Some persons born dual US-Canadian citizens at birth, particularly those born of even one Canadian parent on US soil and with no adult connections to or claims on US citizenship, may have a viable relinquishment option (as distinct from a renunciation option, open to almost everyone) for getting a Certificate of Loss of Nationality of the United States (CLN). Please see other threads of this and our partner website for a discussion of the difference between relinquishment and renunciation and why it might matter to you.
I learned yesterday by private email something I had suspected but had not been confirmed. Some duals-at-birth have, ideally after the age of 18, applied for an received a Canadian Citizenship Card from Citizenship and Immigration Canada at some point in their past. To get such a card, one has to provide evidence (in these cases) that at least one parent was a Canadian citizen at the time you were born, and you also must swear and sign an oath of allegiance to the Queen of Canada.
There are seven different ways you can lose American citizenship, according to 8USC1481 see here http://www.law.cornell.edu/uscode/text/8/1481
Section 1, the most common relinquishment route in Canada AFAIK, is by obtaining naturalization in a foreign state (Canada) after reaching the age of 18 years. Duals at birth can’t qualify for this, since they were born duals and didn’t naturalize.
Section 5 covers renunciation of US citizenship “before a diplomatic or consular officer of the United States in a foreign state, in such form as may be prescribed by the Secretary of State.” (Digression: please note this is the ONLY section of the law passed by Congress that says anything about diplomatic or consular officers or forms prescribed by the Secretary of State; but never mind that for now.)
Section 2 however says you can lose your US citizenship “upon taking an oath or making an affirmation or other formal declaration of allegiance to a foreign state or a political subdivision thereof, after having attained the age of eighteen years.” Gosh gee, that sounds like swearing an oath of allegiance to the Queen upon applying for a Canadian citizenship card, doesn’t it?
Some time ago, on my urging, a dual-at-birth friend applied to Citizenship and Immigration Canada for a copy of his citizenship file through the Access to Information Act, at a cost of $5 and completion and submission of the appropriate form. The link is here:
We have long known that anyone who became a Canadian by naturalization will have a file with CIC and can access a copy of its contents through this process. What I was not sure about, was whether duals-at-birth who applied for a citizenship card or certificate also would have a file there. I suspected and hoped so, and it turns out I was right. My friend swore his oath (over the age of 18) more than 30 years ago, and yes he now has a copy of his signed oath and all other papers in his file. This should be true of every Canadian who has ever applied for a citizenship card or certificate.
I am not a lawyer, but I would be amazed if anyone who swore that oath and got the card after the age of 18 could not get a relinquishment CLN from the US State Department, certifying they actually lost their US citizenship back whenever they swore that oath, assuming the “preponderance of evidence” they provide and swear to on State Department Form 4079 is consistent with an intent to relinquish their US citizenship (basically, sworn statement supported by whatever documentation is possible to prove a negative, that they have done nothing significant since committing their claimed relinquishment to assert or exercise US citizenship and thereby refute or rebut their relinquishment claim).
I should add that at the moment, I am unaware of anyone having applied for a CLN using this argument, and hence do not know for certain whether it will work. I see no reason why it shouldn’t, but one never knows does one? If anyone reading this post has applied using this argument, please reply to this thread and tell us what happened. As soon as I hear definitively from anyone I know that they’ve tried this (whether successfully or otherwise), I will report back on this thread accordingly.
If you are a dual-at-birth Canadian-American and the foregoing applies to you, I urge you to apply for a copy of your file at the above link. You are not committing yourself to any specific course of action with the US State Department by doing so; in fact, under the law CIC cannot inform any third party of your request for a copy of your file. What you do with the contents of that file, or don’t do, upon receipt, it entirely at your discretion and at no penalty other than the $5 fee and the waiting time. They try to reply within 30 days, but the reality of workloads and staffing levels in these offices means realistically you’ll be waiting longer than that. And if a lot of folks start applying for their files (for naturalization as well as for citizenship card cases), that workload is going to jump.
If the above applies to you, I urge you to apply now for your file. You will have several weeks (at least) to think about whether you want to proceed with a claim for a relinquishment of US citizenship, but you might as well get the ball rolling on getting a copy of your file now – which is your right as a Canadian citizen, exercised for whatever reason you wish.
