I’m making this morning’s comments to another thread part of this separate post so more of those affected will realize there needs to be certainty for them about this issue.
From USCitizenAbroad, and I agree:
There is ONLY one clear answer from the USG that is acceptable and that answer is:
People born abroad are NOT automatically U.S. citizens.
This would clarify the position of the USG.
If they say:
People born abroad ARE automatically U.S. citizens – that is their position but it is (in my opinion) as a matter of law wrong. Eventually the validity of their position will be tested in court.
Now, what is more important than the clear position of the USG, is that the persons affected by this take a clear position on their own.
That clear position: I am not a US citizen and therefore NOT a member of their “Tax, form and penalty club”.
Finally, I would be very surprised if the Consulate writes back and says people born abroad are not automatically U.S. citizens.
Some people make things happen.
Some people watch things happen.
Some people ask “What happened”
By featuring this prominently it will force the issue. This is extremely important for FATCA IGAs (if they happen).
But if the IGAs don’t happen, the banks will probably enter into agreements with the IRS. Now, the question becomes:
Who are they looking for? If it is U.S. citizens then the ONLY question that is relevant is:
Were you born or naturalized in the U.S.?
If the answer is Yes, then the logical next question should be:
Have you relinquished your U.S. citizenship?
There is no other question that is even relevant.
We need keep a very close eye on this.
Now, of course IF THEY ASK THE ONLY RELEVANT QUESTION, the banks are moving closer and closer to HUMAN RIGHTS VIOLATIONS.
This is as my frustration abounds. I still have not gotten a reply from Sylvia D. Johnson from the US Embassy, Ottawa.
Nor have my comments to the “The Accidental US Citizen” blog gotten out of moderation: Comments Still Awaiting Moderation — Flott & Co. PC — The Accidental US Citizen.
USCitizenAbroad says
July 6, 2013 at 4:24 pm
@Calgary
The problem is that they need to be very careful about what they say. You may not get a response. In the interim I believe that if you were NOT born in the U.S. and you have never claimed U.S. citizenship (that you may have had a right to) that you:
Lie low. Take the position you are NOT a U.S. citizen.
calgary411 says
July 6, 2013 at 4:45 pm
Thanks, USCA,
I certainly will do both — lie low and take the position my son is NOT a US citizen when and if I’m asked as shown here: http://isaacbrocksociety.ca/fatca/comment-page-29/#comment-422408 what my relationship is to the person for whom I hold a Registered Disability Savings Plan (RDSP).
“Identify relationships between one account holder to another to ensure that individuals who are subject to FATCA guidelines are also identified regarding the relationships to other customers as well.”
I would like to have something very definitive from the USG for the possible conversation on that day. But if not, in my back pocket I will have your analysis, which I absolutely believe is what should be the case.
All who are affected here need to understand what you have given us “Birth abroad – Your Get Out of Jail Free Card – Don’t let the US increase it’s tax/penalty base”
The move after that is theirs — and the move after whatever theirs will be will be mine. I think I’ll be ready.
SwissPinoy says
July 7, 2013 at 12:56 am
@calgary411, I’ve been waiting over a week now for a letter from the US which states that a check to me is legit so that I can cash it, and that’s not even the US government! If the form-filing-nation can’t even do something as logical, natural and simple as that, then you’ll never get a response. 🙁
YogaGirl says
July 7, 2013 at 1:41 am
Calgary, they really can’t give you a written response b/c it would become part of a paper trail record that could work against them in future. But, if I were you, I would just operate under the assumption that your son needed to present himself at a consulate and present evidence that supported his claim to USC so it could be evaluated and a judgement made, and since the USG requires that he do this himself, and be aware of what he is claiming, technically, his right is a non-issue. He can’t claim something he can’t understand anymore than he could renounce it, right? You aren’t allowed to do either for him, so if the USG wants to come after him, first they have to mount a case to prove he is a citizen in the first, which I really doubt they would bother with, nd if a financial institution wants to know his status, you can simply – and honestly really – say that he isn’t a USC. He is a Canadian born and raised.
imo, no consulate is going to touch your query with a ten foot pole. They know what a slippery slope it is because they can’t really go around and prove case by case that this or that child born in another country to an expat meets the criteria for citizenship, and they wouldn’t want this particular loophole becoming widely known. Their silence is – in a way – your answer and probably means you’ve found the Achilles Heel on their Trojan Horse.
