Not applicable to adult emigrants. No other proposals to simplify income taxes for individuals who don’t live in the United States. No help with the insane reporting requirements on foreign retirement & medical & disability savings plans. Some people may hope it’s a start from an administration which up until now has been totally deaf to the “special concerns and issues of Americans abroad” which the president claimed he would address when he was campaigning for our votes. Others will take it as what it appears to be at face value: a chance to get out while the getting is semi-good. At page 282 of the “Green Book” (all links added by me):
Individuals who became citizens of both the United States and another country at birth may have had minimal contact with the United States and may not learn until later in life that they are U.S. citizens. In addition, these individuals may be citizens of countries where dual citizenship is illegal. Many of these individuals would like to relinquish their U.S. citizenship in accordance with established State Department procedures, but doing so would require them to pay significant U.S. tax.
Under the proposal, an individual will not be subject to tax as a U.S. citizen and will not be a covered expatriate subject to the mark-to-market exit tax under section 877A if the individual:
1. became at birth a citizen of the United States and a citizen of another country,
2. at all times, up to and including the individual’s expatriation date, has been a citizen of a country other than the United States,
3. has not been a resident of the United States (as defined in section 7701(b)) since attaining age 18½,
4. has never held a U.S. passport or has held a U.S. passport for the sole purpose of departing from the United States in compliance with 22 CFR §53.1,
5. relinquishes his or her U.S. citizenship within two years after the later of January 1, 2016, or the date on which the individual learns that he or she is a U.S. citizen, and
6. certifies under penalty of perjury his or her compliance with all U.S. Federal tax obligations that would have applied during the five years preceding the year of expatriation if the individual had been a nonresident alien during that period.The proposal would be effective January 1, 2016.
This didn’t appear to be covered in the table of revenue estimates. Correction: As Tim points out, the revenue estimate is in the summary tables file on the White House/OMB website, rather than the Treasury website. They estimate it would cost $400 million over ten years, with more than half of that coming in the first three years as people scramble to take advantage of the offer.
Details of revenue estimates
| Deficit increases (+) or decreases (-) in millions of dollars | Totals | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Heading | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2016 – 2020 |
2016 – 2025 |
| Provide relief for certain accidental dual citizens | ……… | 60 | 103 | 55 | 23 | 24 | 25 | 26 | 28 | 29 | 30 | 265 | 403 |
I am quite interested to know the underlying number of relinquishers OMB used make these estimates (and for that matter, whether they have offset those estimates by the $2,350 fee that many accidentals are going to have to pay because they only qualify for renunciation and no other method of giving up citizenship). I assume that the estimates for ongoing deficit increases past 2018 are attributable to one-time losses of revenue from additional relinquishers,rather than ongoing loss of revenue from the initial group of relinquishers.
For example, they may be using the utterly false (and late again for this quarter) Federal Register relinquishment numbers and assuming that all of them would qualify for Obama’s plan. (That would also mean they’re assuming that no non-accidental Americans have ever given up citizenship because of the FATCA mess that Obama signed into law — clearly an incorrect assumption.) In that case they would be saying that in 2020 they’re expecting an average annual revenue loss of $8,000 per person, rising to $10,000 per person by 2025.
If OMB understands that only a small proportion of recent relinquishers qualify for Obama’s plan, then they’re trying to claim that the revenue loss per person would be much higher — which I don’t think is supportable. On the other hand, they may also understand that the actual number of relinquishers is higher and that only a small proportion of them will qualify for Obama’s plan. Though given the dubious earlier models of the effect of cancelling the FEIE, I get the sense that the government does not have this much of an in-depth understanding of emigrant tax issues.
Treatment of businesses owned by American emigrants
Another small mercy: the proposed 19% minimum tax on foreign earnings only applies to CFCs owned by “entities taxed as domestic C corporations” — finally, an implicit acknowledgement that some owners of CFCs are human emigrants rather than multinational corporations. Unfortunately the 14% tax on “previously untaxed” foreign earnings does not appear to include that same acknowledgement.