Schubert1975 – A few thoughts on the “stay under the radar” maneuvers you advocate.
Persons attracted to street smarts should consider all eventualities. (1) If you’re knowingly concealing US person status, can you ever feel at ease and stop looking over your shoulder? (2) Might it become the case that a financial institution that suffers liability because of your misleading can turn around and transmit that liability back to you, perhaps in as simple a fashion as extracting funds from your account? This would have nothing to do with Canada’s “promises” about enforcement. (3) How well would you be able to lie if you found yourself under direct interrogation by a US border guard due to who knows what tell? (4) Are you prepared to fall back on a position of never entering the United States, even inadvertently, if enforcement screws tighten right down? (5) As time passes, won’t your lie about innocent ignorance become ever more difficult to defend, opening the door to ever greater likelihood of penalty assessment, even if the funds can’t be easily collected?
It’s nice to think on the other side and I appreciate your insight. Unfortunately, if anyone is like who who is already panicked, that comment just made my chest pains come back. I mean how will the IRS know if you’re “hiding out” or “coming out”.
For someone like me who is trying to relinquish with a back dated CLN, I’m not going to contact IRS until afterwards. And what if I’m denied a back dated CLN And they file a renounce instead. Will I be considered a fraud then? Will I be subject to this hefty exit tax because I have never filed my Taxes with them. I took a look at their website yesterday because there was a link at the bottom of the email from the consulate. I couldn’t understand any of it except all of the 10,000$ fines. 2 or 3 of those fines will empty my life savings. It’s no wonder people want to hide out because the US policy and tax systems are nearly impossible to understand and I’d like to think I’m one of those educated people with a masters degree.
This is another roller-coaster, sorry. I just heard back from my informant, from whom I asked for a copy of the wording of the oath. He informs me that in our phone conversation I misheard or misunderstood which oath he was referring to. He has told me in an email that the oath he got is his oath of allegiance that he swore on becoming a Canadian federal public servant, which is what he will likely base his relinquishment claim on. His citizenship-card file does not contain an oath; he spoke with a CIC employee who told him that an oath wasn’t required when he got the card, hence nothing like that in the file.
I am quite certain that another informant told me she remembers swearing an oath on getting her card (I had thought my other informant also said the same thing, but I guess memories can be tricky, whether his or mine who knows?). So it’s possible that some folks did swear and sign an oath on getting a card, others maybe not. I guess you (and we if you tell us) won’t know for certain unless and until you apply for a copy of your file. I still think it’s something worth checking out.
Also everyone please carefully read and reflect on iamquincy’s post two or three above this one.
@usxcanada with reference to duals-at-birth born in Canada whose sole connection to the US is their parents happened to have been born there, absolutely nothing else … obviously everyone has their own tolerance (or intolerance) for ambiguity. Also different people may be angered to differing degrees about any claim they’re Americans when all their entire lives they’ve never thought nor acted as if they were, and different people will make whatever choices make sense to them and their lives, and how rational or probable they might think certain fears are and whether they’ll let that fear govern their lives. I won’t presume to speculate on what I’d do in that situation, because I’m not in that situation and I am very careful never to recommend any specific course of final action that someone else should or shouldn’t take — I just point out some possible alternatives for consideration, if the individual hasn’t already thought of them. As I’m sure you have done with your post. Something to think about, but to what extent will a specific person let fear of a bullying foreign government rule their lives? Depends on the person and their situation.
@everyone contemplating relinquishment:
This has been pointed out by Michael Miller before on this website, some months ago, but it bears repeating here — and if you follow bubblebustin’s link to the Hodgen website and scroll down to the comments by Miller, you’ll see it again.
“For persons whose CLN shows a loss of citizenship date that is on or before June 3, 2004, section 877A should not apply. Even if the CLN is received today. I’ve discussed this with people at the IRS and they’ve informally stated that they agree.” (comment by Michael J. Miller, a US tax lawyer based I think in Washington).
