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
I like it 🙂
“here’s a decidedly less optimistic look at what can happen”
‘No it’s your fantasy about what you imagine could happen; it’s not based on reality.’
Once upon a time the idea that the Canadian government would throw Canadians under a foreign bus was not based on reality.
“is there a real likelihood of the IRS catching up with you 20 or 30 years from now?), ”
‘He’s is a European, not a fugitive from justice. Why are you talking about him like he’s a criminal?’
He’s a European and a fugitive from injustice. We observe that the US (and Canada and some other countries) treat him like he’s a criminal because that is how the US treats its diaspora.
“NRAs aren’t subject to US tax law.”
I don’t have to file new US tax returns each year because the 10% withholding deducted from US-sourced dividends is the correct amount of US tax, but I am subject to US tax law.
The US government and I used to agree with each other that I remain subject to US tax law as a US citizen for the period up to the day before my renunciation. Just now I realize that the US government persuaded a court to overturn that. Hmmm. If some wealthy members of the US diaspora would like to donate to handle an appeal properly, maybe the US government will persuade an appeals court to overturn Cook v. Tait.
“Treaty mutual collection agreements are about one country collecting another country’s assessed tax debts. Not relevant for those with no such debts.”
The Canadian government called Dewees’s form crimes a tax debt even when he didn’t owe any taxes.
==
“I left America in the Sixties. The IRS sent me a refund cheque for my last part-year in the US (I didn’t file for it – I didn’t even know it was due.)”
The IRS is required by law to credit you for withholding, and if your withholding wasn’t embezzled it looks like they did so. The IRS is allowed to make a substitute for return if you didn’t file, and it looks like they decided to do so. But I didn’t know they were allowed to pay the refund to you if you didn’t file. I thought that after some number of years they would have to transfer the credit to some account of the US government.
“I never heard another word from the IRS.”
Yeah we’ve learned here that the only people who get punished are those who try to comply.
“I too applied for SS, in due course, and I now receive my monthly cheque from the SSA, tax-free.”
Doesn’t Canada tax it?
“Once upon a time the idea that the Canadian government would throw Canadians under a foreign bus was not based on reality.”
And it still isn’t. There have been no reports of dual US-Canadians being “come after” by the IRS as a result of FATCA.
“He’s a European and a fugitive from injustice. ”
Rubbish.
““NRAs aren’t subject to US tax law.”
I don’t have to file new US tax returns each year because the 10% withholding deducted from US-sourced dividends is the correct amount of US tax, but I am subject to US tax law.”
To be precise, the US payer is subject to US tax law.
“we’ve learned here that the only people who get punished are those who try to comply.”
Yes. By filing they’ve agreed to pay. Fiscal fingers may get broken if they don’t.
“Doesn’t Canada tax it?”
No. I’m not Canadian. My country taxes it.
“The Canadian government called Dewees’s form crimes a tax debt even when he didn’t owe any taxes.”
Dewees (a US citizen residing in Canada and the owner of a CFC) voluntarily entered OVDP, thus making it possible for the IRS to assess him for tax and penalties. Petethepiper is a UK citizen residing in Germany and applying for German citizenship, therefore soon to be a dual German-UK citizen tax-resident only in Germany.
Is there a thread in which to report how the renounciation process goes? I have started the process by sending in the required information to the Emailadress “renunciations[at]state.gov”
They required these answers and documents in order to scedule an appointment:
” Thank you for your inquiry regarding the renunciation of your U.S. citizenship.
Please read the following general information on the website of the U.S. State Department regarding renunciation:
Renunciation of U.S. Nationality
Renunciation of U.S. Nationality by Persons Claiming a Right of Residence in the United States
Once you have read the information at the above links, please review and complete the Statement of Understanding and Oath of Understanding which are used in connection with renunciation of U.S. citizenship and send these back to us via e-mail:
DS-4081 Statement of Understanding
DS-4080 Oath of Renunciation
The original documents will have to be signed before an American consular officer at the time of your renunciation.
