UPDATE: Michael J. Miller made a further comment based on a conversation with an IRS employee knowledgeable about expatriation (emphasis mine):
As a follow-up to my prior posts, I spoke today with someone at the IRS who is knowledgeable in the “expatriation” area to discuss the issue of someone who renounced prior to enactment of the American Jobs Creation Act in 2004 but never obtained a CLN. While the advice I received was not a formal expression of the IRS’s position on this subject, both she and the colleague that she consulted were of the view that it would be crazy for the IRS to treat such an individual as subject to the expatriation rules. I hope that those of you for whom this is a huge issue will take some measure of comfort from this update.
In an earlier post, Michael J. Miller made the following comment (my link to IRC 877A):
For those who properly ceased to be US citizens (e.g., by naturalizing in Canada with the requisite intention to no longer be US citizens) prior to enactment of the American Jobs Creation Act of 2004, the expatriation rules should not apply (notwithstanding the very poor manner in which section 877A of the Internal Revenue Code is drafted).
2004 is when the idea was first introduced that a person who had otherwise relinquished US citizenship could nevertheless continue to be treated as a US citizen for tax purposes until some “notice event” (my own, inarticulate term) took place. This new rule was set forth in former Code section 7701(n) and it is 100% clear that it was purely prospective in application. Thus, for example, as of 12/31/07 it was perfectly clear that a person who properly relinquished US citizenship in the 1970s, 1980s, 1990s, for example, was (quite properly) “grandfathered” and not affected by section 7701(n) in any way.
In 2008, section 7701(n) was removed and the rule providing for a person relinquishing citizenship to continue to be treated as a US citizen for tax purposes, until some “notice event” occurred, was incorporated into then-new section 877A. While section 877A is worded very poorly in terms of its effective date, I (and other specialists in the area) find it inconceivable that the provision was intended to take people who relinquished US citizenship many years prior to 2004, and who were quite intentionally grandfathered by 7701(n), and convert them many years after the fact into US citizens once again.
Even for the US, that would be outlandish (and this is said fully in the context of the many other notable events of the last several years). I note in particular that, if such an outlandish thing truly had been intended, there would have been some discussion of it in the legislative history — and yet there is none. If your CLN says 1776 (or even 2003) on it, rest easy. You’re not a citizen.
I did a Google search of 7701(n) and found the following information on an IRS webpage, agreeing (I think) exactly with Michael’s point (emphasis mine):
Expatriation after June 3, 2004 and before June 16, 2008
The American Jobs Creation Act (AJCA) of 2004 amends IRC section 877, which provides for an alternative tax regime for certain, expatriated individuals. Amended IRC 877 eliminates the tax avoidance criteria for imposition of the expatriation tax on certain types of income for 10 years following expatriation, and creates objective criteria to impose the tax on individuals with an average income tax liability for the 5 prior years of $127,000 for tax year 2005 ($131,000 for 2006; $136,000 for 2007; $139,000 for 2008) or a net worth of $2,000,000 on the date of expatriation. In addition, it requires individuals to certify to the IRS that they have satisfied all federal tax requirements for the 5 years prior to expatriation and requires annual information reporting for each taxable year during which an individual is subject to the rules of IRC 877.
Further, expatriated individuals will be subject to U.S. tax on their worldwide income for any of the 10 years following expatriation in which they are present in the U.S. for more than 30 days, or 60 days in the case of individuals working in the U.S. for an unrelated employer.
Finally, even if they do not meet the monetary thresholds for imposition of the IRC 877 expatriation tax, the new law (per IRC 7701(n)) provides that individuals will continue to be treated as U.S. citizens or long-term residents for U.S. tax purposes until they have notified the Secretary of the Department of State or of Homeland Security of expatriation or termination of residency. The implementation date of this provision is retroactive and applies to expatriations occurring after June 3, 2004. The expatriation is not effective until the notification and tax satisfaction certifications are filed with the IRS and the Department of State or of Homeland Security.
