When it comes to compliance there is a lot of confusion as to:
- what day does loss of citizenship occur and
- what roles do f8854 and a
- Certificate of Loss of Nationality play?
The filing requirements are explored in two posts by John Richardson.
BRIEF SYNOPSIS
Before June 3, 2004 (before the creation of the “Tax Citizen”)
The date of your “expatriation”was determined solely by the provisions of the Immigration and Nationality Act.
June 3, 2004 – June 16, 2008 (after the creation of the “Tax Citizen”)
You continued to be treated as a “U.S. person” for tax purposes UNDER THE INTERNAL REVENUE CODE until you gave “notice” of your “relinquishment” to a government agency. For this period part of the “notice” was filing Form 8854 with the Internal Revenue Service. In other words, there was no way to cease to be a “U.S. person” for tax purposes until you had notified the IRS.
After June 16, 2008 –
A.The issuance of a CLN is confirmation that the State Department has agreed that you have relinquished U.S. citizenship. A CLN is a confirmation that you have met the “notice requirement” under the Internal Revenue Code.
B. The CLN is one way (a self-certification is also possible) to satisfy “foreign banks” that you are NOT a U.S. person for tax purposes under the Internal Revenue Code. (In other words, a CLN is a “sufficient” but not a “necessary condition” to prove non-USness.
Read more HERE
*****
1. Is the loss of U.S. citizenship for nationality purposes dependent on having a Certificate of Loss of Nationality (“CLN”)?
The answer is absolutely not.
349(a) of the Immigration and Nationality Act specifies conditions under which one relinquishes U.S citizenship.
2. Is the loss of U.S. citizenship for tax purposes dependent on having a Certificate of Loss of Nationality (“CLN”)?
Prior to June 3, 2004 – NO for either immigration or tax purposes
June 3, 2004 – June 16, 2008 – NO for either immigration or tax purposes.
After June 16, 2008 – No for immigration purposes – It is necessary as a confirmation of having met the “notice requirement” to end U.S. citizenship for tax purposes
3. What is the role of a Certificate of Loss of Nationality (“CLN”)?
For Immigration and Nationality Purposes – no relevance whatsoever
For Tax Purposes – The Internal Revenue Code
The accusation of U.S. citizenship is triggered by various indicia (U.S. place of birth, U.S. residence, U.S. phone number, etc.). The U.S. “place of birth” is the most dangerous indicia. Those with a U.S. place of birth can rebut the accusation of U.S. citizenship with either:
A. The CLN; or
B. A “Self Certification” (that must meet specific requirements) documenting why:
– the person has relinquished U.S. citizenship; and
– does NOT have a CLN.
A denial of U.S. citizenship will generally require proof.
In general, those who have relinquished U.S. citizenship under the Immigration laws of the United States prior to June 3, 2004 are more likely to be able to “self certify” that they are NOT U.S. citizens even though they do NOT have a CLN. This position is consistent with the August 2015
4. Why is the Certificate of Loss of Nationality (“CLN”) of value?
It’s simple. Unless you live in the United States, life as a U.S. citizen abroad, in a FATCA, FBAR and CBT world, will be an endless source of anxiety and difficulty. A Certificate of Loss of U.S. Nationality is becoming one of the most sought after documents in the world today.
5. What is the role of a Certificate of Loss of Nationality (“CLN”) in a FATCA inquisition?
June 16, 2008 – Present
IF (you relinquish U.S. citizenship under the Immigration and Nationality Act) THEN
You continue to be treated as a “U.S. person” for tax purposes UNDER THE INTERNAL REVENUE CODE until you give “notice” of your “relinquishment” to a government agency. The “notice” requirement is NOT to the IRS, but to the State Department. (See S. 877A(g)(3) and S. 877A(g)(4) of the Internal Revenue Code.) Once “appropriate” notice is given to the State Department you cease to be a U.S. taxpayer from the date the notice is given (on a prospective basis).
Read more HERE
Calgary – I too was glad to see that ACA flowchart. It’s good to see the truth (that a possible claim to US citizenship by descent is a CLAIM, not an immutable fate) stated matter-of-factly in a flowchart like that as the obvious reality.