Not that Lisa! says
July 7, 2013 at 3:32 am
@calgary411 – I would like to second what YogaGirl is saying and illustrate it with an example from my own experience.
Italy uses jus sanguinis in determining citizenship. Last year I found out that because my father was born before my Italian grandfather became a US citizen, I have been an Italian citizen since birth, even though my father never claimed his Italian citizenship. However, I must now prove this to the Italian authorities and doing so requires producing lots of documents and presenting them to the Italian authorities. I have met with the Italian consul and while my line of descent is clear, without all of the proper documentation, I cannot get official recognition that I am Italian, e.g., an Italian passport. Before I prove my claim to citizenship, I cannot exercise the rights that I am entitled to as an Italian.
Italy also requires Italians to travel into Italy on their Italian passport, but no one at the border is asking me if my father or grandfather was Italian.
As you have renounced, if you travel to the US with your son, you can tell the border guards the truth, that you are no longer American and that your son is fully Canadian. It seems unlikely that a border guard will start asking questions about when you renounced and when your son was born.
As for the tax issue, first, there is no official record/proof of your son as being American. Second, in my OVDI case, the IRS spent thousands of dollars in order for me to pay an extra $133 a year over 8 years. They know, as well as I do, that it was a waste of their time and money as well as a waste of my time and money.
Your son will likely owe something similar, or nothing at all. It is just not worth it to them to go after these small amounts of money. As further proof, I offer that when I was a self-filer, one year, I unknowingly made a very obvious declaration mistake of about $300 on my return. When I redid the returns for OVDI, my accountant advised me what it was and told me that it was so obvious to him on first glance that he was surprised that I was not contacted about it by the IRS. We assumed that the IRS knew and calculated that the hours spent to correct it would not have been worth the few dollars of tax they might have received.
Your anger at not being allowed to renounce on behalf of your son is fully justified, but I think you can let go of some of the fear. You have done everything to protect yourself and your family. The reality is that your son has not been able to document his claim to US citizenship and the risk the IRS will target him as a tax evader is low. I do not think there is any law requiring you as his guardian to document his citizenship, but I do not know. Again, your indignation is justified, but don’t fall into the fear trap the IRS has been aggressively setting since 2009 for Americans abroad. While, sadly, there is no certainty, the realities of your situation should be focused upon.
calgary411 says
July 7, 2013 at 8:51 am
Thanks, YogaGirl and Not that Lisa,
I will not lose (but it doesn’t consume me so) my anger, for my son and for others like him who will be faced with this and — quite frankly what all “Accidental Americans” — live with now. It is not the border guards I fear and I likely will NOT be travelling across the border with my son for that and the fact that I have no desire to go there again or to spend any $$ there, except should I be needed in a time of health crisis of one of my remaining US siblings. I don’t want the risk of facing a confrontation at the border when I’m travelling with my son — alone I can now handle but not with them pointing a finger at him. They have won in barring our travel to the US for whatever reason, which we as a family do with more risk than any other family (with a non-US indicia) travelling to the US from Canada.
No, my fear is what I will be asked, as well as other Parents, Guardians, Trustees, by our own Canadian banks. What will it take to make the business of me and my family who are their Canadian clients more important than what they must certify to the US as they act as the offshore IRS agent? I really don’t know.
It does make my determination even stronger that I am ignored and don’t get an answer. Do they fear a highlighting of their human rights record, this aspect?
The US, besides being a bully, hides in not giving me and others a definite determination — an answer to our very simple question? Why are they giving incorrect information to anyone that comes to a US consulate or embassy, if it is incorrect? Why can they not let us know exactly what we must deal with? Why must we guess? Why must we have to think of work-arounds to unjust law? It appears more of US fear-mongering in a less obvious form.
The lion afraid of the mouse. Perhaps the US really does have a fear of this little old Canadian grandma, like the ones the former US Ambassador to Canada, David Jacobson, said the US was not looking for.