Will not affect ADCS lawsuit
Update, 6 February: Stephen Kish has already spoken with Mr. Arvay about the Obama budget proposal, and states:
Some you have expressed concern that should the Obama budget proposal, if ever enacted, provide some relief to duals-at-birth, like our two Plaintiffs Ginny and Gwen, this could mean trouble for our lawsuit — because both Plaintiffs are duals-at-birth. Apparently, Canada’s Mr. Roy Berg himself, a U.S tax compliance professional, is mentioned in an article (which I have not seen) which states that should the tax code on duals-at-birth change for the better, this might “spell the death-knell” to our Canadian lawsuit.
Please do not worry. The Arvay team has been quite aware of the issue of specific characteristics of plaintiffs from the very beginning.
Today Mr. Arvay also has confirmed with me, yet again, that our legal strategy is not limited to the specific characteristics of the two plaintiffs, that additional plaintiffs can be added to the lawsuit should this ever be necessary, and that our aim has always been to include affidavits from people who span a range of differing characteristics.
@WhiteKat
I believe that Native Canadian was asking if other counties register their children’s birth abroad with the actual date of birth or with the time of registration. We registered our children’s birth abroad within weeks of their birth with the UK consulate and they are bona fide duals from birth reflected in their certificates.
Native Canadian was asking how other countries do it, because he thought that this latest proposal was aimed specifically at Canada , (perhaps to undermine the lawsuit!)
It looks like Ireland only puts the date of registration on the cert
If you were also registered soon after birth why not contact the Canadian Gov and ask why your birth date is not reflected in your Certificate?
@Native Canadian
Imagine that there are perhaps thousands of people born in Canada who qualify for US citizenship through descent, but have no and varying degrees of awareness of such. Now that participating FFI ‘s are required to have new account holders certify whether they’re a USP, some will erroneously say “no” and others, unsure, will hesitate to answer “yes” or “no”. Unfortunately for them, the process they will need to go through in an effort to prove they aren’t USC’s will actually establish that they are, and will come with the obligation to now file US taxes and for some, register for selective service. This is going to be extremely traumatizing for many, and we can thank the Canadian government for handing their own children over to the US government on a silver platter. It also makes the Canadian government’s indifference to the lack of reciprocity in the IGA especially egregious, as there is no requirement for US financial institutions to have their new account holders self-certify that they’re not Canadian.
The subject of the post I believe recognizes that and attempts to deal with it, IMO. The US is now actively beating the bushes for their citizens, people with no connection other than a parent or two. All for $2350 a pop!
@ WhiteKat
According to the Canadian Government website, the citizenship card does not contain the date you became a Canadian citizen, it is supposed to contain the date the card was issued. http://www.cic.gc.ca/english/citizenship/proof.asp
Do you also have the Commemorative certificate with a date on it, this is supposed to be the date you became a Canadian citizen?. For duals at birth applying for this certificate after April 2009 this should be date of birth due to the Canadian law change concerning those born abroad to a Canadian parent. http://www.cic.gc.ca/english/citizenship/rules_2009.asp. Would it be the birth abroad registration date prior to this law change ?
I don’t have a citizenship card, I only have my Birth Abroad Certificate which I used to get my Canadian passport. The Canadian law is the only proof I have that I am Canadian from birth.
I can see some of our duals-at-birthers going through some impressive machinations to find proof of what they know to be so. Please remember “Obama’s proposal” is not legislation … yet. You can gather whatever documentation you can find right now but it will all have to be set aside until you get further word. I once wrote to CIS to ask them to at least speed up the Canadian citizenship process for Americans but nothing came of that. Well it did I guess … the process got longer not shorter. We have a government which not only betrayed us by implementing the FATCA IGA, it also has shown no inclination to assist those it betrayed. Apparently when Congress speaks to our Parliament, the voices of Canadian citizens are completely drowned out.