However, the devil is in the details. The following requirements remain in place:
Expatriation on or before June 3, 2004
The expatriation tax provisions (prior to the AJCA amendments) apply to U.S. citizens who have renounced their citizenship and long-term residents who have ended their US residency for tax purposes, if one of the principal purposes of the action is the avoidance of U.S. taxes. You are presumed to have tax avoidance as a principle purpose if:
Your average annual net income tax for the last 5 tax years ending before the date of the action is more than $124,000, or Your net worth on the date of the action is $622,000 or more.If you meet either of the tests shown above, you may be eligible to request a ruling from the IRS that you did not expatriate to avoid U.S. taxes. You must request this ruling within one year from the date of expatriation. For information that must be included in your ruling request, see Section IV of Notice 97-19. If you receive this ruling, the expatriation tax provisions do not apply.
The expatriation tax applies to the 10-year period following the date of the expatriation action. Individuals that renounced their US citizenship and long-term residents that terminated their US residency for tax purposes on or before June 3, 2004 must file an initial Form 8854, Initial and Annual Expatriation Information Statement. For more detailed information refer to Expatriation Tax in Publication 519, U.S. Tax Guide for Aliens.
To make this all the more clearer, Publication 519 states:
Expatriation Before June 4, 2004
If you expatriated before June 4, 2004, the expatriation rules apply if one of the principal purposes of the action is the avoidance of U.S. taxes. Unless you received a ruling from the IRS that you did not expatriate to avoid U.S. taxes, you are presumed to have tax avoidance as a principal purpose if:
- Your average annual net income tax for the last 5 tax years ending before the date of your action to relinquish your citizenship or terminate your residency was more than $100,000, or
- Your net worth on the date of your action was $500,000 or more.
The amounts above are adjusted for inflation if your expatriation action is after 1997 (see Table 4-1).
Reporting requirements. If you lost your U.S. citizenship, you should have filed Form 8854 with a consular office or a federal court at the time of loss of citizenship. If you ended your long-term residency, you should have filed Form 8854 with the Internal Revenue Service when you filed your dual-status tax return for the year your residency ended. Your U.S. residency is considered to have ended when you ceased to be a lawful permanent resident or you began to be treated as a resident of another country under a tax treaty and do not waive treaty benefits.
Penalties. If you failed to file Form 8854, you may have to pay a penalty equal to the greater of 5% of the expatriation tax or $1,000. The penalty will be assessed for each year of the 10-year period beginning on the date of expatriation during which your failure to file continues. The penalty will not be imposed if you can show that the failure is due to reasonable cause and not willful neglect.Expatriation tax. The expatriation tax applies to the 10-year period following the date of expatriation or termination of residency. It is figured in the same way as for those expatriating after June 3, 2004, and before June 17, 2008. See How To Figure the Expatriation Tax (If You Expatriated Before June 17, 2008) in the next section.
This seems to clear up whether all people who expatriated before June 3, 2004, had to file Form 8854: the current version of the form is only for people who expatriate after that date. Before that date, the so-called Reed Amendment was in effect but it was not applied systematically, and I would think that the IRS is not going to focus its ire on those who have an expatriation date on their CLN of earlier than 3 June 2004, but on those whose expatriation date is after June 16, 2008. As Miller says, those who expatriated before 3 June, 2004 (i.e., the expatriation date on the CLN) are properly grandfathered and don’t have to do a “notice event” (i.e., informing the Consulate of their expatriation). The provisions for making such people pay taxes or barring them from the United States (i.e., the Reed Amendment) were ineffective and that is why the law changed drastically in 2004. I open this to further discussion, because I myself am not an expert but am only trying to understand the requirements properly.
This post was original posted on June 15, 2012
Wow, I didn’t even think of that, right there before my eyes. Calgary411 has no significance, but now I’m thinking of changing my birthday.
How about Woofy?
Woofy is named after my dog – cause she woofs!