So you could have a situation where some 70-year-old grandma:
was born in the US;
moved back to Canada as a young child;
never earned any money in the US;
has no assets in the US; and
dutifully paid all of her taxes in Canada.She didn’t file a US return because she didn’t think she had to. And because she didn’t owe any US taxes. Nonetheless, grandma could be theoretically subject to serious penalties. To my knowledge we have never gone after a grandma in those circumstances.
But there has been a lot of press about this lately and people are worried that we will come after them.
When I read all of this I was concerned. So last week I called the Commissioner of the United States Internal Revenue Service to see what we could do. I explained the problem to him.
The result is that both he and I are sympathetic to the concerns. We are going to work together to see if we can’t find a way to accommodate grandma — and others — here in Canada. But we have to figure out a way to do it without letting the person who is trying to evade taxes in the Cayman Islands off the hook.
The US government and all of its departments are spineless bullies in so many ways. Or they would “stand up like a man” — or the strong democratic country they portray (by brainwashing) they are. Or, why won’t they just change their law to resident-based taxation, which would solve so much collateral damage? I don’t know but in my belaboured quest for simple common sense, I will continue to wonder and continue to lie low, my work-around.
And another of my submissions to the Government of Canada regarding their negotiations with the US in signing an IGA for FATCA:
Kevin Shoom
Senior Chief, International Taxation and Special Projects / Chef principal, Section de la Fiscalité international et projets spéciaux
Business Income Tax Division / Division de l’impôt des entreprises
Department of Finance / Ministère des Finances
Ottawa, Canada K1A 0G5
Kevin.Shoom@fin.gc.ca
Telephone / Téléphone (613) 992-2980 Facsimile / Télécopieur (613) 943-2486 Teletypewriter / Téléimprimeur (613) 995-1455
Government of Canada / Gouvernement du Canada
Forgive my cynicism, but I doubt any US bureaucracy — and particularly bureaucracies like tax, citizenship, and immigration — will ever want to provide clear and unequivocal language that makes it easy for people to understand what the rules are and how they work.
Obfuscation works for them. It makes people do things like file tax returns when they don’t really have to; or get a US passport when they don’t really have to; or apply for an SSN when they don’t really have to. Once you’ve been tricked into doing any of these things, you are in the web. And that’s where they want you.
Add to that the fact that a bureaucrat (or the entire bureaucracy) who provides any assistance whatsoever in clarifying rules is likely to get him/her/it on some Congresscritter’s s*it list — and therefore open to both public condemnation and a career-inhibiting transfer to the Beltway equivalent of Outer Mongolia.
And finally — those bureaucrats don’t know what the rules mean any more than we do. They have to administer a dog’s breakfast of legislation — much of it with contradictory elements — passed by a Congress made up of individuals who rarely ever read what they are voting on.
Having said that — it’s always a good idea to keep putting their feet to the fire and demanding from them that which they really don’t want to give. And my only advice to those caught in this stultifying confusion is, interpret the rules in a way that works best for you — not them. And make them challenge your interpretation.
Another relevant comment to be tucked away: http://isaacbrocksociety.ca/2013/01/15/canadian-government-should-not-be-complicit-in-making-life-miserable-for-any-of-its-law-abiding-dual-citizen-residentss/comment-page-2/#comment-423702
One thing weaves in with another in the absurdity of unjust US citizenship-based taxation and its collateral damage to law abiding citizens and permanent residents of other countries who happen to have some US indicia.
I have a jpg photo copy of a newspaper ‘Notice to All U.S. Persons’ “Registering of U.S. Persons Under the Foreign Account Tax Compliance Act” recently published in a newpaper in Sri Lanka I would like to post here on IBS….can someone please help me and let me know how I can upload a jpeg in my comments? I think it will be of interest to IBS members. Thank you
And, another relevant discussion concerning “banking experiences for US Persons Abroad” — http://isaacbrocksociety.ca/fatca/comment-page-30/#comment-423527
@calgary411
While “logic” is not always deemed as “legal’ in a court of law, here is my “logical’ interpretation of the current facts:
— An individual cannot on their own authority claim to be a US person–if they do so they risk making a “false claim”
— US personhood in its various forms is granted/conferred/confirmed by the Department of State
— Until the Department of State says it is so; it is NOT so
–The tax department has the legal authority to tax US persons
— If an individual has not been confirmed to be a US person…back to point three–it is not so
— There is no law on record, as far as I know, that mandates the registration of children born abroad.
