The Roy Berg response to the Don Whiteley article offers one big reason that “the story” gets very little mainstream media coverage. “The story” is really too complex and shifting to even begin to be told. “The story” involves disputed and disputable technicalities [remember our fun with 8854?] in law and tax accounting that rival the paradoxes of mystical theologies. “The partial story” tends to rely so much on kneejerk rehash of IRS press release etc. Many purveyors of “the story” or parts of it are in the conflict-of-interest fishing-for-business situation of standing to profit handsomely from fees in return for … no guarantees. [Duh! I paid a lot to an expert that I thought would make me safe. Isn’t that reasonable cause? No? Wha!!!] “The story” by nature will find few who are willing to expose their own personal situation. To tell “the story” in Canada requires serious stretching beyond a pervasive and tacit anti-Americanism. From time to time some shameless martyr will lay bare an IRS atrocity suffered and obtain brief but serious media traction. These accounts will have the greatest effect.
@usxcanada
yup. again your crypticness is only surpassed by your accuracy. bravo.
@Roy Berg:
“This is a reckless article and is riddled with blatent (and dangerous) misstatements of law and fact.”
Bravo! But the real point is that the only “tax cheats” are these governments imposing income taxes and stealing the labor of their citizens in times of prosperity and peace. “The good old professor” isn’t a tax cheat, he is a flaming hypocrite. Just like all the lefties that dare call others “racist”.
Why can’t you brainwashed do-good liberal Canadians figure out, even in while staring FATCA in the face, that the real issue is involuntary income taxes? Why can’t you figure out that even if 51 or greater percent of you believe in some “Canadian value” that you have dreamed up that doesn’t give you the right to steal the fruits of someone else’s labor who doesn’t share your “value”? Why can’t you stop dancing on the head of this pin that all income taxes that the welfare state dreams up are good and fair except the one that bothers you?
@Joe “Hitler Bunker” Smith: Talk about the pot calling the kettle black. And isn’t it great to see Canadian tolerance of others’ opinions on proud display.
@Roy, yes, people need to seek legal advice. But when the IRS claims that OVDP is the only solution, and that those who seek to fix the problem by QD will face harsh penalties, even if you have a minor amount of taxes due, guess what advice most lawyers are going to give. I presented my same facts to several lawyers and the IRS. Here are their answers:
IRS: Since you have even a minor amount of taxes due, you have to enter OVDP.
TAS: You’re not in trouble yet, so we can’t do anything for you, but OVDP in the only solution.
Lawyer 1: OVDP is the only solution. Me: You make me feel like a criminal Lawyer 1: Go ask in the street and see the answer you get. BTW, Lawyer 1 quoted me $20k for his fees, not talking into account accountant fees for 8 years of amended returms and of course OVDI costs for ~$120 of tax due per year in the open years.
My immigration lawyer: You have to enter OVDI before we can renew your green card / apply for citizenship. That is the one that gives me sleepless nights.
Lawyer 3: Amend 2 years of taxes and FBARs.
Lawyer 4: Be compliant going forward.
Accountant: “Because you have a green card, OVDI is the only solution. And you’re going to do it even if it cost you $400k to keep your family together”. Honestly, playing with the emotional part like that is DESPICABLE.
At some point, you have to call their BS, and choose a solution that is reasonable. Trust is gone. Not just in the IRS, but also in most lawyers. Bad publicity in the media, even if it is a bit distorted may be what it takes to make things right for Americans expats and immigrants to the US.
@Christophe
I feel and understand your frustration and anger. Part of the problem is that the lawyers often don’t really know what is the best approach. In addition, I have said and will continue to say that the Circular 230 rules of practice before the IRS, coupled with the fact that many of the lawyers make a living by practising before the IRS makes it hard for them to give objective advice.
In an earlier comment, I suggested (and interestingly Roy Berg seemed to agree, but for different reasons) that you are better off getting advice from professionals in your country of residence. (I know you live in the US, but maybe you should consider getting advice from a non-US lawyer.) The number of US lawyers who are just recommending OVDP without even considering the person’s facts is unbelievable, negligent and maybe worse.
I have been reading your comments for a long time now. Unless there is something you have not revealed, you are not a “bad actor”. You should be able to put this behind you. Why don’t you ask yourself the following question? What if there were no lawyers, no advisers, etc. What would you, if left to your own devices do? Somebody has got to make a decision here and it’s pretty clear that you are not being helped by others.
Also, once again this is absolute proof that the IRS is the single biggest obstacle to compliance.
@renounceuscitizenship, thanks for your understanding. No, I mentioned my facts on this blog without hiding anything. I don’t think I am a bad actor. I seeked advice, got educated on the issue, and decided based on everything I’ve read to just be compliant forward. I ruled out OVDP, and the threats of harsh penalties mentioned by Rosemary Sereti for those who would try to fix the past by doing QDs made me rule this out too, that and the fact that the IRS claims that they can identify them and will pay close attention to QDs related to foreign accounts. I am taking the path that I think is the least risky for me, from a immigration perspective, and that has been mentioned by one of the lawyers I consulted, and recommended on Jack’s blog for certain cases, which I think I fall into. In addition, Jack says that a result of an audit resulting from quiet disclosure or going forward should be the same, so why expose myself more? I am taking my chances of not being audited for the open years, and I’ll probably use another immigration lawyer to renew my green card. This really make me feel like a criminal who needs to hide. I am not happy with my choice as I wanted to fix the past. I feel like a coward who chose not to face his responsibilities. I am a worrier, and the prospect of this having dire immigration consequences is haunting me every day. This stuff has really messed up my mind. I’ll probably be able to put this behind me when the statute of limitation have passed.