Clear confirmation of the rightness of your position regarding the citizenship of your son: Canadian, born and bred. Cheers for your unwavering defence of that right for your son.
It would be good to see an IBS post marking the significance of the wording in the ACA flowchart.
Thanks, plaxy.
Given the ambiguity of something that should be clear, I put my comment here at Brock as I know there are other families (mine is not the only!) that are looking for more information to support whatever decisions they have to make for the best futures, after they are gone, of their children born outside the USA.
Not that I want to pop anyone’s bubble, but the ACA saying it’s only a claim to citizenship isn’t quite the same thing as the US government saying so.
The debate is a bit theological, in my view, because without US birthplace the unwanted citizenship is so easily ignored.
“Not that I want to pop anyone’s bubble, but the ACA saying it’s only a claim to citizenship isn’t quite the same thing as the US government saying so.”
The US government are liars.
ACA’s flowchart recognises reality.
Fact: the US will not issue a US passport to an individual born outside the US unless they present proof of their claim to US citizenship.
The US just deems stuff that’s not true, is true. When it suits their purpose.
Like deeming we all live in Washington DC, which I for one have never set foot in.
It’s actually lying but they call it deeming.
No bubbles popped, Nononymous, but ACA’s flow chart, along with other similar opinion, is the boost I personally need to move forward in important matters / decisions in MY life and at my age.
[There remains the loose thread connection to my son’s Canadian Registered Disability Savings Plan (that I am the Holder of / my son the Beneficiary) in my FBAR submissions for my renunciation compliance, as well as tax I paid to the US for the contribution of bonds and grants that the Canadian government / the Canadian taxpayers contributed to the RDSP for my son.]
Having made many of MY decisions approaching a decade ago when there was not the information we have access to now means also I made many, in my opinion, foolish mistakes out of (US) fear. Still not a slam dunk, but I can’t afford to not make my current decision, waiting for a B&W clarification from the country of my birth which I chose to leave in 1969 (and me, in naivety knowing nothing of CBT of USC. Of course, each of us is responsible to make our own decisions with the best information we have, especially with no clear answers to our questions and differing opinions.
ACA has included the recent SCOTUS decision that creates an even (more restrictive) playing field for children born out of wedlock, as now confirmed by the State Department. Children born out of wedlock after the ruling will find it just a little easier to dodge the US citizenship bullet.
“In light of the U.S. Supreme Court’s decision in Sessions v. Morales-Santana, 582 U.S. ___, 137 S.Ct. 1678 (2017), a person born abroad out-of-wedlock to a U.S. citizen mother and alien father on or after June 12, 2017, may acquire U.S. citizenship at birth if the mother was a U.S. citizen at the time of the person’s birth and was physically present in the United States or one of its outlying possessions for a period of five years, two after the age of fourteen under Section 301(g) of the INA.“
https://travel.state.gov/content/travel/en/legal/travel-legal-considerations/us-citizenship/Acquisition-US-Citizenship-Child-Born-Abroad.html
“Children born out of wedlock after the ruling will find it just a little easier to dodge the US citizenship bullet.
Fortunately there doesn’t seem to be a bullet, for those born outside the US. As they’re invisible to FATCA.
Unless the ESTA form enquires about parental citizenship and also demands proof of non-USC status to let a person enter the US on a non-US passport.
Interestingly, the Australian Embassy page on claims to citizenship gets it right:
https://au.usembassy.gov/u-s-citizen-services/citizenship-services/claim-u-s-citizenship/
Many thanks, plaxy, for this additional back-up I will use to further support my personal decision. I can’t imagine any purpose of my son going through that outlined process to obtain (by claim of USC) a US passport nor my doing so on his behalf.
Yes, that’s what I thought – it’s absolutely clear that the citizenship has to be claimed.
No claim – no citizenship.
@plaxy
Can you think of a situation where a person born outside the US with a claim to US citizenship might need to prove that he isn’t a US citizen?
BB – I can think of a situation in which someone in that position might believe he needed to prove he wasn’t a US citizen – if he believed the IRS threats and was afraid they could “come after” him for not filing.
@BB
At some point, JapanT will come along and insist – and for all I know he’s correct – that his Japan-born children will be treated as US citizens by Japanese banks because (a) they are visibly mixed heritage and (b) parental information is encoded on their national ID.
