US Consulate in Canada, you will eventually receive a Certificate of Loss of Nationality (CLN) from the Department of State (that is where it is approved and sent back to the consulate/embassy where the expatriation took place). This will be a VERY important document. My original CLN is in a safe deposit box and a copy will be with me and my Canadian passport the next time (if there ever is a next time) I cross the US border. There is / should also be a record of those who expatriated online at the border that a border official can access.
Did your acquaintance renounce recently without yet receiving the CLN? With renunciation he/she should have received a receipt for the $450 (USD) fee paid; good idea to keep that for proof until the official CLN is received. There will be no cost, so no receipt with a claimed relinquishment. Your acquaintance seems to have had a particularly harsh border official who turned her away; I thought that a US citizen could not be turned away — did he/she have his/her Canadian passport that showed birthplace in the USA?
(I don’t know what you mean by official State Department letter; I think you likely are referring to the CLN.)
Thanks for your report, which may help others; it would be good to have more specific details though.
@LM,
All methods of terminating US citizenship are listed in s. 349(a) of the Immigration and Nationalities Act. Whether you renounce your US citizenship (INA, 349(a)(5)) or relinquish it under any other sub-article of INA 349(a), once your application is approved, you get a Certificate of Loss of Nationality from State Dept.
You might not be asked to present your CLN at the border – a record of you having been issued a CLN is in their database anyway — but the consulates advise that you should always take a copy of your CLN with you whenever you go to the United States.
But how does one actually relinquish? The consulate in Toronto only has instructions for renouncing. Can one simply send a letter to the consulate with information similar to the post above (i.e. that when we received Canadian citizenship the intention was to relinquish). Also, I know working for a foreign government is on the list..does a provincial government count?
Hi Nick. You relinquish by committing a potentially expatriating act with the intent of losing US citizenship. Make a pledge to foreign power or become a citizen of another country, etc.
It is as simple as that. Obtaining proof (Certificate of Loss of Nationality) however is more complicated. You must inform the State Department, and it must be done on their terms, which can be a white-trash pain in the ass (not “royal” because the behaviour of the US government is far from regal). This requires making an appointment with a US consulate to inform them that you are no longer a US citizen and would they please give you a CLN. I wrote it about it here: http://righteousinvestor.com/2011/04/07/my-april-7-visit-to-the-us-consulate/
You have to prove your intent, so if you had informed the consulate prior to taking a new citizenship and possibly gotten a citizenship judge to witness a statement to that effect at your oath ceremony, you would simply present that at your meeting. You could have even emailed them before your oath ceremony so that you had even more evidence to back you up.
I am going to take it that you didn’t do this. Now you simply have to prove that you haven’t acted as an American since you took on your new citizenship. Did not renew your passport or travel on it, voted in a US election, lived for an extended period there, worked there, etc. Whether or not you are allowed to relinquish will be up to the consulate to decide and if they agree with, they will recommend this to the State Department who has the final say.
Go to your meeting prepared to prove and maybe argue a bit but don’t be surprised if they make you go the renounce route.
@Nick
Look for my comments under renunciation and relinquishment dated Jan 11th… I explained my process and proof of BC Government employing…
@ Nick,
Here’s a quick link to the comment Benedict is referring to: http://isaacbrocksociety.ca/renunciation/comment-page-72/#comment-961364
Thanks. Ok, but if I relenquish or renounce they’re still going to expect me to file tax returns with the IRS for past years? I have never filed a U.S. tax report given that I have always worked in Canada (paying plenty of tax to the CRA and have no income or investments in the U.S. Until yesterday I had no clue I was expected to. So, if I go to rellenquish/renounce are they going to try to change me fines for not filing? That would be 20 years of working in Canada. I am tempted to renounce but afraid because of this…I’m wondering if I ‘m better off just ignoring it, and keeping it in Canadian bank accounts at under 50,000. My accounts don’t have information that would identify me as a U.S. person as of yet, trying to get every Canadian who already has an account show proof of birthplace retroactively is going to be a logistical mess. So…renounce and face fines or sit back and see what happens.