… and tiger and I have heard her. Thanks, Woofy!
I was born in Canada, resided here all my life, never worked in the USA. I obtained a US passport and SS# about 15 years ago because one of my parents is a US citizen (not US-born, immigrant to US from Europe). I regret ever applying for the passport. It has expired and I will not be renewing it. I have seen other similar comments on these sites and heard you can be safe from filing with the IRS if you choose to never cross into the US again. Any thoughts?
Canadian passport says born in Canada? Probably ok. If they call your name up and say are you so and so? Iffy.
No reason not to travel to us on Canadian passport.
@Joe Smith
Thanks for your comments. I just thought I’d ask after reading this on the Issac Brock page titled “Canadian citizens still protected”
“Depending on whether one speaks of the December IRS announcement of a requirement for filing back six years, or the OVDI standard of eight years, any Canadian resident who was or became a Canadian citizen prior to 2006 or 2004, respectively, has the option of telling the IRS to jump off a very tall cliff, with respect to tax filing (including FBARs, and Form 8854 with respect to expatriated Americans), as long as that resident is prepared never to cross the US border again. ”
I am not sure why I was issued a US passport in the first place since my American parent was not even US-born.
@cantdecide,
In the end, you are the one who has to decide as no one on this site or any other can tell you for sure that you can be safe from filing with the IRS if you choose to never cross into the US again. None know what FATCA will bring and we don’t know how Canada will or will not protect its citizens and residents who are USP. You, though, without a US birthplace shown on a passport are among the lucky of those here.
There are lots of thoughts here. Read, read, read and see how your risk tolerance jives with others to help you reach your decision. We’re all different, but you will read some different arguments and facts here at Isaac Brock. Start with the links on the right side of the home page:
http://isaacbrocksociety.ca/expat_tax/
http://isaacbrocksociety.ca/renunciation/
http://isaacbrocksociety.ca/fatca/
http://isaacbrocksociety.ca/consulate2/
Stay tuned — you will get some good comments from others here in helping you decide what you need to do. Just be aware; not an ostrich.
@cantdecide,
That is indeed something to look into — why were you issued a US passport in these circumstances. You may have nothing to worry about if this was done incorrectly. There are also ways of obtaining a US passport through your grandparents US citizenship — which may be how you were issued the passport.
@calgary411
No, my grandparents and parent all emmigrated to the US and then obtained citizenship. Is it possible I could have mistakenly been issued a US passport?
I remember attempting to register to vote in the 2004 US election and was told I did not qualify because I was never a US resident. That doesn’t sound like I am recognized as a citizen.
How long did your grandparents live in the US after taking US citizenship? How long did your US parent live in the US?
http://www.uscis.gov/USCIS/Resources/A4en.pdf
I was born overseas. One of my parents was a U.S. citizen but never lived in the United States. One of my grandparents was also a U.S. citizen. Could I have derived U.S. citizenship?
If your parent was a U.S. citizen when you were born but had not lived in the United States for the required amount of time before your birth, but one of your grandparents was also a U.S. citizen and had already met the residence requirements, then you may still have derived U.S. citizenship. The provisions of immigration law that govern derivative citizenship are quite precise and circumstances in individual cases can be complex. For specific information on how the law applies, please check our website or the U.S. Department of State website at http://www.state.gov, or call USCIS Customer Service at 1-800-375-5283.
http://www.avvo.com/legal-guides/ugc/obtaining-us-citizenship-through-a-grandparent
Just joining in the conversation.
@All…I am going to the Toronto US consul on July 15, 2013 to formally relinquish my US citizenship. I became a Canadian February 19, 1993…I was under the belief that I automatically lost my US citizenship at that time. .
