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 was born in the US in 1936 to Canadian parents, who returned to Canada six weeks later. I have a letter from the Canadian department of the secretary of state to my parents in 1947, affirming that I was a citizen of Canada. I have never lived in the U.S. or spent much time there. Is my bank required to report me to C.R.A. as an american citizen?
No
Chuck Sorry, posted before I finished.
Should have said:
No they don’t. There are many reasons most have which have been covered . Firstly, you are Canadian and not American. In 1947, the US didn’t allow dual citizenship and so when you became Canadian (no matter how that came about) you relinquished US citizenship At that time, certificates of loss of citizenship were unheard of.
Secondly, your banks don’t know where you were born and have no reason to ask.
Thirdly if by a 1 in a million chance, they were to claim you were American, there is a section in the intergovernmental agreement that makes your accounts not reportable. I supplied the link in a response to Arcanum on this thread on Aug 22 at 2:45 pm.
P.S. i’m not a lawyer
Some may find parts of this useful, and in particular, the discussion of Former INA 350.
https://www.ca.taxnews.com/tnnnews.nsf/DateWeb/2A312AD0101FFFAA85257D150049DA24/$file/Are%20you%20a%20US%20citizen_July%202014.pdf
Regarding Former INA 350, here is a discussion from Consular Affairs
http://www.state.gov/documents/organization/120532.pdf
Note that based on the Terrazas decision, Consular Affairs no longer will approve a CLN for those who thought they had lost their citizenship under INA 350.
@Hazy,
My interpretation is that the INA 350 door isn’t completely shut and that it could be worth a try. I’ve seen no attempts reported here but there were 2 potential claiments who posted early this year. Neither reported back to let us know if they tried.
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I moved to Canada from the USA in 1971. I was a landed Immigrant until 1977 when I rcvd Canadian Citizenship. The Judge told me that I was at that point by taking my oath as a Canadian relinquishing all other Citizenships. I am concerned that my bank might be reporting me to the IRS as as a US born citizen.
What should I do in case they are incorrectly reporting my banking information to the IRS
Bill Smith. You will be just fine.. You are no longer an American. Let’s say, for the sake of argument, your bank has on record where you were born. (they probably don’t). They might (emphasize might) ask you to provide evidence that you are no longer American.
You would do 3 things: Sign a form saying ‘I am not American’ . Show them your Canadian naturalization cert. or passport and give them a reasonable explanation of why you don’t have a CLN . A reasonable explanation is that they were not required and were virtually unheard of in 1977.
Some Brockers feel that having a CLN is important. It takes months to get an appointment, a fair amount of stress and a year to wait for it to arrive. Whether or not you want one is up to you. So far I don’t think they are necessary in your situation.
A long winded answer to a simple question.
Moderators, do any of you think a link on the right to the IGA section on what the banks might need would be useful? This question seems to come up over and over.
@Duke of Devon
A link to the IGA and CRA Guidance wouldn’t hurt, but more useful would be a compilation of what each bank and CU is actually asking and which CUs are FATCA-Free. One shouldn’t trust that any given bank or CU is going to follow the IGA instructions. Maybe a PDF like the Consulate Directory? Pouring through multiple threads to find this info is difficult.
I have two questions, must you be legally in Canada to go to the US embassy/consulate and relinquish? And secondly, If I have my written oath/affirmation and all other documents can I just walk into the embassy/consulate and just relinquish right there and then or do I have to go through their ‘appointment’ process. Thank you.
Two other questions, does my written oath/affirmation at the embassy/consulate office make me then a citizen of Canada? And if not, would I then just be considered stateless? Thank you
@Seeker – I am not an expert, but from what I have read, the US will not allow anyone to renounce unless they can demonstrate they would not be rendered stateless thereby. If you are not a Canadian citizen, but do have citizenship of another country, then you will be allowed to renounce.
Signing documents of renunciation and swearing an oath (which I’m not sure is even required) will not make you a Canadian citizen. You have to go through the Canadian citizenship process to become a Canadian.
Also, you cannot just walk into a US consulate and renounce then and there. You must have an appointment ahead of time, and unfortunately those are becoming more difficult to come by in any kind of timely way. Appointments are not available in most cities in Canada til far into 2015.
@Seeker – If you are not yet a Canadian Citizen you really need to aim for relinquishment rather than renouncing. Apply for Canadian citizenship, which may take up to three years. When you go to the ceremony be prepared with a document stating that you are becoming a Canadian Citizen with the intent of relinquishing your US citizenship. Have the citizenship clerk or judge witness your signature.
Then contact your consulate by eMail attaching a scanned copy of that document and stating that you are relinquishing your citizenship. They will eMail the needed forms and then set an appointment.
If you follow the comments on this you will see the advantages of relinquishment which extend beyond saving $2350.