Nick
Your decision as to whether it would be “better to just ignore it” or not needs to be based on how much risk you want to take now and in the future.
Our neighbor, an internationally known immigration lawyer who has been familiar with all these upcoming US citizenship and tax issues for at least 10 years (including OVID and FACTA) would tell you that THEY (IRS) WILL FIND YOU eventually and the pain (and cost in $$ and time and stress) then, may be significantly greater than the pain now.
Consider what your parents/partner/spouse/children,siblings will have to deal with if you are discovered after dying in a car accident, or if you are discovered after deciding to open a new investment account somewhere. All I can imagine is real ugliness!
Our age 40 daughter (of 2 US parents, born in Canada) had avoided doing US taxes until she went through the OVID (I think it was called) process prior to renouncing. She owed no taxes to the US (no US investments, never worked there), had paid all taxes owed to Canada Revenue, and was not charged any penalties by the US because Canadians were assured by the US ambassador to Canada during that time & process that if they owed no taxes & went through the (OVID?) that the penalties under that plan would be waived.
The filling out of tax forms took a long time and ended up being, as I recall, about 150+ pages for the 5 or 7 years of back taxes she had to document, but she’s no accountant or economist or lawyer yet she did it all herself.
So think carefully about just putting your head in the sand. This whole witch-hunt/finding US citizens is only going to get worse. The Canadian (and other international banks) have signed on because if they don’t do this FACTA then THE BANKS/investment companies will have to pay a penalty & they certainly don’t want to do that. Also, the Cdn govt has already agreed to support FACTA (indeed, they are, I understand, looing at making similar arrangements with other countries RE Canadian citizens…..)
I know it sucks, but that’s how it is. If you keep your head in the sand for a very long time you will just suffocate, die of chronic fear, and never smell the roses………..
LM wrote: “Our neighbor, an internationally known immigration lawyer who has been familiar with all these upcoming US citizenship and tax issues for at least 10 years (including OVID and FACTA) would tell you that THEY (IRS) WILL FIND YOU eventually and the pain (and cost in $$ and time and stress) then, may be significantly greater than the pain now.”
The IRS is underfunded and is not prepared to handle the FFI FATCA workload, much less deal with the data once they have it. The IRS is probably not able either to handle the massive influx of CLNs running across their desks. Do they have the time to follow up with fines and assessments of every person who relinquishes their citizenship? I find it doubtful. Finally, the IRS is unable to reach people in other countries, even if they were to obtain their account information via FATCA–yet they can’t get this information from the bearer of a CLN. So your internationally known immigration lawyer is drumming up paranoid fear, and that is how they get their business.
@ LM, Petros
Further what Petros just said:
Only the government of Canada can collect taxes in Canada.
No foreign government can directly collect taxes or penalities from Canadians resident in Canada.
Canadian courts will not enforce foreign tax claims.
Under the Canada-US tax treaty, the government on Canada will not assist in collection of any US tax or penality from a Canadian citizen, unless the tax claim predates their date of citizewnship.
Petros said: “The IRS is probably not able either to handle the massive influx of CLNs running across their desks.” Amen! It has now been nine months since I renounced (and paid the $450) and I’ve yet to receive my official CLN. Fortunately I got a copy of my filing at the embassy where I renounced with the signature and official stamp of the consulate.