After you have formally renounced your U.S. citizenship, you will also be required to file IRS form 8854 directly with the Internal Revenue Service, 11511 Roosevelt Boulevard, Drop Point S607-F8854, Philadelphia, PA 19154. For additional details and to download the form, please see the IRS website at http://www.irs.gov or you may call the Philadelphia International Customer Service daily from Mon-Fri at 001- 267- 941- 1000.
In order for us to schedule your appointment we also need the following from you:
• A telephone number where you can be reached during the day;
• A copy of the data page of your current U.S. passport;
• SSN;
• A copy of your U.S. naturalization certificate or Consular Report of Birth Abroad, if applicable;
• Current address;
• Last known U.S. address;
• Other nationality, if applicable;
• Date when you acquired other nationality;
• Manner in which you acquired other nationality (e.g. by birth, application, foreign mother/father etc.);
• Please list all periods of time that you have resided in the U.S., from birth until present time;
• A copy of your German Einbürgerungszusicherung (if applicable) or a copy of your foreign passport.
In addition, you may choose to submit a separate written explanation of your reasons for renunciation at your appointment. At this time you must also turn in your current U.S. passport and show proof of any other nationality.
The renunciation fee is $2.350 or the equivalent in EURO which must be paid in cash or by credit card on the day of the official renunciation.
We hope this information will be of assistance.
Kind Regards,
U.S. Consulate General
Passport & Citizenship Section
Giessener Str. 30
60435 Frankfurt am Main
Germany “.
All the links to the documents are outdated and lead to error pages but you will find them anyhow with a tiny bit of effort.
I think my reply will be funny to read with no current passport, no SSN, no residence in the US (ever) and of course no comment on why I want to renounce, although I did mention German citizenship in the first Email I sent them.
@ Petethepiper,
Thanks for sharing your e-mail from the embassy in Germany. It’s good to know how things are being done in different locations.
Actually, there seems to be a fair number of people of people with no SSN and no current (or even never had) US passport. You’re in good company 🙂 As for no written comment on why you want to renounce, it’s *very* common to leave that blank. BTW, they’re not supposed to ask you your reason at your meeting, but sometimes they do. If they do, I think it’s best to answer, to have a neutral one-liner ready, just to keep things running smoothly — and you already do, that you’re acquiring German citizenship.
The meetings are usually pretty brief in terms of face time, usually about 5 or 10 minutes with a clerk, 10 minutes with a consul or vice consul, most of which is signing and pushing papers back and forth. There may be wait time to see the clerk and then to see the consul, so your entire visit to embassy could take an hour or so, hard to predict.
Yes, there is. The Consulate Report Directory thread.
Petethepiper: why did you tell Germany about your US personhood? Who gave you US personhood, did they report your birth to the consulate? Did you travel to the US on your UK passport in the past?
Reason I ask is that you may have no reason to do anything, much less spend $2350.
-I’ve read that Germany allows US citizens not to have a CLN when they renounce because the cost is exorbitant.
-How would Germany know you have a consular report of birth (US)? Perhaps you don’t know yourself.
-Only reason to get in order is to travel to the US. If you are a citizen you need a US passport. Unless they have no clue. If you are born in the UK and travel on a UK passport, never had a US one, and were in the US before on UK passport, perhaps it is because even you have no clue that there was a consular report of birth.
-Never tell your banks about your US personhood. They don’t know, and shouldn’t know.
-If you are completely under the radar in all these circumstances, do consider the one option that costs you nothing in time, money, or stress. That option is DO NOTHING. Do consider it. The hypothetical risks of doing nothing are probably similar to those of winning Euromillions. In fact, several Europeans win every month at Euromillions, while nobody “under the radar” has ever been deported to the US for not filing or renouncing or complying.
Petethepiper — sorry if my comment above sounds aggressive — didn’t mean to; the questions were rhetorical, but they sound quite rude as I re-read them.
Know that you are not alone, and that this site is quite therapeutic. Cheers.
All this is answered futher up in the thread too.
“why did you tell Germany about your US personhood?”