@Christophe, Do you really need an immigration lawyer just to renew your green card? I don’t know all the details, but I’ve helped someone with that before and it looked like a pretty easy procedure. I guess some people may have more complex cases, but from what I’ve seen, immigration forms are much more simple than tax forms and I thought people should be able to fill them in on their own.
*@ Tim – Your point #3 (and follow up) is exactly spot on. The effect of a pre 86 expatriating act is exactly spot on: there is no guidance anywhere on the effect of a CLN for these folks. We are working on a solution to this problem, however. Stay tuned.
My biggest fear, and why I quit reading in disgust, is that folks will attempt to obtain a CLN (for any year) and file the State Department for DS-4079 “Request for Determination of Possible Loss of United States Citizenship.” Completing this form can be extremely risky for the following reasons:
You could have been determined to have lost US citizenship in, say, 2000. If that is the case, you may have lost citizenship but STILL have tax and filing obligations. Likewise if the determination is post 1988 (see Tim’s commentary above).
In completing the form you might unwittingly admit to comitting a felony. For example, the form asks if you voted in the US, applied for a US passport, traveled on a US passport, etc. If you’ve done any of these things after loss of US citzenship, that is a felony and you’ve just admitted to it.
Further, completing the form and filing it may an expatriating act that could lead to the application of the US exit tax.
Very dangerous stuff, and the article makes it appear obtaining a CLN is an easy way out.
*@ usxcanada
I agree with your premise that the true story is really too complex to be told. I applaud IBS, its contributors, and those who attempt to share their stories and spread the word. Misinformation and sensationalization are what really get under my skin, however, because that diminishes what those caught in this procrustean bed have been put through.
@Roy Berg, I wonder if accounting firms get a lot of business due to US citizenship-based taxation and would like to keep it that way. Would you and other accountants or tax lawyers be happy if the US changed its taxation system to one based on residence, or greatly simplified tax forms? Do you think such a change would affect your business significantly?
All of this uncertainty will only create leagues of ostriches: those who know enough to realize that going forward will create a pandora’s box of compliance headaches, those who would like to go forward but cannot afford the legal and accounting fees in safely doing so, those who object to the US’s incursion and will not support it, those hoping others will do the heavy lifting for them and make the problem go away…the list goes on.
The USG hasn’t done anything to encourage compliance, the’ll only cause a great number of folks to seek more creative ways in avoiding it and the US altogether.
@ Roy Berg & others
A pragmatic question…
Assuming that Mr Williams has no US-based assets, real-estate, income or presence. And assuming that he has no intention of ever living anywhere EXCEPT Canada.
If Mr Williams simply “sat tight” and DID NOTHING, by what mechanism would the US enforce its revenue claim upon him? My understanding is that Canadian courts do not enforce foreign tax revenue claims, and that the Canadian government will not assist in collecting the US tax from any Canadian citizen (unless it was incurred before they became a Canadian citizen).
Has Mr Berg – or any other cross-border tax specialist – encountered or defended against a US tax collection involving a long-term Canadian citizen in Canada, who only has Canadian assets; a situation to similar to Mr Williams? And was the action brought in Canada – and what was the outcome?
(sorry typo in last post… if admin could delete previous)
@Roy, your reaction to the Don Whitely article is way over the top. The lawyer class is the least objective profession that I’ve ever encountered. I’ve read Whitely’s article for inaccuracies and I find it one of the best articles so far written in any Canadian journal. It is written from an anti-American point of view to be sure, and it called the overreach of the United States a “Tax Jihad”, but that is far from yellow journalism: that is, objectively, what it is. That article is so much better than the Canadian papers who have carried the water of the IRS and brought business to Moody.
You reveal your own bias: the one of paternalistic lawyer class that wants all people to go through them in order to sort through this mess. That way you can make $500-750 per hour, and we can become poorer and poorer. How unfair and inaccurate! Your scaremongering on the form DS4079 is actually quite hilarious and pathetic. DS 4079 is no more complicated and scary to fill out than the 1040 and US persons have to take their freedom and prosperity into their hands every year in order to file their taxes. And you could be committing hundreds of felonies just by filling out that. So far, however, I don’t know anyone who has successfully relinquished their citizenship that hasn’t filled out the DS 4079–and I know several, including myself, who have successfully relinquished.
People go to jail every year for the filling out a “fraudulent” 1040–you and Mopsick have also warned about the frivolous return with an attendant $5000 fine. There is also the penalty for failure to file which is a damned if you do damned if you don’t Catch 22. So I just urge the US government to let my people go. Let the fill out the DS 4079 and let them relinquish. Then they will remain risk free in the future of committing unintential crimes on their US income taxes year after year. The DS4079 is the form of freedom. Dangerous yes, but so is every highway to freedom.
The article by Whitely was excellent.
@ Roy Berg
I appreciate your words of caution, However, I’m sure you realize that there is a divergence of opinion in the legal community regarding what actions the IRS may or may not take in cases of a CLN with a relinquishment date of many years ago.
Without something definitive either by the IRS (perhaps followed by a court case) the situation is indeed murky.
Although it may be way too soon to tell, there has been no evidence that the IRS has gone after someone who relinquished. If you know of cases, pray tell.
Regarding your comment above regarding committing a felony, it has been mentioned a number of times here at IBS that it is important to tell the truth on DS-4079.
“The article by Whitely was excellent.”
Wrong answer, slave.