Section 877A is the section that says that you’re supposed to submit six years of back returns (and FBARS) and a mark-to-market evaluation of everything you own on IRS Form 8854. Miller’s opinion, and informal but unfortunately not publicly stated opinions by fairly senior IRS people, is this does NOT apply if your actual expatriating act (like becoming a foreign citizen or swearing a foreign oath of allegiance) happened before June 3, 2004. This is also consistent with the way Form 8854 is designed, if you look at it and read it carefully. That form distinguishes between when you actually expatriated and when you informed State Department; it asks for the specific date in the second case, but in the first case it asks for a tick mark in a box at the top. THERE ARE NO BOXES FOR DATES BEFORE 2004 AT THE TOP.
Hence you want to get a relinquishment CLN, not a renunciation, if you can, if your expatriating act occurred pre-2004. What Hogden says about it not mattering for tax purposes which route you go (other than the $450 fee for renunciation), is true ONLY if your relinquishment act was AFTER June 3, 2004. It very much matters which way you go, before then — there is IMO absolutely no need for you to file anything to IRS in that case. Nor AFAIK does State actually copy CLNs of such persons to IRS; ALL the pre-2004 relinquishment CLN cases whose real names I know (8 so far, all pre 1990 in fact) so far (in some cases a year and a half after the CLN was issued) have not shown up on the quarterly Register list that IRS publishes of CLNs they got from State. ALL of the renunciations I personally know (almost 20 of them) have in fact shown up on those lists. I have been monitoring the lists closely. Not a random sample, but any statistician will tell you that the joint odds of 0/8 going one way and 20/20 another way, by random chance, are vanishingly small (see Fisher’s Exact Probability Test, for starters).
This is not legal advice, and I’m not a lawyer, but read the above and think about it carefully.
Ideally I would like to relinquish with a back dated CLN of 1999. The problem is I was 16 when I performed my expatriating act. So my question is, how long do you have to file taxes if this does not happen post-relinquishment/renouncement? I would file now but obviously this could impact my ability to back date. Are there more penalties if I wait until after the fact?
You say :
“Nor AFAIK does State actually copy CLNs of such persons to IRS; ALL the pre-2004 relinquishment CLN cases whose real names I know (8 so far, all pre 1990 in fact) so far (in some cases a year and a half after the CLN was issued) have not shown up on the quarterly Register list that IRS publishes of CLNs they got from State. ALL of the renunciations I personally know (almost 20 of them) have in fact shown up on those lists. I have been monitoring the lists closely. Not a random sample, but any statistician will tell you that the joint odds of 0/8 going one way and 20/20 another way, by random chance, are vanishingly small (see Fisher’s Exact Probability Test, for starters).”
You can add me to the number of relinquishers with a CLN who haven’t shown up on the Federal Register. My CLN was very pre-2004 – the late 1960’s.
@Very confused. I’m neither an accountant nor a lawyer, and I’m certainly not qualified to speak on US tax matters. I will defer to any other persons who want to reply to your question, but I would caution that in my understanding, filing US tax returns might disqualify you for a relinquishment because they do ask on Form 4079 if you do file US taxes “if yes, please explain” not if no please explain. So I think if you are going to try for a relinquishment you should probably not file now. If you end up having to renounce, from their perspective you’ll have to file since the expatriation would then be 2014. Whether it’s a good idea to file before renouncing or whether to wait until after renouncing, I can’t really say as I haven’t followed those discussions since they don’t apply to me nor to anyone in my family. In terms of penalties I can’t answer that either, since again I haven’t paid attention to them (since they won’t apply to me or my family). Someone else will have to answer. But you probably should get professional legal and accounting advice for this; go to one of the information sessions mentioned elsewhere on this site (starting this Saturday in Toronto) if you can get there. Ask around for recommendations for reliable advisors.