They ask for all your citizenships. I did not realize at the time that lying was an option and probably would not have even if i had known. They ask for parents birthplace. My Dad is from the US.
” Who gave you US personhood, did they report your birth to the consulate?”
I got it through my father, the reported my birth to the consulate, yes.
“Did you travel to the US on your UK passport in the past?”
No, my last visit as a child in 1992 was on my US passport that I had at the timt.
Reason I ask is that you may have no reason to do anything, much less spend $2350.
“I’ve read that Germany allows US citizens not to have a CLN when they renounce because the cost is exorbitant.”
Only if you monthly salary is under the amount of the fee which is not applicable in my case.
“How would Germany know you have a consular report of birth (US)? Perhaps you don’t know yourself.”
Well, I do know because I have the document and they know because I gave valid information.
“Only reason to get in order is to travel to the US. If you are a citizen you need a US passport. Unless they have no clue. If you are born in the UK and travel on a UK passport, never had a US one, and were in the US before on UK passport, perhaps it is because even you have no clue that there was a consular report of birth.”
I was born in Germany and had a US passport with which I travelled to the US as a child, plus I know that my birth was reported. I got my first british passport at age 16 and never went back to the US one for practical reasons. As a EU citizen I can work and move freely within the entire EU.
-“Never tell your banks about your US personhood. They don’t know, and shouldn’t know.”
They dont know.
“If you are completely under the radar in all these circumstances, do consider the one option that costs you nothing in time, money, or stress. That option is DO NOTHING. Do consider it. The hypothetical risks of doing nothing are probably similar to those of winning Euromillions. In fact, several Europeans win every month at Euromillions, while nobody “under the radar” has ever been deported to the US for not filing or renouncing or complying.”
Not renoucing wont work for me as I will have to renounce in order to become German = remain a EU citizen after Brexit next year.
“I did not realize at the time that lying was an option and probably would not have even if i had known.”
It’s actually not a workable option, IMO.
Lie to a bank? Sure, if that’s what floats your boat.
Lie to the IRS? Normal practice.
Lie to a country you’re asking for citizenship? Not a good idea at all IMO. Once revealed, the lie would probably lead to a refusal, and possibly loss of EU residence rights, post-Brexit.
There’s no better way to invest $2350 than shedding the lying IRS liars from your life.
Besides which, one has an attachment to one’s country, does one not? And would like to be honest in one’s application for citizenship which when granted makes one proud.
As opposed to US citizenship, which makes one (this one at least) feel deeply depressed and embarrassed.
No worries. I did not perceive your response as agressive.
Yes, this website has proven extraordinarily valuable to me as I would have been a “victim” of the tax complicance business.
Just 10 mins ago, I received yet another offer for a streamline procedure “tax package” for ~2000 € emphasizing that I must urgently get an SSN before renouncing and can not renounce with complete tax papers!! I am saddend by this false information that I am sure many ppl are fooled by. Not the part about becoming compliant, but the part about saying that I can not renounce with taxes filed. As you can see from the letter I received from the embassy, there is not mention of such as it is not required.
These tax ppl very well know that once I have renounced I can not get an SSN or more likely would not want to thats why they attached forms and links with the urgent advice to do this “as soon as possible”. Imagine being pushed into the tax system because of being bullied into getting an SSN and starting the streamline procedure. (Quote: ” You must become compliant urgently BEFORE starting the renouning procedure”. And in phone conversation: “There are high fines if you dont”. ) The question: How are the IRS going to enforce the fine precisely, just got me an annoyed answer e.g. “well its the law”.
Thanks to you all for helping!
“He’s a European and a fugitive from injustice.”
‘Rubbish.’
OK. He’s a European and a fugitive from rubbish. But he’s still a fugitive from injustice, like lots of us are.
‘NRAs aren’t subject to US tax law.’
“I don’t have to file new US tax returns each year because the 10% withholding deducted from US-sourced dividends is the correct amount of US tax, but I am subject to US tax law.”
‘To be precise, the US payer is subject to US tax law.’