— No claim made, no confirmation of citizenship, NOT a US person
The US Consulate in Ottawa and elsewhere understand this logic and have not said otherwise. At this point in time, unless a case goes through the US court system, I doubt there can be any clarity other than to use a logic model. I realize that FATCA has created so much fear for any foreign financial institution in the world that “logic” will most likely not rise above fear. But until the Department of State verifies a claim, there is no US person status.
Steve Klaus,
I am off to a personal commitment right now, but will email you offline and you could provide to me there. Must run. Thanks!
@therapist604,
Thank you for your contribution to this discussion. Correct!
Isn’t it a shame that those who don’t have the ‘luxury’ (don’t know if that’s the right word, but I’m in a hurry) of reading all on Isaac Brock will fall into one trap after another in their fear of what their financial institutions will do?
Calgary – THANK YOU 🙂
Therapist – taking a practical view – unless someone is born in the U.S. and therefore has U.S. Indicia on his/her non U.S. passport/ID, I would think it is extremely unlikely that person will have an issue with FATCA or the banks. Once again the unfairness of how FATCA is going to be implemented is astounding. My daughter, born in the U.S. but raised overseas will forever have ‘U.S. Indicia’ with her for life, but my son, born in S.E. Asia will likely be free from FATCA issues overseas if he chooses not to every use his U.S. passport (i.e. use his non U.S. passport) to open a bank account. Two people with exactly the same legal status, both raised overseas, may be treated very differently. Citizenship Based Taxation and the relentless drive by the U.S. to suck every penny out of its citizens outside the U.S. creates these results.
I’m not sure what the confusion is here?! I was born in Canada but have a U.S. parent. (now deceased). I was not a U.S. citizen until I went to the trouble of getting my parents U.S. birth certificate and a policeman’s signature and various other things to acquire U.S. passport and SSI number. Now of course I regret having done that 15 years ago. BUT. . . There is no doubt I was not a US citizen before I did all that work to apply for naturalization. What is the confusion? I think you are just worrying too much!
@ Steve Klaus and Calgary,
Is this the article?
http://www.dailymirror.lk/news/31432-us-citizens-in-sl-asked-to-register.html
Thanks for finding this news, Steve.
Has Sri Lanka signed an IGA yet? If not, how can they direct US persons to go register with their Sri Lankan banks now?
The article says; “The Sri Lanka Banks Association (Guarantee) Limited today informed all United States citizens living in Sri Lanka to register themselves with their respective banks so as to comply with US legislation termed the Foreign Account Tax Compliance Act (FATCA)….”
I note that the entity directing US persons to do this is NOT the Sri Lankan government, or the US government, but a corporation – “…The Sri Lanka Banks’ Association (Guarantee) Ltd. is a Company registered under the Companies Act in Sri Lanka….”
On what legal basis can a Sri Lankan company direct ALL US persons or ALL US citizens in Sri Lanka to do anything on behalf of themselves or the US government?
therapist604 wrote;
“The US Consulate in Ottawa and elsewhere understand this logic and have not said otherwise.”
Sorry, when it comes to the US’s track record, I don’t take much for solace in this what could be a fleeting set of circumstances.
Arrow has got it right:
“And my only advice to those caught in this stultifying confusion is, interpret the rules in a way that works best for you — not them. And make them challenge your interpretation.”
Daniel. Thanks. I’ll just refer my bank to you if I have a problem.
Actually, this is a big issue. Why can the US not definitively answer this question?
I want to be prepared (and in fact am now prepared and know what my course of action will be) should the US want to close the Canadian Registered Disability Savings plan account that I hold for my son who has never been registered with the US. I don’t know how this will play out and neither do any of us. My risk aversion level is not as high as yours. Thus, I do want a statement / ruling from the US saying that my son (and others like him, not registered as a US Birth Abroad, etc., etc.) are NOT considered US citizens so if and when I am asked what my son’s relationship to me is, as a person born in the US since I hold an account in trust for him, I have the well-thought out response. If they should say the RDSP account that I hold for him is for a US citizen because his mother was born in Canada and he has automatic US citizenship — because of something the IRS tells them is the rule they have to follow or, if not, be penalized by the over-reaching US, my next step will be legal action, either through a class-action suit or my own and requested action regarding human rights with the Canadian Civil Liberties Association and other civil / human rights organizations. There will be cause.