@hijacked Thanks for the info. I think we all agree that it would be absurd for the US to claim back taxes against someone who committed a relinquishing act that long ago, did nothing subsequently to contradict the relinquishment, and got written confirmation of these facts from the US State Department, approved in Washington. State seems to see no point in sending such CLNs to IRS (unless they did and even the IRS said, “oh come on, this is nuts.”) BTW a couple of years ago there was a now-defunct website on renunciation (a very good one in fact) which posted some hearsay they picked up I think in Washington to the effect that neither State nor IRS thought the “name and shame” list was a good idea nor likely to act as any deterrent to anyone who for whatever reason was prepared to ditch their birth citizenship. Story was the two departments argued over who had to maintain the list (mandated by a silly resolution introduced if I recall correctly by none other than Ted Kennedy), and IRS lost the argument. This may partly explain why those lists are always late and often ridden with duplicate or erroneous errors and other anomalies, not to mention they demonstrably don’t even include all renunciations since the list the FBI gets from State on renunciations (only) includes larger numbers than the IRS list, consistently, for whatever reasons. FBI gets the names of renunciations so they can alert registered gun dealers not to sell firearms (or, I think, ammunition) to such nefarious persons, and so the border guards won’t let them bring firearms into the States. Relinquishers (or in some states people with criminal records or mental health issues), no problem, here would you like to buy an AK47 and several drums of ammo for it? Go figure.
@ Very Confused and Schubert,
It isn’t necessary to file prior to renouncing. One’s citizenship status isn’t dependent on their tax status, so the Consulate/State Dept doesn’t really care if you are or not.
You have til June 15th of the year following the renunciation to file the tax forms for the 5 years prior to renunciation year, exit tax form (8854), and the partial year tax forms for renunciation year. Eg, if you renounce this year, 2014, you have til June 2015 to do this. Several people have done this, one I remember renounced in 2011, filed her stuff in 2012, and actually got a refund (one of those stimulus refunds they were giving out in ’08 or ’09).
If you don’t file, you become a “covered expatriate” with IRS, that is could be subject to exit tax. However, the citizenship remains terminated and the CLN remains in effect.
Schubert1975 – Now defunct website for Renunciation Guide.
Thanks to Internet Archive aka Wayback Machine, never defunct:
Thanks for that link USX, good to see it’s still available.
The focus on that site is mainly on renouncing, but it has other good information and is worth a visit for those reading this post who may be considering renunciation. It was the first detailed site on the subject before Brock got going, and it’s where many of us who originally met over at ExpatForum got a lot of our early information and education on these matters.
I thought for sure I had bookmarked this but couldn’t find it today. How lucky to see it posted here. Thanks!
I don’t think I’m the only one here who has renounced (2012) and whose name has not (yet) appeared on the name and shame list.
Thanks for posting the archive link to Renunciation Guide, USX. Also RenunciationGuide.com is back. Heidi discovered it up and running again a few months ago. It’s now a blog as well as containing the resource material it was well known for.
Wow this link is great! Very easy to understand and read. Looks like I am not subject to the “exit tax” because I was born a dual citizen, very nice to know. Stress has just gone down a little and thanks for that! Now I just have to worry about 5 years of taxes should they decline a backdated CLN.
@everyone with a claim to a pre-2004 relinquishment
A friend just discovered the following link, which I’d seen before and which probably is buried somewhere on this website, so I’m going to re-post the link here and on a couple of other threads here and at Sandbox, to make it prominent to everyone. This is a footnoted and detailed article co-authored by Michael J. Miller, a US tax attorney referenced in my earlier comment above, explaining in legal and footnoted detail why in fact anyone with a pre-June 3, 2004 relinquishment has absolutely zero filing obligations to the IRS under form 8854 or anything else they dream up. It should provide some comfort and guidance to those who qualify for this under any of the seven listed grounds for relinquishment, which are quoted in the article as well.
Some browsers may have trouble opening this link (mine does sometimes); right-click on the link and select “save target as” to your desktop, and the PDF should download there, then double-click the PDF and Adobe Acrobat Reader (which your computer almost certainly already has; if not Google it and get the free download and install) will open it; you can read and (if you prefer) print the article from there.
Note at the end of the article, the authors plea for the IRS to issue clear guidance to people on these points, which so far and for whatever motivations we might think of (I’ll refrain from spewing my own string of adjectives on this point) they haven’t done yet. FTR if my wife, who has a 1970s relinquishment CLN issued a couple of years ago because until then she had no idea what a CLN was or that she needed one (and the article says there actually is no legal basis for requiring you to notify State about a relinquishment except in the case of an outright renunciation), if IRS ever contacts her all they’ll get from either of us is a pair of proudly upraised and upright middle fingers.