I was filing my US Tax forms, the last year filed was for 1993…
Reading the above I am confused if I have to file a 8854 form…Also since I never had a US passport, only a Canadian one, should I bring in my US social security cards? I have both for maiden name and married name. I am gathering up all the papers need. I have my birth certificate,, marriage certificate, settler papers and landed immigration papers. I will also bring in my Canadian passport and citizenship card and official citizenship paper. Is there Anything else? I have form DS-4083 certificate of Loss of Nationaltiy , DS-4081 Statement of Understanding concerning the consequences and Ramifications of renunciation or relinquishment of US citizenship. Also OMB NO> 1405-0178.. Request or Determination of Possible Loss of United States Citizenship…
Do I need to fill out all of these? I want to make sure I have all in order when I go in.
Thank you all for your advice.
http://isaacbrocksociety.ca/consulate2/ for others’ experiences regarding relinquishments and good information documented from Pacifica regarding all necessary forms for relinquishments, as well as renunciations.
from earlier comment from Pacifica regarding difference of opinion, Phil Hodgen and Michael J. Miller:
According to updated post: http://isaacbrocksociety.ca/2012/06/19/if-your-expatriation-date-is-before-2004-the-rules-are-different/, it appears from what Michael Miller says that your claim of expatriation for 1993 would NOT require the 8854. From that post:
Regarding what to bring with you: better to have too much rather than too little for your appointment. Your SSN is not required, but your two cards will be further proof of your change of name. I would fill out beforehand and very aware of all you MAY be asked at your appointment since experiences differ from consulate to consulate. Better to be as prepared as you can be.
Good luck, northernstar. With all the information Pacifica has documented, you should be well prepared for your upcoming claim of relinquishment appointment in Toronto.
@ Northern Star
It seems that all the lawyers that Brockers have contacted except one have the view that 8854 doesn’t apply to long-ago relinquishers. (We haven’t done a massive survey or anything, though, just people independently enquiring and reporting to Brock what they were told.) It makes sense to me, as we weren’t USCs when those laws were enacted. Best thing, of course, as with anything relating to this whole thing, is read up, make up your own mind based on your own circumstances to feel confident in what you do.
Here’s some posts about pre-2004s.
http://isaacbrocksociety.ca/2013/02/16/pre-1995-relinquishers-and-the-irs-three-recent-legal-opinions/
http://isaacbrocksociety.ca/2013/03/05/michael-miller-paper-on-the-exit-tax-applies-propsectively/
@Calgary 4411 and @Pacifica777 thanks for your excellent advice. I have all 3 forms .
The Form no. 1405-01788 is 4079..
When I go into the appointment meeting I will advise them that I am there for my CLN because of Relinquishment from 1993. I will fill out all the forms prior to going but not sign them.
Thanks again. I feel all should go smoothly.
I renounced my US citizenship at the US Consulate in Halifax on 02-Dec-2003. I received a form entitled “Oath of Renunciation of the Nationality of the United States,” signed by myself, the Consul and two witnesses, and stamped with the Consulate’s seal. What I did *not* receive was a Certificate of Relinquishment.
In 2009, I applied for and received a Canadian passport, which I recently renewed. It lists the States as my place of birth.
Now I’m facing two issues. One is that I’ve been dutifully saving for retirement and my accounts total more than $50,000. The other is that my mother is 82 and in fading health. When the time comes that she passes away, I would like to be able to attend her funeral.
Will my “Oath of Renunciation” form be adequate in both cases to prove that I’m no longer a US citizen? If not, how do I get a CLN?
Rosie,
What you may not have received was the Certificate of Loss of Nationality (CLN) (see below).
Is your document one of the following (from the Consulate Report Directory at Isaac Brock)?