Yes that too, but me and other NRAs too. If a US NRA resides in a country that doesn’t have a tax treaty with the US, but has an account with a securities dealer in Canada, and US payers deduct 15% instead of 30% withholding because they’re sending the payment to a securities dealer in Canada, US law compels the NRA to pay the other 15%. Now the universe is about to explode because I agree with the law.
Enforcement is another matter. If the NRA never goes to the US then maybe the US will have to do the same thing that the US did to, for example, Noriega. No wait, it’s easier for them now. They have drones and don’t have due process.
“Doesn’t Canada tax it?”
‘No. I’m not Canadian. My country taxes it.’
OK. You said you get your US social security tax-free but really your country taxes it. Even though you and I are on the same side, please don’t call it tax-free because we have enough trouble with homelanders thinking that their diaspora lives tax-free.
“The Canadian government called Dewees’s form crimes a tax debt even when he didn’t owe any taxes.”
‘Dewees (a US citizen residing in Canada and the owner of a CFC) voluntarily entered OVDP, thus making it possible for the IRS to assess him for tax and penalties.’
The IRS could assess him anyway. The problem is that the Canadian government collected for the IRS. The difference between assessing and collecting is huge.
As we know, Dewees was not a Canadian citizen. Precisely two countries – Canada and Denmark – will collect on behalf of the IRS against residents who are not their own citizens (but not against those who are). It’s the exception that proves the rule: you have to be mighty stupid/unlucky for the IRS to collect outside the US. (And vice-versa: the Danes used this against someone in the US, I read once.)
@Pete
You wouldn’t want to expose yourself to any risk but it would be fun I’m sure to send this link in reply to all the tax compliance firms begging for your business.
“If a US NRA resides in a country that doesn’t have a tax treaty with the US, but has an account with a securities dealer in Canada, and US payers deduct 15% instead of 30% withholding because they’re sending the payment to a securities dealer in Canada, US law compels the NRA to pay the other 15%. Now the universe is about to explode because I agree with the law.”
ND, do you think of yourself as a “US NRA”? That seems so odd, to me.
Tax being withheld on US source income doesn’t make you subject to US tax law. It just means you’re only legally entitled to receive the payment less US tax due.
“You said you get your US social security tax-free but really your country taxes it. ”
No, I receive it tax-free. And subsequently include it in my self-assessment return in order to pay the correct amount of tax.
“please don’t call it tax-free because we have enough trouble with homelanders thinking that their diaspora lives tax-free.”
I’m not part of any diaspora. And I don’t care what US residents think about my tax bill, even supposing they ever thought about it which I can’t imagine why they would.
“The IRS could assess him anyway.”
We’ll have to agree to differ on that. Poor devil, I suppose they’re now going to hit him with this transition tax. So unfortunate that that lawyer got him to enter OVDP.
@Nononymous
I considered some smartypants answer but will it stop them practising like this? I doubt it…
So to me the reply is not worth the bites it takes to send the mail, at least not until I am done with the entire renouncal procedure. Who knows what I will do then out of joy and feeling 10 miles tall.
I said:
“I’m not part of any diaspora.”
To explain: my ancestors were part of a diaspora, from Europe to North America. I moved back to the point of origin – untouched by non-European DNA due to America’s hysterically stratified social structure during the 17th – late 20th century.
@plaxy
“I’m not part of any diaspora.”
Don’t forget to count yourself as part of the steadily expanding world-wide population of ex US citizens. Its a diaspora I’m certainly proud to be a member of and we all have something very precious in common.
Because of its stupid laws the US has managed to turn the meaning of the word diaspora upside down.
‘ND, do you think of yourself as a “US NRA”? That seems so odd, to me.’
You mean I shouldn’t rely on my CLN? You could be right.
‘Tax being withheld on US source income doesn’t make you subject to US tax law. It just means you’re only legally entitled to receive the payment less US tax due.’
If the payer didn’t withhold enough then I’d receive more than I’m legally entitled to, and if I didn’t file a 1040NR they could drone me (though they could drone me anyway).
‘I’m not part of any diaspora.’
You rely on your CLN? (Or your status was something other than US citizen, I’ve forgotten.)