Because that is precisely what that article is, slave talk.
It is the soothing, calming words of master telling slavey not to worry:
“One significant challenge for Canadian financial institutions is the
fact that Canadian and provincial right-to-privacy legislation prohibits
them from sending financial information to a third party (like the IRS)
without the consent of the account holder. While Canada’s major banks
have taken strong positions on FATCA, the country’s credit unions are
also caught up in the controversy and are actively pushing for changes.
Collectively, they are not happy. “I’ve never touched a file before in
which there is absolutely no public policy benefit, no benefit for
Canada, no benefit for a Canadian credit union,” says Gary Rogers,
vice-president of financial policy at Credit Union Central of Canada,
the association that represents the country’s credit unions.”
The members of the OECD, Davos, Bilderberg, BIS, and whatever also include the elites of Canada. They have all agreed to austerity and a clampdown on all the “rich tax cheats”. They are perfectly aware that the only way the western countries are going to harvest that “cheat” money is by setting up an information sharing corralito for their mutual benefit. They are all in it together with their Geitners and their Shulmans and their Obamas.
So Petros, I wish you luck on your anti IRS jihad. But you are completely missing the target. The IRS, and FATCA, are merely symptoms.
Just look how PE (Private Equity), which is how Mitt made his fortune, owns everything.
*Roy Berg
One point that must kept in mind whether the 2008 and preceding 2004 exit tax laws comply with the US Canada Tax Treaty. Why is this important well unlike the 1996 law neither AJCA or HEART make any mention of Congress’ intent of to override previously agreed treaty obligations(The 1996 exit tax law only had a ten year treaty override and one of the reasons for the 2004 law was that US Treasury had not been successful in re-negotiating treaties to better reflect the law). One of the issues in my mind is whether “citizen” as used in the savings clause of the treaty should be defined using the 1984(when the treaty was ratified) definition(basically the same as nationality law) or the current post 2004 AJCA definition which is any US “citizen” plus any former citizen who committed a relinquishing act but who was not given formal notification to the State Department. If it is former then the 2008 Heart will fall like a stack of cards just like the 2004, 1996, and 1968 exit tax laws did. Note: Congress has not had to change the exit tax law three times in 15 years for no reason.
Now to give some background the 2008 Heart Act in theory complies with all US Tax Treaties even the really old ones in the case “renunciation” as one renounces and no longer has any tax obligations to the US going forward other than filing form 8854 as to the date of renounciation at the normal filing time the next year. All of the previous exit tax laws had the issue of how someone who was no longer a US Citizen could be compelled to continue to file and pay tax for ten years afterwards. The US Canada treaty for example allows the US to continue to tax its former citizens for ten years but only on their US source income. So as per the US Canada treaty someone who commits a relinquishment act without notification should only be compelled after the fact to pay US tax on US source income unless you accept that the US can somehow change the definition of citizen unilaterally notwithstanding its own definition in US nationality law and the definition in use at the time of the original treaty ratification(Some of the more recent OECD commentaries allow this but the ones from back in 1984 and US courts have ruled only the OECD commentaries published at the time of ratification can be used to determine congressional intent). One reason the 2004 exit tax law “failed” so to speak is that generally anyone effected simply converted any US source income they had to non US source income.
*Petros and Berg
From what I have heard the consulate will simply not accept a DS-4079 that is filled out incorrectly and their tends to be at least four or five people who check the information as such their are at least two or three cases I have heard of people being turned back. Just look at the situation on another thread that Tiger is going through. Clearly not everyone is entitled to a back dated relinquishment(however, many are and through all appearances Williams is too. I think the article needs to make clear the back dated CLN route is not for everyone however, it is for probably more people than has been commonly thought.
I will also point the cases I know of where people have done things to give up there claim of relinquishment have tended to have occurred in the last years. I believe Bubblebustin only voted in a US election back in 2008 and Calgary411 only got a US Passport in 2009 so on a completely unscientific basis I suspect there are very few people who lost their US citizenship back in 1970s and 1980s and decided to regain it lets say back in the 1990s.
I will also note relinquishment does not help those who were born as dual citizens but basically lived their entire lives in Canada without ever obtaining a US Passport etc.
@Roy Berg,
‘The effect of a pre 86 expatriating act is exactly spot on: There is no guidance anywhere on the effect of a CLN for these folks. “We” are working on a solution to this problem, however. Stay tuned’.
My question: who is the “We”, and how long might a solution to this problem take? The U.S. State Department has yet to design a form to deal with ‘relinquishments’ vs ‘renunciations’. In my experience, at least in one Canadian consulate, the clerk you deal with does not understand the difference between relinquishment and renunciation, if they send you away to ‘reflect’ on your decision (when all reflection took place decades ago).
At the rate the U.S. government and its’ insane bureaucracy moves, I will be planted in the ground before any decisions are made.
*Roy Berg
As to you point #2
In completing the form you might unwittingly admit to comitting a felony. For example, the form asks if you voted in the US, applied for a US passport, traveled on a US passport, etc. If you’ve done any of these things after loss of US citzenship, that is a felony and you’ve just admitted to it.
Again at least two or three third hand accounts I have heard indicated when people filled out information “incorrectly” on DS-4079 the consulate staff basically handed the form back and said they were ineligible(Which basically said that be voting, applying for a US Passport etc that they had not shown intent as required by law post 1986 to lose US nationality). The legal issue that would come up is that if you admitted to voting in an election or applying for a passport pre 1986 at which time affirmatively under the law of the day you were not a US citizen. The issue I personally have with DS-4079 is that is simply asking for a determination(unless you count section 2) that someone has or has not lost US citizenship.
