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
Oh EmBee!
No, this is terrible! I hope you at least enjoyed the skating until the fall. You have now given my a reason NOT to learn to skate. I could not recover from 2 broken wrists (piano). Hope they are not hurting and that you are back to normal ASAP.
Merry Christmas to you and Mr. EmBee!
It was the best ice ever on the lake. I hope it freezes that well next winter. Thanks for all the good wishes.
Hope you’re feeling better soon, EmBee. I used to love ice-skating too.
Anyone from Singapore?I wish I was in Canada
Am going to renounce this year and was going to ask the same Qs:
Four Q’s:
1. Has anyone renounced and NOT filled in the 8854 form?
2. Has anyone renounced and NOT filled in their IRD income tax year forms?
3. Has anyone filled in 8854 and IRD income tax forms without an SSN?
Most important, has anyone who had not filed a 8854 form or the annual returns directly been contacted by the IRS or been chased? what happened? what consequences?
Was born outside the US and have never lived or worked there. Dont have an SSN, dont plan to ever live in the US.
I mean…what are is the IRS going to do to me? Even if I filed I would not owe taxes. I doubt my resident country whos citizenship I am in the process of acquiring (Germany) will surrender my to the US because of this!?
“I mean…what are is the IRS going to do to me? Even if I filed I would not owe taxes. I doubt my resident country whos citizenship I am in the process of acquiring (Germany) will surrender my to the US because of this!?“
No, and the US won’t ask them to. The IRS doesn’t even know you exist, and doesn’t want to know. My adult children are in the same position as you (born outside US, never lived there or worked there). They just ignore their IS citizenship and don’t even bother to renounce.
If you need to renounce in order to be granted German citizenship, you can just renounce – no need to file any US tax forms.
Thank you for your comment! Finally someone who is in the same situation.
Yes, I need to renounce to become German.
…no tax forms ok, thats great, but should I fill 8854 at all?
No, it’s not necessary at all.
It may be mentioned in the paperwork you deal with in order to renounce, but you can safely ignore it. You’ll be asked why you’re renouncing – just explain about Germany not allowing dual citizenship.
If banks are aware of your US citizenship, be sure to tell them it’s changed when you renounce and become German. If you kept the US citizenship concealed from banks, you’re good. And as others have said, better not to enter the US tax system. If you have no SSN they won’t come looking for you, particularly not if there’s no FATCA reporting.
Thanks again! This is awesome news to me.
I will check on the bank issue, but I doubt I am registered as a US bank account holder because I remeber having read that the bank gives you an extra form to confirm this. I have used my British passport (which I also hold from birth) for anything official since aged 16.
That’s perfect. You don’t need to give another thought to the IRS. When it comes to extraterritorial taxation, they’r all smoke and no fire. Or as my grandmother used to say, they’ve got the braces but they haven’t got the britches. 😉
You can not belive how relieved I am after spending days listening to threats from tax specialists on how the US is cracking down on US citizens abroad failing to comply with tax regulations….if course not without wanting to sell me a package for 1700-2000 € to do those taxes.
I was however not completely believing it because I was not convinced that the IRS or FBI would come knocking in order to….what.. make me file my taxes? Thank goodness this is too silly to be true.
Huraahh for your Grandmother!
@ Pete the Piper,
Dept of State, which handles citizenship matters, basically doesn’t care if you’ve filed or not.
IRS is a separate matter. IRS does receive a copy of each CLN issued. However, you’re not even in their system; if you have no SSN and no assets in the US, not worth the hassle of getting into the system just to get out of it, and not worth their hassle to do anything, so they don’t.
Whether one files taxes or not, the citizenship remains terminated and the CLN remains valid.
This post, Renunciaton/Relinquishment: Interactions Between Department of State and the Internal Revenue Service contains details regarding the relation between DoS and IRS in the context of renunciation, with links to source documents.
Also of a more general nature:
A post specifically about Germany (if the specifics about the income level of 1280 USD don’t apply to you, other aspects of the post and comments might be of interest): Relinquishing your US Citizenship in Germany, Renunciation Fees in Excess of 1280 UDS deemed Excessive and Exhorbitant.
People’s experiences renouncing/relinquishing (265 pages arranged by country, about 10 pages from Germany):
Consulate Report Directory – Directory
Consulate Report Directory – Thread
Thank you pacifica777!
Yes, my administrator here in Germany told me about the rule regarding income, however currently it does not apply to me.
If a dual UK & US citizen only ever used his UK passport and never revealed his accidental unwanted US citizenship, maybe he can renounce his UK citizenship to take German citizenship and still never reveal his accidental unwanted US citizenship.
Its not about the dual citizenship. Germany does not require me to renounce my British citzenship (even though I would have been prepared to do so), because bilateral agreements between Germany and the UK (and many other EU-countries) exist on the matter. Between the US and Germany these agreements do not exist.