@Petros @LM @Skeptic I learned about this a couple of days ago and (as evident from some of my messages here) started to panic. Having thought this through over the past couple of days, I tend to agree with Petros and Skeptic. Canada does have laws, a Charter of Rights and a court system. We’re not the 51st state just yet. This is Canada, not some second-rate banana republic. Flaherty has stated that the CRA won’t seize tax revenue from Canadian citizens and turn it over to the IRS. It would cause political upheaval amongst Canadians for him to order the CRA to turn over Canadian citizens’ income to a foreign government and even if he did, such a policy could not withstand legal/court challenges. It would amount to persecution of Canadian citizens based on birthplace, something clearly unconstitutional. Furthermore, as Petros states, the IRS may be powerful, but it is not an omnipotent God-like entity. It IRS doesn’t have the capacity to hunt down and find everyone on earth who has ever had any ties with the U.S. and attempt to forcefully extract their money.
I don’t know how Canadian banks will deal with this, but the several Canadian-born “non-U.S. person” Canadians I have spoken to have said they will tell their bank “none of your business” if the banks asks where they were born. So, are our banks going to turn over info. about millions of Canadians whether or not they are U.S. persons? Does anyone really think this won’t create a political uproar or withstand Canadian privacy law and Charter challenges?
The bottom line is, FATCA shouldn’t be ignored and those of us who may be affected need to take it seriously and consider our options. This probably means we renounce ties with the U.S. and possibly file back taxes. But I do now think that there has been some fearmongering, in part spread by lawyers and tax professionals who stand to gain from this. So perhaps a bit of perspective is in order.
It took my CLN 18 months to arrive, after my relinquishment in Calgary. But in my case it was very worthwhile to ignore their advice to ‘just renounce and get it done’, even if the Consul said he could not recommend me for CNL approval. The $450 fee is insignificant, as compared to entering the US tax system, if relinquishment is even remotely possible. My CLN is effective December 1994 when I took a government job (I could not produce any signed oath, just a blank confidentiality agreement I may have signed). I now have no filing requirements whatsoever, so it pays to do the homework, and stand firm to what you believe are your rights.
@prairiegirl,
This is huge! Could you please elaborate on these points?
The consul in Calgary initially said that your relinquishment claim was insufficient and refused to submit it to DC, but you insisted, he did it, and it was approved?
You had zero proof of employment other than a blank form related to where you claimed you worked? No employment offer letter written to you, no T4 slips or anything?
@prairiegirl,
Another question: did they offer to process a renunciation for you right then and there during your relinquishment meeting? We’d like to know if they’ll do that during the same interview, or make you come back for another appointment later (so they can re-do the paperwork, etc)? It’s a 5-hour drive for my sister to get to Calgary.
@ Petros – – the CLN comes from the State Department. I don’t know if the IRS gets a copy of these sent to them but there is, I understand, a list of names of people who have renounced sent to the IRS. Names, not SSN. So if you have an unusual name, they MIGHT identify you; if you have a more common name, there may be total uncertainty (from the IRS perspective) of who exactly has renounced. If you haven’t gotten your CLN in 9 months, check back with your consulate/embassy and ask them why not – – it should not take that long. Hubby’s took 7 months but at 5 months I was in the consulate and asked; aparently the Toronto consulate had put aside all these forms for about 4 months before sending them on to DC for processing; once sent, it only took 3 months.
@Nick – – Likely true that the Canadian govt will refuse to collect any US taxes owed. It’s the banks and investment companies that will bear this responsibility (not necessarily sending $$ to IRS, but closing your account!!!).
If your bank (e.g. TD or RBC or ING)) wants to have a presence in the US, they are being told – by US law – – that they must agree to follow US policies – – that is, identify their US citizen clients in other countries. If they are found to not be doing so, they will pay a very steep fine/cost and perhaps be banned from a presence in the US. They aren’t going to want that to happen anytime in the near future! Remember, us US citizens in “foreign” countries are just ants in the elephant jungle.
There are already, in other countries, banks and financial/investment institutions that are closing the bank/investment accounts (or disallowing the opening of new accounts) of US citizens because they (the banks) don’t want the hassle of these issues. That is, TD or RBC or ING could decide to close accounts from us ants at any time rather than worry about the potential fines they might face from the USA witch-hunters. Would the Cdn govt have any say? I doubt it. Could you go to court? Yes, perhaps a class action would make it to the 6:00 news. But how many months/years do you want to put into this effort? And banks/investment firms are non-gov businesses, not extensions of the govt, and they are allowed to have very broad range RE their policies – – they are allowed to close accounts for whatever reasons their policies state.