THE ISAAC BROCK SOCIETY
Department of State Forms
These are the forms for renunciation:
4079
. Request for determination of loss of citizenship
. Important for relinquishments, is not strictly required for renunciations (according to the DOS procedure manual) but it seems most consulates ask for it. This has four pages of questions, requiring dates; it’s best to fill it out in advance of your consulate meeting.
http://www.state.gov/documents/organization/97025.pdf
4080
. Oath of renunciation
http://www.state.gov/documents/organization/81606.pdf
4081
. Statement of understanding of consequences
http://www.state.gov/documents/organization/81607.pdf
4083
. Certificate of loss of nationality
http://www.state.gov/documents/organization/81609.pdf
If you have already relinquished your citizenship (eg. upon obtaining citizenship in another country) and are now applying for a CLN:
4079
. Request for determination of loss of citizenship
. This has four pages of questions, requiring dates; it’s best to fill it out in advance of your consulate meeting.
http://www.state.gov/documents/organization/97025.pdf
4081
. Statement of understanding of consequences
http://www.state.gov/documents/organization/81607.pdf
4083
. Certificate of loss of nationality
http://www.state.gov/documents/organization/81609.pdf
Statement
. Not necessary, but can be useful to supplement your 4079 with a written statement to show that your relinquishment was intentional and that your post-relinquishment conduct has been consistent with having relinquished.
Rosie
Regarding Canadian Banks
If your current address phone numbers are Canadian you should fine as long as you used your driver license as photo ID for the bank . Does not have US place of birth. You can open new bank accounts using the driver license at banks/credit unions that do not ask USA question. A lot of people here like credit unions.
You have to still fill out a bunch of US tax returns and forms to be considered compliant with US tax regulation. Did you do that?
@Rosie
Another good ID is your Firearms license…I am not sure how all provinces are but my province police have to approve everyone who applies for a firearms license and you can only be a resident . no birth certificate on the card. I got mine…
Out of curiosity, does anyone know if “enhanced driver’s licenses” contain within them your place of birth. BC has this and I believe you’re supposed to be able to cross the border using it instead of a passport.
Another good ID is your Firearms license
Still American at heart.
@GeorgeIII
Not really…I don’t own one. but moving to the rural north I thought I would get one and so had to get the firearms license (for long guns) I was the oldest, the city slicker and a female.out of 14..and I had the highest marks..I just keep it current. It can come in handy and I did use it to open a bank account.
I just had a response back from Halifax-ACS@state.gov on this: “If you have an Oath of Renunciation that has a Consular Officer’s signature and seal then this is an official document to confirm your loss of U.S. nationality.”
The document I’ve got is an HLF-119, last revised Aug 98. The current document it’s most similar to is a 4080, http://www.state.gov/documents/organization/81606.pdf
I worked in financial services both in the States before immigration and in Canada after, so I was super-careful about the tax stuff. I filed both Canadian and US returns starting from my year of immigation (1998) up through the year I renounced my US citizenship (2003). I also filed FBARs for those years and an 8854 after I renounced. My US tax liabilities and assets were low enough that I didn’t have to file US returns after that.
I also downloaded a copy of the pages from the Federal Register which include the “Quarterly Publication of Individuals Who Have Chosen To Expatriate, as Required by Section 6039G” that applies to me. (The past 20 years of the Federal Register are available on-line.)
What I’m most concerned about is the bank where I have my existing accounts questioning me re: US citizenship because the aggregate value is > $50,000. I live in a small city that’s more like a small town in some ways, including that everyone seems to know everyone else’s business and lots and lots of people know I’m an immigrant. It’s a bit late in the game to start pretending I was born in Canada, plus my NYC-style vowel sounds sort of give me away.
It’ll be interesting to see if, in the wake of FATCA, banks and credit unions (credit unions are awesome – I work for one!) continue to accept documentation to open accounts that doesn’t reveal the holder’s birthplace. It seems to me that one easy way for financial institutions to avoid FATCA is to pull their investments out of the US. Right now the sword that the States is holding over the FIs’ heads is the threat of 30% withholding on any US-generated income, but 30% of zero is zero. Perhaps this issue will come up at banks’ shareholder meetings and credit unions’ membership meetings?
FYI: a “short form” Ontario birth certificate does NOT show the parents’ place of birth.
It is also handy pocket size and can be used for practically any official ID request, except possibly getting a Canadian Passport.
In Ontario, an individual may have one each of long form and short form birth certificates.