@heartsick
I don’t understand your comment that your only proof of Canadian citizenship is the Canadian Law. The Registration of Birth Abroad certificate is absolutely a valid proof of citizenship. It’s listed on the Canadian passport application form as proof of Canadian citizenship, and clearly here as well:
http://www.cic.gc.ca/english/citizenship/proof.asphttp://www.cic.gc.ca/english/citizenship/proof.asp
It was issued between January 1, 1947, and February 14, 1977, inclusive. I’ve never bothered to look up the changes made to dual-citizenship in 1977. I have a RoBA, and nothing else. My name, WhatAmI, is rhetorical. There is no doubt what I am.
What is your concern?
@WhatAmI I have no concern at this point. I meant that I have nothing in writing that states Canadian citizenship “at birth” except the Canadian law, my RoBA proves my Canadian citizenship but the date is several years after my birth. Sorry for the confusion.
@Bubblebustin
You quoted Virginia’s change to her blog:
Obtaining another country’s citizenship by naturalization later in life due to eligibility from a parent or other ancestor will not count.”
Could you please explain the discusion that led to this change, and exactly what history of birth and citizenship this is intended to describe?
I ask because the phrase “naturalization later in life due to eligibility from a parent” is strange and meaningless to me. Here’s my thinking:
“naturalization” means to apply for and receive a new citizenship, involving taking an oath, etc. There is no requirement for a Canadian parent eligibility. You just have to be a permanent resident, etc.
“eligibility from a parent” sounds like having been registered as a birth abroad, which clearly declares citizenship since birth.
I see no link between the two scenarios and her revised wording makes no sence to me, at all!
Even before the addition of “by naturalization”, I could see she was referring, maybe, only to the 2009 law change? Hopefully she’s not referring to receiving a certificate of Registration of Birth Abroad later in life as an adult? The latter could be a possible interpretation but grossly unfair. I think the intention of the provision is aimed at duals-since-birth who _knew_ they were duals since birth. It would be unfair and unreasonable for the US to determine knowledge-since-birth based on the dates of certificate applications and receipt. Like declarations of intent to relinquish decades ago to the DoS during a relinquishment claim interview, they accept your claim made under oath. Oh, but, yes, well, I suppose we are talking about the IRS here, not the DoS!?!?
Keep in mind that we have a documented case of the DoS denying a past relinquishment citing being a Canadian since birth, for a naturalization that occured decades before the 2009 las change that retroactively granted the citizenship since birth (as I posted above). They can’t have it both ways!
@heartsick
I see. I’m looking at my RoBA, and you’re right, it does not say “since birth”!
I found this mention of “since birth”: http://www.cic.gc.ca/english/resources/tools/cit/acquisition/retention.asp
Persons eligible to be registered whose births were not registered before February 15, 1977 were able to apply for a delayed registration of birth outside Canada until August 14, 2004. Persons who were registered as citizens under subsection 4(3) are considered citizens by birth and citizenship is retroactive to birth.
And this history of “Canadian Citizenship by Birth Abroad” on an US web site:
http://www.americanlaw.com/cdncitabrd.html
It contains some things I didn’t know:
I knew that having a Candian mother and US father wasn’t good enough to get Canadian citizenship born abroad, but I didn’t know that a single-mother birth was OK!
Because many people have obtained RoBA by registering after the specified 2-year deadline, I figured there must be a provision for this. The quote above indicates this point of law.
I asked Virginia La Torre Jeker J.D.:
and her reply was:
The cynic will say it won’t pass, but the cynic also says the provision is purely damage control aimed at Canada and the lawsuit. Doesn’t the provision have to pass for the damage control to be effective? 😉
@WhatAmI
You get.
This is my part of the conversation that led to her amending her blog post (edited to protect the innocent):
“Please let me try to paint a clearer picture of what I’m trying to get at here.
You write that the Obama proposal states “Obtaining another country’s citizenship later in life due to eligibility from a parent or other ancestor will not count.” (I assume in recognizing whether the person in question has dual nationality at birth for the purposes of the proposal).
