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).
*Hi tiger and Freeatlast – so do you think it is easier and faster to do a renouncing or a relinquishing – assuming there are 2 or more reasons that meet the relinquishing list .. ignoring the $450 charge, which is faster and easier to get the CLN?
*I would like to relinquish but dread the 8854. Has anyone filled out one of these forms yet? Do they still steal your pension? Would it be easier to become tax and fing fbar compliant and then renounce or easier to relinquish and file 8854. If you own nothing and your total worth is less than $50,000 would 8854 be the less of the two diabolical monstrous evils? Do you still have to file fbars if you fill out 8854?
Why do you dread 8854? Would you be a covered expatriate above the 2 million threshold?
Personally, I chose not to file any FBARs. Since I am no longer a US citizen, I figured I would not jeopardize myself or my family. I filed a 8854 but with Fifth Amendment on certain lines. The tax lawyers hate that approach. Some would undoubtedly have preferred that I go the safe route and enter OVDI. But Flaherty says that Canada will not collect FBAR fines.
For everybody in this boat..you have two choices..get compliant or do nothing and see what happens…if you get compliant then you have the choice to renounce or just keep filing 1040s and FBARS and keep your U.S. citizenship…if you renounce and your not a covered individual just fill out the 8854…it’s not that hard…People read ,read ,read..there is a wealth of information on the Internet ..If I did it you can do it…you don’t need lawyers ..find a person that does U.S. taxes that doesn’t charge a arm and leg go to the States and find one if you have too..FBARS are easy you can do it…if you do it yourself your making hundreds of dollars an hour!
This is just my belief …I think if your just an ordinary person the IRS does not want to come after you..it just costs way too much to do that.. that is why I got compliant and I mean compliant..no funny stuff I gave them everything and FBARS was not pleasant to fill out telling them everything…that way if they wanted to audit me they would find nothing…After I was compliant then I renounced…I have my CLN in hand…I never thought I’d say this but losing my U.S. citizenship is the best feeling in the world!!
FREEATLAST!
FBARs are not necessary for expatriation and for ending one’s tax obligations to the IRS. You can completely check out of the system without filing one. As for information on the web, this site is one of the premier sites for information of all things to do with renunciation, FBAR, FATCA, expat taxes. 978 posts 23,400 comments on the subject.
petros..you must be right..heck I really regret doing it right and getting my CLN…wish I could do it all over again your way…for passing along all my idiot information I am banning myself from this website…good bye cruel world…Still Freeatlast
@Freeatlast, I didn’t mean to say either that you did it wrong or to chase you off at all. Merely to say that FBARs are not part of the expatriation process. Undoubtedly, your tax advisers told you to do all the FBARs. But given certain conditions, such as 100% of assets in Canada, I see no reason to jeopardize my family by inventorying my Canadian wife’s bank accounts for the IRS. I don’t see that any good could come of that. But some people trust government more than I do.
@Freeatlast –
If your assets are all in Canada I’d be not very concerned about the IRS and more concerned about FBAR-related identity theft. Might be prudent to change your account numbers now that you’ve renounced.
@CanadaExpat –
Always better to relinquish than renounce, assuming you can make a good case (a well-documented potentially expatriating act, no trying to be American since that date). If your expatriating act is well in the past, you’re off the hook for tax paperwork, which is a major plus.
FBAR is odious!!!
I would like to see the reaction of homelanders if they were forced to complete a form each year giving intimate details of their domestic accounts.
Not to be paranoid, but identity theft is a real concern, which has stopped some USP’s from becoming compliant.
@ Freeatlast
There’s no right way to do this. They make it complex and obtuse enough to guarantee that there is literally no right way to do this. They simply do not do simply at the IRS and hidden in the complexity are some very onerous penalty pits. They of course are prepared to pounce if anyone is perceived, by them, to be doing it the wrong way. So your way is as right as Petros’ way which was done in the best interests of his family.