@ Roy, point #2
“My biggest fear, and why I quit reading in disgust, is that folks will attempt to obtain a CLN (for any year) and file the State Department for DS-4079 “Request for Determination of Possible Loss of United States Citizenship.” Completing this form can be extremely risky …”
I don’t get what’s wrong with applying for a CLN, or what’s necessarily risky about the 4079, because to me this whole thing boils down to *reality.*
If a person has been continuing to be (act as) a US citizen after getting their new citizenship, he shouldn’t be applying for a CLN under s. 349(a)(1) in the first place.
If the person is in some sort of grey area, he can fill out the 4079 and go to the consulate, as Tim points out, and the consular officials seem to tell you right off if there’s a problem with it. I’m also of some such cases that have been reported to Brock. I recall 2 persons who then renounced on the spot. Another person was told that they didn’t have a very good case, but the consulate would send it on to DC if they wanted, but it was dicey – don’t recall the outcome, I think the person did not proceed and went home to think things over.
As for a possible felony, I told the complete truth in my 4079, plus wrote up a sworn statement to tell them even more stuff that they didn’t even ask in the 4079 to clearly illustrate that I terminated my US citizenship in 1979. Truth is easy and comfortable.
As I see it “fiction” is anyone trying to say that I have been a citizen of the US since 1979. Once I learned of the retroactive law/policy, were I to have carried on without applying for CLN dated 1979, I would be living a lie. And I certainly can’t undo 33 years of my life, even if I wanted to.
Far from feeling it was risky, applying for a CLN was the only way I could get peace of mind in my life.
*Here is the link to the 1995 JCT Exit Tax Report. The then proposed tax by the Clinton Administration would have retroactively re-instated US tax obligation on any previously relinquished citizen who had not obtained a CLN. In the report there is actually significant discussion of the policy ramifications of doing so. I should note while the so called “mark to market” regime proposed at that time later became the basis for 2008 HEART it was not in fact the proposal the was later adopted by Congress in 1996. (The Clinton proposal also had a permanent treaty override which neither the 1996, 2004, or 2008 laws ended up having). So it is hard to say whether anything in this report actually would be useful in any type of litigation. I do make note of the fact that some at JCT were aware of the effects of retroactively reinstating US tax obligations on this who previously under the law were no longer US citizens.
That you are working on the problem of *no guidance anywhere* on whether a CLN for those who have relinquished pre-1986, is indeed good news. People who came to Canada in the 60’s, 70’s, early 80’s were told / warned (or all of our memories have deteriorated as we start into dementia in our older years) that we would be relinquishing our US citizenship as we were, then, becoming Canadian citizens. If any of us knew of any such thing as a Certificate of Loss of Nationality, it was certainly a fluke. I don’t believe the US gave us any such information. Specific defined guidance will be welcome to so many in getting their lives back and stopping this cruel guessing what is correct game.
In my mind, if the US is giving a CLN backdated to the date of taking Canadian (or other) citizenship, the US Department of State is confirming that the person did indeed relinquish US citizenship as of that decades-ago date. It doesn’t make sense to me that the person would then have a requirement to file US tax returns and reports in the years after that date of relinquishment shown on their CLN, not being a US citizen. It had to have been the thinking of the majority of us that we no longer had that tax reporting responsibility.
Why would a person who is now CLN certified as having lost their US citizenship as of the date shown on the CLN have a requirement to be filing US tax returns after that specific date? The US is saying that person is now no longer a US citizen as of that date (as that person thought was the case all along). If that is the case, why is it the case?
And, as long as that person has done absolutely nothing to negate that relinquishment, as you note (voted in the US, applied for a US passport, traveled on a US passport, etc.), which hopefully 1) he would fully realize or he wouldn’t be seeking a relinquishment rather than a renunciation or 2) if any doubt, the person should consult or be adivsed to consult a US tax lawyer regarding any actions he may have taken and is now being asked to swear he has not on Form 4079, I see it as the US saying that person now has absolute proof that he has been only a Canadian as of the acknowledged relinquishment date shown on the CLN. Cut and dry — nothing required after that date? Or, if not, why not?
*Pacifica
Where I think there could be a legal issue is if you said that you voted lets say in the 1984 US Election even though you knew you were no longer a US citizen and US law in 1984 said you were no longer a US citizen after naturalizing as a Canadian citizen lets say in 1979. Of course my impression of this rather unlikely scenario is the statute of limitations has long ago passed however, I am not a US Criminal Lawyer so it would not want to make a judgement as to what would be the exact case in these circumstances.
@Tim,
It seems that if a person voted in the 1984 US election after naturalising in 1979, they didn’t relinquish in the first place. As I understand it now, in 1979 there was a presumption that you intended to lose your US citizenship but you had the option to keep it. (At the time I was told and believed it would be terminated automatically.) So if they voted, the would have been exercising their option to keep their US citizenship.
So, you’re pointing out that either they remained a USC, or they knew they weren’t a USC and voted illegally. I’m not a US lawyer either, but I’d guess the statute of limitations has passed, too, seems logical. At any rate, it would queer their argument in 2012 that they relinquished in 1979. So, the way I see it is if they want out now, they should renounce.
For the record, since I’m 1979, that’s not me! I never voted in a US election after getting permanent resident status. I knew I still could for a few years until I terminated my US citizenship upon naturalising here, but I figured I’m not going to be moving back so I don’t have a stake in it. Have never missed a Cdn election, of any sort, in 33 years, though.