I guess another way to ask the question would be:
US citizenship by descent: Do you claim it, or can it claim you?
@calgary411 – Here is some advice that was given to me on my Italian citizenship. In spite of the fact that I am an Italian citizen, the Italian govt is not treating me as one. They will not until I prove it to them. So if I am asked if I am Italian citizen, I would say no. If I had to qualify it, I would say, on paper, no. The fact is that Italian government will not acknowledge me as an Italian citizen until I do the paperwork. They, unlike the US, are not afraid to say this.
If you are worried about FATCA, from looking at The Sri Lankan article wording and the wording of what Swiss banks are asking, no questions are asked about ascendents (parentage).
Here is the advice I got:
“Anyone who qualifies for jure sanguinis citizenship is in fact already an Italian citizen and has been since birth. The application process is one whereby someone claims to the Italian government to be an Italian citizen. The government then asks for proof. If the evidence presented is judged to be sufficient to establish the claim, the Italian government acknowledges that the person is in fact a citizen and begins to treat them as such. Moreover, the government acknowledges that the person’s citizenship began at birth. One does not actually become an Italian citizen through this process, although people, even Italian consular officials, will often (mistakenly) speak of it that way.”
Here’s an interesting twist on establishing citizenship:
“A Canadian-born man is fighting to stay in the country as he faces the prospect of deportation to India by the Canadian government after serving time for weapons and drug trafficking.
Deepan Budlakoti, 23, has lived his entire life in Canada, but for months he has been caught in what he calls a bureaucratic nightmare after the Canadian government revoked his passport and issued a deportation order…
Budlakoti’s parents are from India and came to Canada to work as support staff at the Indian High Commission in Ottawa. According to the Immigration and Refugee Board, Budlakoti’s father was a foreign diplomat when his son was born.
By law, the children of foreign diplomats, even if born in Canada, do not automatically become Canadian citizens…
Sukanya Pillay, a director at the Civil Liberties Association, says Budlakoti may have a strong case to fight the deportation under international law.
“What constitutes one’s own country in international law doesn’t depend solely on citizenship and nationality, it depends on the country to which you have the most ties,” Pillay said.””
Read more: http://www.ctvnews.ca/canada/canadian-born-man-facing-deportation-immigration-canada-says-he-s-not-a-citizen-1.1356119#ixzz2YO5Et0GY
@not that lisa..
Your IRS refund mistake brought to my mind a mistake refund for me in in 1985 for my US tax returns for 1984….for $2,073.61..which was a nice chunk back then. I wrote them on October 22, 1985 after receiving the cheque on Oct 11th, 1985..I called them on Oct 15th and was advised to return the cheque.. I did so October 22, 1985.
My husband and I never made enough of money to have to pay US income taxes as we paid into Cdn taxes. Our combined income then was $47,000 well below the $80k US PER PERSON that was needed to pay US taxes. I have copies of the letter, cheque and a Statement of Change. of correction …dated a YEAR LATER. I sent the returned with a acknowledgment of receipt request. which was stamped Nov 5, 1985.
NotThatLisa, Italy has nothing to lose by stating the facts whereas the USG will find itself without means to force citizenship obligations on those who prefer not to the USC’s plus they suddenly have more paperwork from those who do want to claim their birthright. It is a lose/lose thing for US to clarify. Also, they lose traction with other govts, who will correctly point that the burden of proof is now on the USG rather than their own citizens, who clearly don’t regard themselves as duals.
The only way to really get any clarification is to make an appointment at a consulate and corner someone. Even if you only get vague language, you will probably learn more and will know where you truly stand.
It seems though that the US’s position is the same really as Italy’s. A claim has to be formally made and backed up with evidence so that a formal decision can be made. Right now the USG is benefiting from the fear that is compelling many potential duals into outing themselves before they stop, assess and realize that they have a choice in the matter.