“The US just deems stuff that’s not true, is true. When it suits their purpose.”
True. (Though so do other countries.)
“Like deeming we all live in Washington DC”
As a matter of fact, I’ve received a court order denying that. I even pointed out definition number 39 to the court and they ignored it.
However, when the IRS finds it convenient to violate that court order, I bet they will. After all, the IRS violates other court orders.
“Interestingly, the Australian Embassy page on claims to citizenship gets it right:
‘Applicants over the age of 18, born outside the United States to one or both United States citizen parent(s), may have a derivative claim to U.S. citizenship.'”
That’s a US Embassy not Australian Embassy, even though it’s located in Australia.
“Can you think of a situation where a person born outside the US with a claim to US citizenship might need to prove that he isn’t a US citizen?”
Unfortunately Calgary411’s son isn’t capable, but surely Japan T’s children would like to. I still think they should apply for a US passport, then NOT submit evidence of citizenship, and get a rejection.
@plaxy, re;
“Fact: the US will not issue a US passport to an individual born outside the US unless they present proof of their claim to US citizenship.
The US just deems stuff that’s not true, is true. When it suits their purpose.
……………. It’s actually lying but they call it deeming.”
And some of that bs “deeming” is enforced by the booming US Extraterritorial CBT Compliance Industrial Complex in Canada who don’t just stick to US tax law, they freely opine on US citizenship as well, even though it is totally outside their professional training and expertise. One of those prospectors in the forefront of that US extraterritorial compliance gold rush tried to push me into “deeming” my child a USP via my parentage, citing future access to imaginary US streets paved with gold, despite the fact that if I went along with having my Canadian born child so deemed, their Canadian RESP (funded by a Canadian only grandparent) and their local legal birthday savings account would be FBAR fodder (and also according to the Compliancer, the RESP subject to the 3520A reporting and penalty regime – which they’d happily charge an additional fat purse of gold to help me with). The Compliancer in question (a Democrats Abroad member according to their bio) was fully aware of the punitive effect that deeming my child a USC would have on the child and our family’s savings – further exacerbating my own expensive and torturous attempt to comply and formally sever my own vestigial citizenship relationship. Ironically, (despite the harmful effect that would have had on the child, and the added expense and torment that would add to my own situation) the Compliancer not only tried to argue the benefits of deeming my Canadian child a USC (transforming them into a taxableUSP) and expressed disbelief of my firm and informed position that I did not sufficiently qualify to have transmitted the taxableUSCtaint – something only I could know) – they at that time didn’t seem to approve of my firm resolve to expatriate myself – but now, they not only put on travelling renuciation service roadshows, but also brag about their percentage of global market share of assisted renunciations.
The US Tax Compliance Industry continues to “deem” stuff that even the IRS has remained silent on.
badger – in my case it was consular staff rather than condors.
US citizenship and tax laws spread trouble and disinformation everywhere.
Interesting article on the background to Japan’s approach to registering its citizens and residents:
https://www.japantimes.co.jp/community/2016/07/10/issues/japans-discriminatory-koseki-registry-system-looks-ever-outdated/#.WrDDHuvfWK1
Talked to French people living in Switzerland last weekend. Apparently their banks in France wanted tax and income info for the French Govt — told the banks to go to hell — no longer reside in France, won’t provide any info. Conversation started when I asked if they were going to become Swiss. They said yes, but we’ve been saving, it costs about 2000 euros. I said hey, that’s similar to the price of losing US citizenship. Imagine if they were Americans; the year you buy your CLN and your Swiss passport would be a costly one!
I said:
For instance, take a Canadian citizen owning a Canadian business, who may or may not have a derivative claim to US citizenship.
Such an individual might want to prove to his accountant’s satisfaction that since he has never claimed US citizenship, he is not a US citizen and therefore is not liable to file a US tax return, FBAR, or Form 5471 for US tax year ending 2017.
While his brother, also owning a corporation, might have claimed US citizenship (for instance by applying for a US passport) and therefore would not have that option for protecting himself from the transition tax but instead would need to consider other options, e.g. filing and paying; filing and paying under protest; filing but not paying; not filing; renouncing, etc.