Roy Berg’s scenario where a person says that they relinquished but voted after the potentially relinquishing act is just a very weak point. As Tim points out, the State Department will simply invalidate the relinquishment and that means the voter was actually a US citizen and remains as such. The relinguishing act was not done with intent, since the person intended to remain a citizen. We’ve gone through this in various discussions. Berg is just trying to muddy the water.
The Roy Berg response to the Don Whiteley article offers one big reason that “the story” gets very little mainstream media coverage. “The story” is really too complex and shifting to even begin to be told. “The story” involves disputed and disputable technicalities [remember our fun with 8854?] in law and tax accounting that rival the paradoxes of mystical theologies. “The partial story” tends to rely so much on kneejerk rehash of IRS press release etc. Many purveyors of “the story” or parts of it are in the conflict-of-interest fishing-for-business situation of standing to profit handsomely from fees in return for … no guarantees. [Duh! I paid a lot to an expert that I thought would make me safe. Isn’t that reasonable cause? No? Wha!!!] “The story” by nature will find few who are willing to expose their own personal situation. To tell “the story” in Canada requires serious stretching beyond a pervasive and tacit anti-Americanism. From time to time some shameless martyr will lay bare an IRS atrocity suffered and obtain brief but serious media traction. These accounts will have the greatest effect.
@usxcanada
yup. again your crypticness is only surpassed by your accuracy. bravo.
@Roy Berg:
“This is a reckless article and is riddled with blatent (and dangerous) misstatements of law and fact.”
Bravo! But the real point is that the only “tax cheats” are these governments imposing income taxes and stealing the labor of their citizens in times of prosperity and peace. “The good old professor” isn’t a tax cheat, he is a flaming hypocrite. Just like all the lefties that dare call others “racist”.
Why can’t you brainwashed do-good liberal Canadians figure out, even in while staring FATCA in the face, that the real issue is involuntary income taxes? Why can’t you figure out that even if 51 or greater percent of you believe in some “Canadian value” that you have dreamed up that doesn’t give you the right to steal the fruits of someone else’s labor who doesn’t share your “value”? Why can’t you stop dancing on the head of this pin that all income taxes that the welfare state dreams up are good and fair except the one that bothers you?
@Joe “Hitler Bunker” Smith: Talk about the pot calling the kettle black. And isn’t it great to see Canadian tolerance of others’ opinions on proud display.
@Roy, yes, people need to seek legal advice. But when the IRS claims that OVDP is the only solution, and that those who seek to fix the problem by QD will face harsh penalties, even if you have a minor amount of taxes due, guess what advice most lawyers are going to give. I presented my same facts to several lawyers and the IRS. Here are their answers:
IRS: Since you have even a minor amount of taxes due, you have to enter OVDP.
TAS: You’re not in trouble yet, so we can’t do anything for you, but OVDP in the only solution.
Lawyer 1: OVDP is the only solution.
Me: You make me feel like a criminal
Lawyer 1: Go ask in the street and see the answer you get.
BTW, Lawyer 1 quoted me $20k for his fees, not talking into account accountant fees for 8 years of amended returms and of course OVDI costs for ~$120 of tax due per year in the open years.
My immigration lawyer: You have to enter OVDI before we can renew your green card / apply for citizenship. That is the one that gives me sleepless nights.
Lawyer 3: Amend 2 years of taxes and FBARs.
Lawyer 4: Be compliant going forward.
Accountant: “Because you have a green card, OVDI is the only solution. And you’re going to do it even if it cost you $400k to keep your family together”.
Honestly, playing with the emotional part like that is DESPICABLE.
At some point, you have to call their BS, and choose a solution that is reasonable. Trust is gone. Not just in the IRS, but also in most lawyers. Bad publicity in the media, even if it is a bit distorted may be what it takes to make things right for Americans expats and immigrants to the US.
@Christophe
I feel and understand your frustration and anger. Part of the problem is that the lawyers often don’t really know what is the best approach. In addition, I have said and will continue to say that the Circular 230 rules of practice before the IRS, coupled with the fact that many of the lawyers make a living by practising before the IRS makes it hard for them to give objective advice.
In an earlier comment, I suggested (and interestingly Roy Berg seemed to agree, but for different reasons) that you are better off getting advice from professionals in your country of residence. (I know you live in the US, but maybe you should consider getting advice from a non-US lawyer.) The number of US lawyers who are just recommending OVDP without even considering the person’s facts is unbelievable, negligent and maybe worse.
I have been reading your comments for a long time now. Unless there is something you have not revealed, you are not a “bad actor”. You should be able to put this behind you. Why don’t you ask yourself the following question? What if there were no lawyers, no advisers, etc. What would you, if left to your own devices do? Somebody has got to make a decision here and it’s pretty clear that you are not being helped by others.
Also, once again this is absolute proof that the IRS is the single biggest obstacle to compliance.
@renounceuscitizenship, thanks for your understanding.
No, I mentioned my facts on this blog without hiding anything. I don’t think I am a bad actor.
I seeked advice, got educated on the issue, and decided based on everything I’ve read to just be compliant forward. I ruled out OVDP, and the threats of harsh penalties mentioned by Rosemary Sereti for those who would try to fix the past by doing QDs made me rule this out too, that and the fact that the IRS claims that they can identify them and will pay close attention to QDs related to foreign accounts.
I am taking the path that I think is the least risky for me, from a immigration perspective, and that has been mentioned by one of the lawyers I consulted, and recommended on Jack’s blog for certain cases, which I think I fall into. In addition, Jack says that a result of an audit resulting from quiet disclosure or going forward should be the same, so why expose myself more?