My friend, the internationally known immigration lawyer, who works mostly with high-wealth clients who want to change citizenship & move to other countries to avoid taxes (Cdn and sometimes US) says folks new to learning about this (US-renunciation/taxation) strangulation process are like folks just learning that they have an untreatable deadly disease – – they go through the 5 various Kubler-Ross stages of “Denial, anger, bargaining, depression, acceptance”. As a senior citizen, I can empathize with the anger and grief and panic but I also ask “how much of your life time/effort” will you (another ant like me) be willing to spend on being angry and stressed and wanting to “kill the elephants”? And will you ever succeed – – and how do you feel about the possibility that you might not succeed?
I totally agree with all the rage that folks on this blog site feel, the righteous indignation and calls for justice and support from the Cdn (and perhaps other) govts. But consider your energy and emotional well-being and finances and “life’s time” and relationships and how long you want to be angry and disheartened and enraged, and who/how many will fight (and for how long) with you.
Believe me, I’ve been there, done that – – it takes a heavy toll even if you win……
@ WhatAmi
Yes to all your questions. In my DS-4079 I had cited a potential second relinquishing act, which was in effect in 1972 when I voted in my first Canadian federal election. I had understood all my life that as a dual citizen (both in the US to Canadian parents, moved back to Canada at age 6) that when I voted in my first Canadian election I would have chosen to give up my USC. However, they changed that in 1978 but I wasn’t aware till border officials started educating anyone who had a US birthplace in their passports. I lived all my adult life as only Canadian. However, the Consul told me in the interview that voting was not a relinquishing act, and giving back citizenship to those who thought they had lost it was such a big favour to teachers from Quebec or something like that. Then I tried the government job angle, and he said it only applied to policy-makers, very high up in the government. I had been an administrative secretary in our local hospital, but I told him I did work on policy manuals, and was non-union, so if the union employees went on strike, I would have still had to work. By then I was grasping at anything, as I had expected it to go well, and he was discounting everything I said. Then, he pointed to the next window and said I should just renounce and save myself another trip (I had flown in from Winnipeg). I said no, I’d like them to send my file to Washington. He brusquely allowed me to sign the DS-4081 and to repeat something after him with raised hand, and I was out of there shaking like a leaf. He said I’d have my response in 4-6 months, and finally after 12 months I emailed Calgary ACS to inquire. That’s when I was told my file was at the top of some pile, and they just wanted to know if I had signed an oath upon hiring. All I could provide was that sample confidentiality agreement, and was not asked for anything else. My CLN was signed shortly thereafter, but took another 5 months to arrive, with no message from Calgary prior, just a registered package arriving in December. Best Christmas present ever!
@prairiegirl – Last year our son (born in Canada of 2 US parents) wanted to go through a renunciation process but it was hard to get an appointment in Vancouver (his closest consulate). I emailed the embassy in Ottawa and they said this could be done at any consulate. He contacted Calgary and arranged a 1-visit renunciation. He flew there, stayed overnight with friends, and had his appointment in the morning the next day – – everything done by 10:30 AM.
Toronto requires 2 visits but I know that both Halifax and Calgary (maybe others) will arrange 1-visit renunciations. It may take a while to get these appointments but at least it’s done in 1 visit.
@LM
Calgary only requires one appointment for everything, I agree. I had come to relinquish and because they couldn’t recommend my approval, I was offered renunciation, as if I had been rejected for relinquishment I would have had to arrange another appointment.
@LM,
There’s been some positive developments with the visits. Toronto has switched to 1 visit in November 2012 and Vancouver did so in October 2013.