@ehFreeman – unfortunately at this point, the only advantage to claiming relinquishment by becoming a Canadian with the intent to lose US citizenship, going forward (ie not in the past), IS saving the fee for renunciation. Only those who can claim relinquishment from before 1993 can benefit from it, because it was from 1993 on that you would still be required to have been 5 years compliant to get out from under the thumb of the IRS.
Not to say that you can’t claim relinquishment after gaining Canadian citizenship, or renounce, without being IRS compliant…as long as you don’t mind living with the uncertainty about whether they might try to come after you at some point in the future.
@GwEvil
1993? I thought it was 2004? I’ve heard 1995 and 1996 in other threads. Can somebody please clarify?
@Kathy, the 5 year certification requirement took effect on June 4, 2004 when AJCA was passed (and amended in HEART effective on June 18, 2008 changing 10 years of post relinquishment/renunciation taxation to the exit tax.) Before that date, the date of the expatriation was date of the relinquishing act, not when you notified the embassy/consulate.
See http://isaacbrocksociety.ca/relinquishing-acts-performed-prior-to-2004/
@GWevil — DOS say in the FAM they will allow one to be stateless by renouncing, but they strongly advise against it.
See 7 FAM 1261(g) http://www.state.gov/documents/organization/115645.pdf
and http://www.nostate.com/1364/certificate-of-loss-of-nationality-canceled-us-passport/
@Kathy – it actually may be 1995 or 1996, yes. But either way, Seeker won’t be abe to use past relinquishment unless he/she became a citizen of another country before that date and it doesn’t sound like he/she did since “statelessness” was mentioned. If you yourself became a citizen of another country around those dates it would need to be pinned down exactly when they changed the rules. I haven’t paid really close attention to the exact date, since l don’t qualify for past relinquishment myself.
@RMA – they may talk about “advising against” statelessness but practically I’d hold out little hope of them actually allowing it without a fight. They seem to have been using any excuse these days to disallow relinquishment, so I can’t see them being very open to statelessness in a renunciation.
@Kathy – sorry RMA is right, it’s 2004 for the IRS compliance rule. 1993/95/96 is another important date(s), the significance of which has slipped my mind at the moment.
Wow, is there ever a lot of helpful information here!
I have just obtained my Canadian citizenship and am waiting to get an appointment to relinquish my American citizenship.
I will be so relieved to be out from under the invasive tentacles of the U.S. government!
The latest news is that the Toronto and Ottawa consulates are booked up through May 2015 and are not yet booking for June, July or August. So I’m thinking I will probably not get a Certificate of Loss of Nationality until sometime in 2016.
In the meantime, I’m not sure what I will do about filing U.S. tax returns and FBARS/FinCen forms. I’m completely up to date, but what about my 2014 return (to be filed in 2015) and my 2015 return (to be filed in 2016)?
I’ve tried to read through the gazillion pages on so many aspects of this process but can’t yet figure out what it is the IRS and treasury departments expects of those who have relinquished their citizenship but have not yet been “approved” by their bureaucracy.
Does anybody here have any suggestions?
Medinas… No matter what you do someone will tell you that you’re wrong . So pick the easiest way. Depends on how little you owe in annually taxes. Probably nothing. You relinquished in 2014 so you file 2014 by the deadline next year. You won’t have a CLN appointment until at least 2015 so you can file 2015 by the deadline if you feel the need. You will probably want to file 8854 sometime after your appointment. FBARS come under a different law. Stop filing them when it’s convenient.
Medinas, if I were you, I would immediately write a statement informing the US State Dept. that you relinquished your citizenship on the date of obtaining your Canadian citizenship, and send it to your closest consulate by registered mail, keeping the receipt and the tracking info showing they’ve received it. I would then use that date as the end of IRS tyranny over you. I’m sure you should still make an appointment, but I would fight for the date you informed them by registered mail, as State is the party delaying recognition of relinquishment, not you.
@ Medinas
I whole heartedly agree with The Mom’s advice. It worked for my husband. His CLN was dated for the day of his Canadian citizenship ceremony because he immediately informed the US consulate (next day actually — we had to drive back home) that he had become a Canadian citizen with the intent of giving up US citizenship (he sent the consulate a copy of his “statement of intent”, signed by the Canadian citizenship officer). It essentially stops the clock on your USness. For his final tax filings and 8854, upon disclaimer advice (we are not IRS experts) from the US consulate, he used the date of his informing the US consulate of his intent as his last day as a US taxpayer. No repercussions yet but who knows? BTW, my husband did this by e-mail with attachments but the registered letter is a great idea — perhaps both to be sure?
@ Medinas
This of course means you are doing a relinquishment when you finally get that US consulate appointment so no renunciation fee. A $2350 bonus!
The Mom and EmBee. Brilliant!