I am taking my chances of not being audited for the open years, and I’ll probably use another immigration lawyer to renew my green card.
This really make me feel like a criminal who needs to hide. I am not happy with my choice as I wanted to fix the past. I feel like a coward who chose not to face his responsibilities.
I am a worrier, and the prospect of this having dire immigration consequences is haunting me every day. This stuff has really messed up my mind. I’ll probably be able to put this behind me when the statute of limitation have passed.
@Christophe, Do you really need an immigration lawyer just to renew your green card? I don’t know all the details, but I’ve helped someone with that before and it looked like a pretty easy procedure. I guess some people may have more complex cases, but from what I’ve seen, immigration forms are much more simple than tax forms and I thought people should be able to fill them in on their own.
*@ Tim – Your point #3 (and follow up) is exactly spot on. The effect of a pre 86 expatriating act is exactly spot on: there is no guidance anywhere on the effect of a CLN for these folks. We are working on a solution to this problem, however. Stay tuned.
My biggest fear, and why I quit reading in disgust, is that folks will attempt to obtain a CLN (for any year) and file the State Department for DS-4079 “Request for Determination of Possible Loss of United States Citizenship.” Completing this form can be extremely risky for the following reasons:
Very dangerous stuff, and the article makes it appear obtaining a CLN is an easy way out.
*@ usxcanada
I agree with your premise that the true story is really too complex to be told. I applaud IBS, its contributors, and those who attempt to share their stories and spread the word. Misinformation and sensationalization are what really get under my skin, however, because that diminishes what those caught in this procrustean bed have been put through.
@Roy Berg, I wonder if accounting firms get a lot of business due to US citizenship-based taxation and would like to keep it that way. Would you and other accountants or tax lawyers be happy if the US changed its taxation system to one based on residence, or greatly simplified tax forms? Do you think such a change would affect your business significantly?
All of this uncertainty will only create leagues of ostriches: those who know enough to realize that going forward will create a pandora’s box of compliance headaches, those who would like to go forward but cannot afford the legal and accounting fees in safely doing so, those who object to the US’s incursion and will not support it, those hoping others will do the heavy lifting for them and make the problem go away…the list goes on.
The USG hasn’t done anything to encourage compliance, the’ll only cause a great number of folks to seek more creative ways in avoiding it and the US altogether.
@ Roy Berg & others
A pragmatic question…
Assuming that Mr Williams has no US-based assets, real-estate, income or presence. And assuming that he has no intention of ever living anywhere EXCEPT Canada.
If Mr Williams simply “sat tight” and DID NOTHING, by what mechanism would the US enforce its revenue claim upon him? My understanding is that Canadian courts do not enforce foreign tax revenue claims, and that the Canadian government will not assist in collecting the US tax from any Canadian citizen (unless it was incurred before they became a Canadian citizen).
Has Mr Berg – or any other cross-border tax specialist – encountered or defended against a US tax collection involving a long-term Canadian citizen in Canada, who only has Canadian assets; a situation to similar to Mr Williams? And was the action brought in Canada – and what was the outcome?
(sorry typo in last post… if admin could delete previous)
@Roy, your reaction to the Don Whitely article is way over the top. The lawyer class is the least objective profession that I’ve ever encountered. I’ve read Whitely’s article for inaccuracies and I find it one of the best articles so far written in any Canadian journal. It is written from an anti-American point of view to be sure, and it called the overreach of the United States a “Tax Jihad”, but that is far from yellow journalism: that is, objectively, what it is. That article is so much better than the Canadian papers who have carried the water of the IRS and brought business to Moody.
You reveal your own bias: the one of paternalistic lawyer class that wants all people to go through them in order to sort through this mess. That way you can make $500-750 per hour, and we can become poorer and poorer. How unfair and inaccurate! Your scaremongering on the form DS4079 is actually quite hilarious and pathetic. DS 4079 is no more complicated and scary to fill out than the 1040 and US persons have to take their freedom and prosperity into their hands every year in order to file their taxes. And you could be committing hundreds of felonies just by filling out that. So far, however, I don’t know anyone who has successfully relinquished their citizenship that hasn’t filled out the DS 4079–and I know several, including myself, who have successfully relinquished.
People go to jail every year for the filling out a “fraudulent” 1040–you and Mopsick have also warned about the frivolous return with an attendant $5000 fine. There is also the penalty for failure to file which is a damned if you do damned if you don’t Catch 22. So I just urge the US government to let my people go. Let the fill out the DS 4079 and let them relinquish. Then they will remain risk free in the future of committing unintential crimes on their US income taxes year after year. The DS4079 is the form of freedom. Dangerous yes, but so is every highway to freedom.
The article by Whitely was excellent.
@ Roy Berg
I appreciate your words of caution, However, I’m sure you realize that there is a divergence of opinion in the legal community regarding what actions the IRS may or may not take in cases of a CLN with a relinquishment date of many years ago.
Without something definitive either by the IRS (perhaps followed by a court case) the situation is indeed murky.
Although it may be way too soon to tell, there has been no evidence that the IRS has gone after someone who relinquished. If you know of cases, pray tell.
Regarding your comment above regarding committing a felony, it has been mentioned a number of times here at IBS that it is important to tell the truth on DS-4079.
“The article by Whitely was excellent.”
Wrong answer, slave.
Because that is precisely what that article is, slave talk.