I will just ditto what Halifax wrote. I hope you changed all the locks (i.e. numbers and locations) on your bank accounts afterwards. I would not want that information sitting in a file at the IRS or the Treasury Dept. because I wouldn’t trust them with it — not one bit. However, the main thing is you are “free at last” and that is something we all envy.
Actually, because my American (waiting to Canadianize) husband has filed everything all along he will do a completely compliant type of exit (or as close as possible, given how easy it is to make errors) and then he will change those “locks” of course. I am Canadian and will not be drawn into their once upon a time — long, long ago — you had a green card trap. I have in my mind, even if not in theirs, already made my exit and will not provide any information beyond name, rank and serial number.
*I renounced and now have my CLN and have never filed taxes an FBAR or the 8854, they are all unnecessary. Renunciation took place at a US consulate, but it is a myth that this is US soil, I was in Canada when I renounced. I mention the fact that the renunciation took place in Canada because some people have been intimidated to be “on US soil” and probably fear they are somehow subject to US law when inside the consulate. If or when I file taxes/FBAR/8854 will be because I decide to, not because it is necessary to do so. Is this the best or correct way, I don’t know. I do know that any forms I do not file will be errors free 🙂
@ True North
That last sentence really made me smile and both my thumbs went immediately to the up position. 🙂
*TrueNorth were there special circumstances around your renunciation? I thought that being up to date with taxes was the only way to avoid form 8854 and that you are told to contact the IRS after renouncing. I like your way a lot better but can everyone do it that way?
@ banany
I share your concern. Within the last several weeks I posted a question about renouncing with doing any filings.If I recall correctly, Halifax pier pointed out the perils of taking this approach. I can’t find the response to my enquiry, but perhaps someone else can.
The only place where it says you must contact the IRS is in paragraph 10 of form DS-4081 and it only says that “I understand that I must contact the United States Internal Revenue Service.” No timeline for such contact is given so maybe 150 years is soon enough.
The CLN itself makes no mention of the IRS.
@Hazy2, is this the comment you’re looking for?
Posted by A Broken Man on a Halifax Pier at 1:40 pm, July 20th, on the Relinquishment and Renunciation Questions thread in reply to your question of 1:28 pm.
@ pacifica777
Thanks
That’s the response. I had asked the question on behalf of someone else for who relinquishment was not an option. It seemed that renouncing without filings was too easy a way out. Perhaps True North would disagree.
*@Banany, there were no special circumstances. I was in a hurry to renounce and not in a hurry to file taxes. The state department will process the renunciation taxes or not, I don’t think they care at all about the IRS. The statement about contacting the IRS is probably there so no one can claim they were not aware. I have now contacted the IRS, told them I renounced, and have asked how to proceed. I have probably made about half a dozen calls to the IRS with various questions, each time I call I inform them I have renounced but not as yet filed taxes, there has never been any mention that this is a problem. I am actually many decades behind in taxes as are many of us, my hunch is that if I file in the next few months even the IRS won’t care if it is before or after the date of renunciation. The form 8854 is not due until June of 2013, if I file taxes, then do the 8854 on time I don’t think I will have much trouble. Time will tell.
My head is spinning with all this, I’m hoping for some clarity.
Born in the US in 1957 to an American mother and a Canadian father. Moved to Canada in 1970. I don’t have a SSN, never worked in the US, have no financial or property ties there. I have never held a US passport. I applied for and was granted Canadian citizenship in Feb 2005 on the basis of my father being Canadian. I did not have to swear an oath or attend a citizenship ceremony.
After reading about the relinquish/renounce information, I’m still confused. Can I just make an appointment at one of the Consulates and relinquish my citizenship?
It seems since I have no SSN that I could simply fly under the radar, but I’m worried that if I attempt to cross the border I could get nailed one day.
I have no intention of becoming compliant with my IRS filings – that is just ridiculous. I’ve never made more than $60K in a year and net worth is crazy low.
I’d appreciate any insight you all could provide. I’d like to continue to be able to visit friends and family in the US, but….