“The IRS could assess him anyway.”
‘We’ll have to agree to differ on that.’
It doesn’t matter if you agree or not. A law specifies how the IRS makes an assessement. They file some form in an IRS office in Washington, D.C. In a few cases a law forces a delay before the IRS can legally make an assessment, but when the IRS violates that law there is no punishment. The IRS can assess anyone for anything.
Collection is vastly different from assessment. In a few cases a law prevents the IRS from making collection, and when the IRS violates those laws there is a law to compensate the victim (26 USC section 7433) but there’s still no punishment because courts don’t enforce the law.
Canadian law prevents the IRS from collecting directly from a Canadian financial institution unless the Canadian financial institution voluntarily participates. That’s why CRA got involved in screwing Dewees.
I think the US’s diaspora is the steadily expanding world-wide population of people who still are US citizens, not the steadily expanding world-wide population of ex US citizens
maz –
“Because of its stupid laws the US has managed to turn the meaning of the word diaspora upside down.”
Nah. Only in US-speak, where people are regularly described as nonwilfully delinquent. Doubleplusungood nonsense, IMO.
I’m certainly a former USC and former USCs certainly have a lot in common, but I wouldn’t describe us as a US diaspora. I’m a little allergic to being described as a US anything. 🙂
@ND
It really doesn’t matter what the IRS decides to assess against US citizens abroad, at the end of the day, with the exception of non-citizens of Canada or Denmark who happens to live in either of those countries (or per standard disclaimer have US assets/income etc.). Really, other than those unfortunate souls, who cares? Canadian financial institutions do not participate in collection, voluntarily or otherwise. (Your experience was presumably something different; no need to repeat the story.)
Regarding Dewees, CRA had no choice but to collect, under the tax treaty, and frankly Dewees (via his lawyer) mostly screwed himself. In addition to attempting compliance, I believe he paid a fine in order to contest it, and lost.
“If the payer didn’t withhold enough then I’d receive more than I’m legally entitled to,”
I wouldn’t worry about it. They can just take it off the next payment, if there is one, or send you a bill, which you can then pay.
“The IRS can assess anyone for anything.”
You vastly overestimate the degree to which USCs living elsewhere have to live in fear of the IRS. They don’t assassinate USCs living in Canada, or even Japan. They don’t file substitute returns for USCs living in Canada and get Canada to collect. It’s just a tax agency – a very malign tax agency but still just a tax agency.
“Canadian law prevents the IRS from collecting directly from a Canadian financial institution unless the Canadian financial institution voluntarily participates. That’s why CRA got involved in screwing Dewees.”
The US-Canada treaty sets out the circumstances in which Canada will collect from non-citizens. Worth a read (for USCs living in Canada and not holding Canadian citizenship).
“The IRS can assess anyone for anything.”
‘You vastly overestimate the degree to which USCs living elsewhere have to live in fear of the IRS. They don’t assassinate USCs living in Canada, or even Japan.’
Assessment and assassination differ too.
They assessed my wife, who never was a US person and never had any US-sourced income.
They assassinated (though not for taxes) Anwar al-Awlaki, who was a US citizen.
‘They don’t file substitute returns for USCs living in Canada and get Canada to collect. ‘
They can though.
They can also file substitutes for returns for someone who never was a US person, and assess, and get Canada to collect. The SFRs and assessments can be 100% fraudulent and CRA will repeat what CRA did to Dewees.
@ND
“That’s why CRA got involved in screwing Dewees.”
The CRA got involved because the he didn’t bother to become a Canadian citizen.
P.S. I mentioned “They assessed my wife, who never was a US person and never had any US-sourced income.”
In fact they also collected from my wife, who never was a US person and never had any US-sourced income. They were able to collect because we filed a joint return on which we were jointly entitled to a refund of withholding that I had paid. They collected from me at the same time, but they actually sent a letter to my wife stating that they collected from her.
Later they altered their records to delete the fact that they collected from her and even delete the fact that she had filed joint returns with me. As always, courts didn’t give a flying fig.