It is the soothing, calming words of master telling slavey not to worry:
“One significant challenge for Canadian financial institutions is the
fact that Canadian and provincial right-to-privacy legislation prohibits
them from sending financial information to a third party (like the IRS)
without the consent of the account holder. While Canada’s major banks
have taken strong positions on FATCA, the country’s credit unions are
also caught up in the controversy and are actively pushing for changes.
Collectively, they are not happy. “I’ve never touched a file before in
which there is absolutely no public policy benefit, no benefit for
Canada, no benefit for a Canadian credit union,” says Gary Rogers,
vice-president of financial policy at Credit Union Central of Canada,
the association that represents the country’s credit unions.”
The members of the OECD, Davos, Bilderberg, BIS, and whatever also include the elites of Canada. They have all agreed to austerity and a clampdown on all the “rich tax cheats”. They are perfectly aware that the only way the western countries are going to harvest that “cheat” money is by setting up an information sharing corralito for their mutual benefit. They are all in it together with their Geitners and their Shulmans and their Obamas.
So Petros, I wish you luck on your anti IRS jihad. But you are completely missing the target. The IRS, and FATCA, are merely symptoms.
Just look how PE (Private Equity), which is how Mitt made his fortune, owns everything.
*Roy Berg
One point that must kept in mind whether the 2008 and preceding 2004 exit tax laws comply with the US Canada Tax Treaty. Why is this important well unlike the 1996 law neither AJCA or HEART make any mention of Congress’ intent of to override previously agreed treaty obligations(The 1996 exit tax law only had a ten year treaty override and one of the reasons for the 2004 law was that US Treasury had not been successful in re-negotiating treaties to better reflect the law). One of the issues in my mind is whether “citizen” as used in the savings clause of the treaty should be defined using the 1984(when the treaty was ratified) definition(basically the same as nationality law) or the current post 2004 AJCA definition which is any US “citizen” plus any former citizen who committed a relinquishing act but who was not given formal notification to the State Department. If it is former then the 2008 Heart will fall like a stack of cards just like the 2004, 1996, and 1968 exit tax laws did. Note: Congress has not had to change the exit tax law three times in 15 years for no reason.
Now to give some background the 2008 Heart Act in theory complies with all US Tax Treaties even the really old ones in the case “renunciation” as one renounces and no longer has any tax obligations to the US going forward other than filing form 8854 as to the date of renounciation at the normal filing time the next year. All of the previous exit tax laws had the issue of how someone who was no longer a US Citizen could be compelled to continue to file and pay tax for ten years afterwards. The US Canada treaty for example allows the US to continue to tax its former citizens for ten years but only on their US source income. So as per the US Canada treaty someone who commits a relinquishment act without notification should only be compelled after the fact to pay US tax on US source income unless you accept that the US can somehow change the definition of citizen unilaterally notwithstanding its own definition in US nationality law and the definition in use at the time of the original treaty ratification(Some of the more recent OECD commentaries allow this but the ones from back in 1984 and US courts have ruled only the OECD commentaries published at the time of ratification can be used to determine congressional intent). One reason the 2004 exit tax law “failed” so to speak is that generally anyone effected simply converted any US source income they had to non US source income.
*Petros and Berg
From what I have heard the consulate will simply not accept a DS-4079 that is filled out incorrectly and their tends to be at least four or five people who check the information as such their are at least two or three cases I have heard of people being turned back. Just look at the situation on another thread that Tiger is going through. Clearly not everyone is entitled to a back dated relinquishment(however, many are and through all appearances Williams is too. I think the article needs to make clear the back dated CLN route is not for everyone however, it is for probably more people than has been commonly thought.
I will also point the cases I know of where people have done things to give up there claim of relinquishment have tended to have occurred in the last years. I believe Bubblebustin only voted in a US election back in 2008 and Calgary411 only got a US Passport in 2009 so on a completely unscientific basis I suspect there are very few people who lost their US citizenship back in 1970s and 1980s and decided to regain it lets say back in the 1990s.
I will also note relinquishment does not help those who were born as dual citizens but basically lived their entire lives in Canada without ever obtaining a US Passport etc.
@Roy Berg,
‘The effect of a pre 86 expatriating act is exactly spot on: There is no guidance anywhere on the effect of a CLN for these folks. “We” are working on a solution to this problem, however. Stay tuned’.
My question: who is the “We”, and how long might a solution to this problem take? The U.S. State Department has yet to design a form to deal with ‘relinquishments’ vs ‘renunciations’. In my experience, at least in one Canadian consulate, the clerk you deal with does not understand the difference between relinquishment and renunciation, if they send you away to ‘reflect’ on your decision (when all reflection took place decades ago).
At the rate the U.S. government and its’ insane bureaucracy moves, I will be planted in the ground before any decisions are made.
*Roy Berg
As to you point #2
In completing the form you might unwittingly admit to comitting a felony. For example, the form asks if you voted in the US, applied for a US passport, traveled on a US passport, etc. If you’ve done any of these things after loss of US citzenship, that is a felony and you’ve just admitted to it.
Again at least two or three third hand accounts I have heard indicated when people filled out information “incorrectly” on DS-4079 the consulate staff basically handed the form back and said they were ineligible(Which basically said that be voting, applying for a US Passport etc that they had not shown intent as required by law post 1986 to lose US nationality). The legal issue that would come up is that if you admitted to voting in an election or applying for a passport pre 1986 at which time affirmatively under the law of the day you were not a US citizen. The issue I personally have with DS-4079 is that is simply asking for a determination(unless you count section 2) that someone has or has not lost US citizenship.