Is there some way that we can start spreading the word so that those born in foreign countries to a USC can at least be aware that they cannot be forced into actively claiming citizenship? Though it might seem like a small thing, this could be really huge and if enough people stood their ground and demanded that the US prove their claim (and banks) rather than simply caving, it could put a big dent in FATCA too because technically you aren’t a US citizen until your claim to citizenship has been duly processed and signed off on by the State Dept.
@ bubblebustin
I am with you in not taking much solace in the track record of the US. I actually take NO SOLACE in the US track record. For once, I would like the “gray” to be made “black and white”. When lawyers can’t agree on how to answer the “am I or am I not a US person” question, how can the average potential US person know the answer. My sole motivation for hoping for clarity is so that my loved ones don’t have to live with uncertainty. For them, I don’t want the “gray” to suddenly become “black and white” at a time in their lives when they have much to lose.
For now my loved ones are “blissfully ignorant” because I made the choice to carry this fear of “are they or are they not US persons” myself until I have greater clarity as to what is required of them. They go to bed at night with the understanding that they are Canadian and only Canadian. For now, the US consulate has been reported to have told two born abroad children of a US citizens that they are NOT required to make a claim. For today, this is the answer to the question. Will it be the same tomorrow? I have not a clue. But, I don’t want them being “lured’ into the “you must make a claim club” as so many did into the “you must sign up for the OVDI club”. So I wait….wanting and not wanting clarity.
@Calgary, I too would like a black and white answer on paper. Yes, it’s not likely my son is a “U.S. person” or at least not so it would show. I just don’t trust that in the future they won’t have some way to determine this that is to the detriment of my son or yours or the many like them. Without something in black and white and on paper they can do as they like later on and given what they have done so far I put nothing past them. They care zero about what they have done to people’s lives and have even made noise to punish those further who have tried to get out of their reach. So what is someone to logically think of their behaviour?
No my son has no “U.S. indica” on his passport but, he does have accounts linked to mine. So? Will the bank be allowed to ask if one parent is a “U.S person” Will they for their own protection scoop up these people as “reportable” too? Then can the U.S. say they are a citizen at some later date?
Without something that is hard and on paper that we can point to or that they can point to in the case of those able to do so then there is no defence at some later date when another stupid, harmful “law” is imposed over the U.S. borders.
@therapist604
It’s almost as though we are waiting to hear if we passed a genetic disease on to our children.
@AtticusinCanada
I would think that having someone, especially a parent, on an account with you is enough indicia to warrant a closer look by the bank, especially when they are expected by the USG to be immigration specialists and know that US citizenship can be transmitted from parent to child.
AtticusinCanada, agree with Bubblebustin and I would add that if the FATCA thing goes ahead, banks will begin staffing people whose sole job it is to go through each and every account looking for indicia. But, I don’t think they will focus on the under 50k accounts first, so there is still time to rearrange your son’s account so that your husband is on it. Then if questions arise, he can vouch for your son’s Canadian -ness and the bank can either accept that or spend the time and money to dig further to see if you are capable of citizenship transmission (sounds like a disease, doesn’t it?) and that would mean questioning you, get proof that you lived in the US long enough to satisfy requirements – and if the State Department and the IRS aren’t going to invest in that (and clearly they don’t b/c they are probably hundreds of thousands of potential duals in the world that they aren’t hunting down but simply trying to scare into outing themselves), I really doubt the bank will bother with something that will be very time-consuming and even more expensive than what they already have to do under FATCA.
While it would be nice to have the claim thing sorted out in writing, I still think it speaks volumes that no one can seem to get that out of anyone in charge. That indicates that the US still requires people who’ve inherited citizenship to prove their claims before being granted status. Without that, the US is pretty powerless to simply stamp their brand on whoever.
Perhaps if enough maybe USC’s just took the stance of “prove it”, the US would be forced to put it in writing but as it doesn’t line up with the claim procedures of the rest of the world that could be more problematic than the stealth bs that they already practice in terms of duals. Even Uncle Sam knows when he’s reached his limit of sovereignty breaching (although he pushes it pretty hard).
Calgary411, is it possible to send you a private e-mail?