Why would the US refuse to recognize duals under these circumstances, but still neglect to clearly state whether or not it considers our undocumented US children born abroad as US citizens?
The concern today among many is that the US has a claim on our children born abroad. We worry that the banks knowing that they have the potential to be US citizens will FATCA them and make them prove they aren’t US citizens. [there are US citizens who have children born in Canada who qualify for US citizenship, but want nothing to do with it. Should they go to a US consulate, claim their US citizenships so they can say in no uncertain terms that they’re not US citizen?]
To also use my husband as an example, he was born in Canada and documented his US citizenship through his American father at 19 at the US consulate in Montreal. Had he never documented his US citizenship at 19, would he or would he not still be considered a US citizen? It would appear by the above statement in the proposal that should the US not recognize that dual citizenship from birth exists in another country for someone who claims it later in life, that the same would be for those who’ve qualified and never claimed US citizenship, and therefore the US would have no claim on undocumented US citizens born abroad.”
My conversation with Virginia and comments here have been precisely about the unfairness of the US proposal that would claim their unregistered citizens whilst eliminating duals who may themselves have only documented their own non-US citizenships at birth later in life. You see the inequity in this, I hope others now do too.
Since you’ve also got a line of communication going with her, you may want to press her to explain how someone can naturalize through a parent or grandparent and your doubts about whether it’s a correct interpretation of what is being set out in the proposal. You have a better technical grasp of these things than I do 😉
@WhatAmI, re: ” I knew that having a Candian mother and US father wasn’t good enough to get Canadian citizenship born abroad, but I didn’t know that a single-mother birth was OK!”
That is news to me. Having two Canadian born parents, I never gave it any thought before.
@Bubblebustin
I haven’t had any private correspondence with Virginia. My questions are in the Comments to the bog.
With regards to the US claiming unregistered US children born abroad, but not recognizing a foreign country’s citizenship laws and applying their own spin on foreign citizenship to the financial benefit of the US: this is typical US hypocrisy at work. No surprise there. The case that I quoted recently about a DoS relinquishment denial is actually the opposite: they insisted Canadian citizenship since birth already existed for the person even though it wasn’t Canadian law at the time. The cynic in me suggests this was done again for their own financial benefit, as denying the claim might lead them to collect a $2350 renunciation fee, expat tax, etc.
I’m not sure yet that Virginia means to say anything about the case of Canadian Registration of Birth Abroad.
Her original statement was this:
“Obtaining another country’s citizenship later in life due to eligibility from a parent or other ancestor will not count”
That sounds too much like a reference to registration of birth abroad. She added the words “by naturalization” for clarification? If she had changed the statement to this:
“Obtaining another country’s citizenship later in life by naturalization will not count.”
That would make perfect sense, and actually border on fairness since this far-too-narrow tax relief is initially aimed at Accidental Americans who have had little or no US connection their entire adult lives. The wording above eliminates adult US tax-paying citizens who left the US and naturalized elsewhere as adults and stopped filing US taxes. Such people clearly are NOT Accidental Americans (although of course they absolutely, in many cases, deserve the same tax relief).
However, she added the words “by naturalization” and kept the other wording, making:
“Obtaining another country’s citizenship by naturalization later in life due to eligibility from a parent or other ancestor will not count”
which I insist makes no sense at all. My original question to her, after reading about her vast experience, was if she thought the drafter of the proposal could have made a simple mistake in Point 4 about “departing” the US, omitting “entering”. She replied, “maybe”, but she guesses probably not. I’m hoping she made a similar simple mistake when she updated that sentence in her own writing, and really means to only single out the newly added clarifying words, “by naturalization”.
@WhiteKat
There have been many posts here by people with only Canadian mothers. Going forward, I don’t think I’d outright ask anybody if their parents were actually married at the time, but it should be OK if we simply add this extra bit of information for them, just in case!
@WhatAmI
In Canada, someone attempting to naturalize through a parent or grandparent will receive a document saying they were a citizen at birth!