@ Roy, point #2
I don’t get what’s wrong with applying for a CLN, or what’s necessarily risky about the 4079, because to me this whole thing boils down to *reality.*
If a person has been continuing to be (act as) aUS
If the person is in some sort of grey area, he can fill out the 4079 and go to the consulate, as Tim points out, and the consular officials seem to tell you right off if there’s a problem with it. I’m also of some such cases that have been reported to Brock. I recall 2 persons who then renounced on the spot. Another person was told that they didn’t have a very good case, but the consulate would send it on to DC if they wanted, but it was dicey – don’t recall the outcome, I think the person did not proceed and went home to think things over.
As for a possible felony, I told the complete truth in my 4079, plus wrote up a sworn statement to tell them even more stuff that they didn’t even ask in the 4079 to clearly illustrate that I terminated my US citizenship in 1979. Truth is easy and comfortable.
As I see it “fiction” is anyone trying to say that I have been a citizen of theUS since 1979. Once I learned of the retroactive law/policy, were I to have carried on without applying for CLN dated 1979, I would be living a lie. And I certainly can’t undo 33 years of my life, even if I wanted to.
Far from feeling it was risky, applying for a CLN was the only way I could get peace of mind in my life.
*Here is the link to the 1995 JCT Exit Tax Report. The then proposed tax by the Clinton Administration would have retroactively re-instated US tax obligation on any previously relinquished citizen who had not obtained a CLN. In the report there is actually significant discussion of the policy ramifications of doing so. I should note while the so called “mark to market” regime proposed at that time later became the basis for 2008 HEART it was not in fact the proposal the was later adopted by Congress in 1996. (The Clinton proposal also had a permanent treaty override which neither the 1996, 2004, or 2008 laws ended up having). So it is hard to say whether anything in this report actually would be useful in any type of litigation. I do make note of the fact that some at JCT were aware of the effects of retroactively reinstating US tax obligations on this who previously under the law were no longer US citizens.
https://www.jct.gov/publications.html?func=startdown&id=2547
@Roy Berg,
That you are working on the problem of *no guidance anywhere* on whether a CLN for those who have relinquished pre-1986, is indeed good news. People who came to Canada in the 60’s, 70’s, early 80’s were told / warned (or all of our memories have deteriorated as we start into dementia in our older years) that we would be relinquishing our US citizenship as we were, then, becoming Canadian citizens. If any of us knew of any such thing as a Certificate of Loss of Nationality, it was certainly a fluke. I don’t believe the US gave us any such information. Specific defined guidance will be welcome to so many in getting their lives back and stopping this cruel guessing what is correct game.
In my mind, if the US is giving a CLN backdated to the date of taking Canadian (or other) citizenship, the US Department of State is confirming that the person did indeed relinquish US citizenship as of that decades-ago date. It doesn’t make sense to me that the person would then have a requirement to file US tax returns and reports in the years after that date of relinquishment shown on their CLN, not being a US citizen. It had to have been the thinking of the majority of us that we no longer had that tax reporting responsibility.
Why would a person who is now CLN certified as having lost their US citizenship as of the date shown on the CLN have a requirement to be filing US tax returns after that specific date? The US is saying that person is now no longer a US citizen as of that date (as that person thought was the case all along). If that is the case, why is it the case?
And, as long as that person has done absolutely nothing to negate that relinquishment, as you note (voted in the US, applied for a US passport, traveled on a US passport, etc.), which hopefully 1) he would fully realize or he wouldn’t be seeking a relinquishment rather than a renunciation or 2) if any doubt, the person should consult or be adivsed to consult a US tax lawyer regarding any actions he may have taken and is now being asked to swear he has not on Form 4079, I see it as the US saying that person now has absolute proof that he has been only a Canadian as of the acknowledged relinquishment date shown on the CLN. Cut and dry — nothing required after that date? Or, if not, why not?
*Pacifica
Where I think there could be a legal issue is if you said that you voted lets say in the 1984 US Election even though you knew you were no longer a US citizen and US law in 1984 said you were no longer a US citizen after naturalizing as a Canadian citizen lets say in 1979. Of course my impression of this rather unlikely scenario is the statute of limitations has long ago passed however, I am not a US Criminal Lawyer so it would not want to make a judgement as to what would be the exact case in these circumstances.
@Tim,
It seems that if a person voted in the 1984 US election after naturalising in 1979, they didn’t relinquish in the first place. As I understand it now, in 1979 there was a presumption that you intended to lose your US citizenship but you had the option to keep it. (At the time I was told and believed it would be terminated automatically.) So if they voted, the would have been exercising their option to keep their US citizenship.
So, you’re pointing out that either they remained a USC, or they knew they weren’t a USC and voted illegally. I’m not a US lawyer either, but I’d guess the statute of limitations has passed, too, seems logical. At any rate, it would queer their argument in 2012 that they relinquished in 1979. So, the way I see it is if they want out now, they should renounce.
For the record, since I’m 1979, that’s not me! I never voted in a US election after getting permanent resident status. I knew I still could for a few years until I terminated my US citizenship upon naturalising here, but I figured I’m not going to be moving back so I don’t have a stake in it. Have never missed a Cdn election, of any sort, in 33 years, though.
Roy Berg’s scenario where a person says that they relinquished but voted after the potentially relinquishing act is just a very weak point. As Tim points out, the State Department will simply invalidate the relinquishment and that means the voter was actually a US citizen and remains as such. The relinguishing act was not done with intent, since the person intended to remain a citizen. We’ve gone through this in various discussions. Berg is just trying to muddy the water.