I
*So confused. Yes you can just make an appointment and relinquish or renounce. I have made one. However,from what I understand, if you do not do the taxes before giving up the citizenship you are smacked with an exit tax form 8854. This will be a tax on your whole estate as though you had died the day before expatriation, they will steal from any pension plan or RRSP’s that you have, I believe they take 1/3 at the source when it is supposed to be paid out to you. On top of this, they get you to waiver any rights that you might get from future changes to the tax treaty between the U.S. and Canada. They want to know exactly everything that you own – art, gold, jewelry, cash on hand as well as accounts. They are thieves casing your financial files and belongings for a big robbery (my opinion). The only way to avoid future draconian consequences (resulting from FATCA when your bank will rat you out in 2014) is to hold your nose and jump into the 5 years of taxes and 6 years of FBARS Abyss. Then you will not be a covered expat providing you are not worth millions of $$ and thus you will not have to file an 8854.
@ So confused
Yipes, looks like you are in quite a pickle. You were an American up until you became a dual in 2005 and have done no filing with the IRS. Your Canadian passport will put border guards on high and mighty alert because it says — Born in the USA. (This is not a big problem right now but just wait, it will be I’m sure.) Unless you become “compliant” (I hate that word when it refers to the IRS tyrant) there is little you can do except stay out of the USA and don’t even fly over it in case the plane makes an emergency landing. The new not-so-much-amnesty deal might be a possibility but again that ugly word “compliant” comes up. Hang in there, someone with much better understanding of the complexities will jump in to try to help you out and I hope I haven’t added too much more to your confusion. Believe me, everyone at Brock sympathizes with your situation. Whatever you do, don’t move too quickly. There’s a lot to be considered yet.
*@So confused, If you were born in 1957 to a Canadian father you may have been a Canadian citizen since birth. A person born in 1957 to a Canadian father is a Natural-Born Canadian citizen, the birth however had to be registered within two years. Do you know if your birth was registered? There are advantages to being Canadian (or any other citizenship) since birth when it comes to the exit tax, and may make you completely exempt from it.
*Thanks so much for the input.
My birth wasn’t registered is Canada within two years, but my father is listed as a Canadian citizen on my birth certificate.
I was initially all about becoming compliant – that is until I found out what I have to do just to get a SSN. Now I’m just thoroughly annoyed (actually enraged) by the whole thing. I have to personally attend a Social Security office. I live way up north – a 10 hour drive to the closest US border. I expected to have to provide my birth certificate and Cdn passport, but guess what, I have to provide “decade documents”. One official document for each decade I’ve been alive. An elementary school report card, high school transcript, doctor/dental records etc. They don’t want the Cdn tax returns I’ve filed since 1976 – that’s only proof that I worked in Canada, not lived here (Huh?)
I think I’ll go back to burying my head in the sand. this whole process is unbelievable. My only real concern is I had planned to go across the border in a couple of weeks to visit with some friends. Now I am leery. I went to Texas in Jan 2012, had no issues with customs at the aiports.
@So confused
I recently crossed the border (land crossing) and had absolutely no trouble (my Canadian passport shows a U.S. place of birth). My suggestion would be to ‘sit on things’ for a while, educate yourself regarding your options during that time. In the meanwhile, I would cross the border to visit your friends and try to enjoy your trip.
*@So confused, You still may be Canadian since birth. Canada has retroactively restored citizenship to some like you who had lost it back to the date of your birth. If you did not have to swear an oath this may be because you were considered to be a citizen already. You also can renounce or relinquish without filling taxes, this is what I have done, I did so this year. Form 8854 for me is not due until June 2013. I still have almost a year to file five years of taxes ( if I wish ) and certify on form 8854 that I am tax compliant. As I am no longer a US citizen so I can not get SSN. If I do file taxes I will require a taxpayer identification number. I have been told by the IRS that I am to attach the application form for a taxpayer identification number to the tax returns. The application form should be stapled or physically attached, not just in the same envelope as the tax forms will have no “number” ant this is normally wrong. No need to have a SSN, and no need to have the taxpayer identification number prior to filling taxes, and it can all be done by mail.