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@Bubblebustin
We must get to the bottom of this! No offence intended, but here goes… 😉
Now you’re using the same non-sensical terminolgy as Virginia! If you’re talking about “getting” Canadian citizenship from a parent, you _must_ be talking about birth abroad (otherwise you already have citizenship by being born in Canada!). There are 3 main options: born in Canada, naturalized in Canada, or born abroad and registered as Canadian through a parent.
The page I gave above:
http://www.cic.gc.ca/english/resources/tools/cit/acquisition/retention.asp
describes the history of birth abroad, and NOWHERE does it use the term “naturalized” in connection with citizenship due to ancestry. For example, look at the careful separation in these headings”
@Whitekat – I was a dual at birth. My Canadian citizenship paper certificate fell apart in 2010 so I ordered a new one. I was sent a small plastic Canadian citizenship card with the date the card was issued. A letter came with it informing me that the law had changed in 2009, and that I was now considered a Canadian citizen since birth.
When we went looking at Canadian citizenship for my wife, we were told that because her mother was a Canadian, my wife was as well from birth. We were told that we needed to apply for a “proof of citizenship” document. When we did, we had to provide her mother’s long form birth certificate and several other documents. When was all done, we received the certificate of Canadian citizenship which clearly states that my wife was Canadian since the minute she was born. It appears that this law was added in Canada in 2009 to be retroactive. This might be why Obama appears to be aiming this at Canadians as we are the largest population of so called “duals” in the world.
If there are others in our situation, I would suggest asking for a proof of citizenship. Your document will show Canadian since birth..
Re: RBA
Our RBAs (my sister and I) contain two dates – our dates of birth and the date the document was issued (several months after our return to Canada with our Canadian parents).
@Anne Please check here http://www.cic.gc.ca/english/citizenship/proof.asp When you applied for your citizenship certificate, you must have sent ALL info for your mother?? My brother in law became a Citizen and had the ceremony etc over 20 years ago. He applied for the proof certificate and his too was dated from his birth date….
“became at birth a citizen of the United States and a citizen of another country” The wording Seems a little odd to me. How can a baby, only a few hours old, fill out the paperwork to be a citizen of another country? The wording appears to say just that. there is no time limit before the baby got the other citizenship etc. Very odd…..
@NativeCanadian
I am not sure if your question was adressed to me, but my post was meant to answer the question of proof of “citizenship since birth” on the RBA and not the citizenship certificate.
@WhatAmI
Where did I say anything about “getting” Canadian citizenship? I see clearly why you say Virginia’s amendment doesn’t make sense. That’s why I’ve asked her explain. You and I are in agreement on the same point I’ve been trying to make ever since I brought up it in a comment to Eric two days ago:
https://isaacbrocksociety.ca/2015/02/03/obama-fy2016-budget-proposes-limited-relief-for-accidental-duals-at-birth-who-give-up-u-s-citizenship/comment-page-9/#comment-5495089
Let me state it differently. If someone with Canadian born parents or grandparents submitted an application for Canadian citizenship (or permanent residence for that matter) they would in all probability receive notification that they are already a Canadian citizen at birth, just as many who’ve applied for US citizenship under the same circumstances have found out, apparently (Hat tip to badger):
“It is the circumstance of U.S. citizenship arising from a birth outside the United States that frequently catches people by surprise, resulting in the existence of many persons who simply did not know they were U.S. citizens until their status came to light in connection with an immigration, tax or other similar administrative enquiry. Unlike the case of status arising from birth in the United States, the citizen- ship rules applicable to births overseas are not widely known.”
http://www.caplindrysdale.com/files/14701_The%20Current%20State%20of%20Expatriation.pdf
@Bubblebustin
You said “In Canada, someone attempting to _naturalize_ through a parent or grandparent…”. It’s the (mis)use of the word “naturalize” that I was pointing out. If you had said getting/obtaining/acquiring, I wouldn’t have said anything. I think we actually agree on this?