… and if after being presented with evidence of her or my CLN, any pathetic miserable treasonous Canadian bank dares to forward one scintilla of our financial information to the IRS, I’ll spend the rest of my life dedicated to pounding their miserable carcasses into sand in court.
Glad to hear you aren’t on the list yet; let’s hope it stays that way, whatever you did or didn’t do after renouncing re tax filing to IRS.
You’re not one of the folks whose name I know (at least I don’t think so), and as I noted in my comment, my knowledge certainly is not a random sample of all CLN recipients even in Canada (they’re only in Canada; I have no idea what’s going on with the Federal Register lists re relinquishment CLNs vs renunciation CLNs when the recipients reside in countries other than Canada). And as I mentioned, it’s obvious that not all renunciation CLNs end up on that list, given the discrepancy between IRS and FBI numbers, coming from whatever whyever. But so far I’ve yet to hear from a Canadian pre-2004 relinquishment-CLN recipient that he or she has showed up on those lists, and if I do, my next question will be “did you unfortunately actually contact the IRS after you got your CLN or during the process?” though if you take the wording of the Register posts literally, they’re only supposed to include names of persons whose CLNs were copied to the IRS by State Department in the preceding three months.
Unfortunately, that is not correct.
Being a dual from birth (and some other residency requirements) excuses a person from 2 of the 3 tests used to determine if one is a “covered” expat and thus subject to the exit tax.
It excuses a person from the net worth test and the tax liability test. It does not excuse one from the tax compliance test. The tax compliance test is that one requires a person to be up to date on their tax obligations for the previous 5 tax years.
So, even if you are dual from birth (and meet the residency requirements) you will still be subject to the exit tax if you’re not 5 years compliant.
What I’m not clear on is if you are considered covered is whether you pay tax if you meet specific asset thresholds, or on the total value of your assets regardless of what their total is.
I believe that if you’re a covered expat you pay tax on all unrealized gains (with a $663K exemption). AFAICT asset thresholds and asset values no longer come into play (strange as that may seem). An unrealized gain of $663K seems quite large, however there is at least one gotcha – RRSPs are treated differently and you are taxed on the *full* amount (not the gain) as income *and* the exemption does not apply – ouch.
I stand to be corrected if anyone knows better.
AFAIK — as far as I know
AFAICT — as far as I can tell
BTW — by the way
In case anyone is wondering.
Thank you tdott, and Em for your acrynimbleness 😉
@ bubble and @tdot, looks like you are right and it’s good to know. This is taken from the IRS website:
Who Must File
If you expatriated after June 16, 2008, the expatriation rules apply to you if any of the following statements apply.
Your average annual net income tax liability for the 5 tax years ending before the date of expatriation is more than the amount listed next.
$139,000 for 2008.
$145,000 for 2009.
$145,000 for 2010.
$147,000 for 2011.
$151,000 for 2012.
$155,000 for 2013.
Your net worth was $2 million or more on the date of your expatriation.
You fail to certify on Form 8854 that you have complied with all federal tax obligations for the 5 tax years preceding the date of your expatriation.
You expatriated before 2013 and you:
Deferred the payment of tax,
Have an item of eligible deferred compensation, or
Have an interest in a nongrantor trust.
Covered expatriate. You are a covered expatriate if at least one of the statements in paragraphs (1), (2), or (3), set out above (under Who Must File) applies.
Exception for dual-citizens and certain minors.
Dual-citizens and certain minors (defined next) will not be treated as covered expatriates (and therefore will not be subject to the expatriation tax) solely because one or both of the statements in paragraph (1) or (2) above (under Who Must File) applies. However, these individuals will still be treated as covered expatriates unless they file Form 8854 and certify that they have complied with all federal tax obligations for the 5 tax years preceding the date of expatriation as required in paragraph (3) above (under Who Must File).
I would just like confirmation from IRS in terms of whether you can pay 5 years of taxes post-renouncing without penalties. Or if it’s best to get caught up in advance. I just want to exit USA ASAP but can’t do taxes until I try to relinquish.
This website was given to me by a US consulate at the bottom of their email, http://www.irs.gov/instructions/i8854/ar01.html#d0e1183