Probably too late now, but if you had applied for German citizenship as a UK citizen and never said anything about US citizenship (easy to do given that you do not have a US birthplace) you could have done it without paying the fee to renounce. But then again perhaps lying isn’t the best way to start out when acquiring a new passport, so pay the $2350 happy in the knowledge that you won’t need to pay for any tax preparation, as you can ignore all the IRS silliness.
The lesson here is that a dual citizen born outside the US can, if they keep their mouth shut, complete ignore any and all obligations of US citizenship, avoid bank access problems, and need not bother to renounce.
Not also that Germany is not one of the countries with a mutual collection assistance provision in its tax treaty with the US. So if the IRS decided you owed it money, Germany would not help it collect, even before you became a German citizen. (If you were a US citizen only in Canada or Denmark, you’d need to be more careful.)
Yes, its too late and indeed (for me personally) not the best way. Plus in the application form you must state the birth place of both parents. With one being US born, some questions might have been asked and I am not comfortable with or good at lying.
On the bases of giving incomplete information the German citizenship could be revoked or not granted…not that I know how they would find out…but I will be screened carefully in the process of becoming German.
The risk of ignoring the IRS seems the better risk to take than being caught for giving incomplete information whilst getting a new citizenship.
No mutual collection assistance sounds very good indeed.
Yeah, in your situation I’d say that’s $2350 well spent. Having applied for an Aufenhaltserlaubnis a number of times over the years, I should have known they’d ask for all those parental details.
The risk of ignoring the IRS, for you, is precisely null.
It will be interesting to see what if anything would happen next time we return. Back in the day I used my US passport in Germany because Americans never needed a visa, you arrived and had 90 days to sort things out with the Ausländerbehörde, but about 15 years ago they extended the same privilege to Canadians, so I now use my Canadian passport. But they wouldn’t care about US tax so no big deal. I do have German bank account opened using a Canadian passport with US birthplace but they’ve never done a FATCA check, as far as I know (and as it’s generally keep it under a thousand euro when we’re not living there, possibly under a reporting threshold anyway).
Yes! And on a closing note…its all the UK fault in my case for proposing Brexit 😉 Without this I would have been a happy EU-citizen (with UK passport) and US citizen for the rest of my days.
Do I understand the facts correctly?
!. Pete was eligible to acquire US citizenship via one USC parent but never actually exercised that option.
(He never lived or worked there, never had a SSN, never had a US passport, and never filed a US tax return. It is debatable whether or not person in that situation automatically possesses full US citizenship or the citizenship merely remains a dormant possibility unless and until there is some sort of affirmative action, either by the parent or by the individual.)
2. Pete has a naturalization application currently in progress with the German authorities. They are therefore aware of the details of his personal history because of information he has already supplied on his application forms.
What I’m wondering is if it would be worthwhile for Pete to go ahead and discuss his US citizenship situation with the German authorities to find out exactly what will satisfy their requirements for terminating US citizenship. Its possible that because of the way the US law is written, if he is willing to state (i.e. sign a declaration) that he intends to lose US citizenship upon naturalizing as a German, he will officially lose his US citizenship the day before the day he takes the oath of German citizenship. That may be all the German authorities need and he can save the US$2350 for a CLN, which he otherwise has no use for.
I seem to remember that there has already been a case in which a German court decided that the US$2350 fee for a CLN was unreasonable and prohibitive.
” – Pete was eligible to acquire US citizenship via one USC parent but never actually exercised that option.”
Not quite: I had a US passports until age 16 when I got my first British one and have renewed this one since as I travel frequently with the EU but never to the US (last visit in 1992, no close living relatives in the US). My last US passport expired in 1997 at age 16. Your assumptions are correct (Born in Germany, never lived in the US, never filed taxes, no SSN)
Ther German authorities require me to renounce the US citizenship unless my monthly salary is under the fee of 2350 USD, which is not applicable in my case.
If your income is low enough, the renunciation fee is deemed a hardship and you can therefore keep your US citizenship when acquiring German. Pete mentioned that his income is too high for this exception, so he must renounce.
I don’t think I’ve heard of anyone successfully claiming that they didn’t need a CLN because they relinquished US citizenship the moment they became German – because what’s to stop them from going and getting a US passport the next day? Add to that the German love of forms and paperwork, preferably with lots of Stempel (stamps).
He could I suppose argue with the German authorities that he never had US citizenship (born abroad to one US citizen parent, no action taken to register birth, acquire passport or SSN, never having lived in the US etc.) so there’s nothing to renounce, but I expect he’d get the same answer – what’s stopping you from going round the US consulate a day later to apply for a passport?
“I don’t think I’ve heard of anyone successfully claiming that they didn’t need a CLN because they relinquished US citizenship the moment they became German – because what’s to stop them from going and getting a US passport the next day? Add to that the German love of forms and paperwork, preferably with lots of Stempel (stamps).”
My case worker actually confirmed this too saying that no one had been successfull at attempting this… at least to her knowledge. Its either the hardship clause or renounciation once you have disclosed that you are a US citizen (having held a US passport at any given point in time is considered proof of being a US citizen).