Renunciation and Relinquishment of United States Citizenship: Discussion thread (Ask your questions) Part Two
Ask your questions about Renunciation and Relinquishment of United States Citizenship and Certificates of Loss of Nationality.
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NB: This discussion is a continuation of an older discussion that became too large for our software to handle well. See Renunciation and Relinquishment of United States Citizenship: Discussion thread (Ask your questions) Part One
One argument for filing, the one I used for myself, is that the system will get better and better (so to speak) at finding people, or at least at making life hellish, as illustrated above with money transfers. It seemed inevitable that at some point my banks would figure me out, and out me to the local gov’t which will be very happy to see my accounts (that normally they cannot see without a court order) and forward to the IRS.
My reasoning was, might as well get all the tax numbers, FBARs and returns going while it’s easy (just quietly restarted filing after 12 years of nothing). That way when/if they start to become more stringent, I can just cave in and give the banks my TIN and be done with it.
That said, it’s also quite probable that people who never file will never be bothered.
Main thing is, no rush, be informed, make your own decision.
@japanT
For large amounts, eg a yearly pension distribution, the FOREX companies give much better exchange rates, usually within 0.006% of the interbank rate.
@FredB
I am still wondering what is you argument for not just renouncing? 🙂
@Heidi
We are talking very small sums, rarely more than $100. USD. Besides, the fees are my least concern. Having all this private info shared is not good.
$100? Just mail cash, FFS.
Everything described above I’d consider denial of banking services, broadly defined. Yes it’s ultimately a consequence of US laws, but it’s not a case of the IRS directly pursuing individual US persons abroad.
@Fred (B)
I’m not sure that being in compliance will cause banks to give better treatment to US persons. (Only a few Swiss banks in the early days were demanding proof of that, based on what we know.) Other than ensuring that you have an SSN to give them, compliance is of no great use. Ultimately one may need to renounce to be treated fairly.
And excess FTC is only useful if you continue to file, so technically it can’t be a “pro” for continued filing!
@nononymous
The Swiss banks are continuing to ask for yearly proof of Fbars according to US persons we know in Ch.
@plaxy
The young people of whom you speak have no reason to be compliant prior to living in the US. File when you are required to, when working in the US. Not before, not after. There’s no great inquisition if you file your first return in your twenties.
Perhaps that’s what you meant, but it wasn’t clear.
@Heidi
I wondered about that. Switzerland is a bit of an edge case, though not surprising given the recent history.
I wonder what constitutes “proof”? A confirmation screen after submitting an online form? Though in a way it doesn’t really matter, it’s just a way of making the customer swear that they’ve done it.
“$100? Just mail cash, FFS.”
For birthdays and the like, sure. But most of the money that has been sent to me recently has been as reembursements for shopping for things that are hard to get outside of of Japan. Started doing it to see if I could start a business doing it, but not as a business. Not making a profit, thank God. While I have made friends doing this, we were all but complete strangers when the money started changing hands. No cash in envelopes. I have recommended but understandably, the have declined. Has been interesting finding work arounds. These are also drying up.
For birthdays and Christmas, my parents do not listen. They can not exchange currencies anywhere near where they live. Buying from any local bank requires their USDs to be sent to Chicago and exchanged and then sent back. Takes a month. They do not, will not believe that I can easily exchange money in Tokyo. Although, not having done so since who knows when, don’t know if I have to provide the same proof of ID and tax documentation as for money orders or wiring services now.
Not being able to send money and postage from the US costing an arm and a leg, earlier this year my parents exchanged USDs for Japanese yen and had to provide a hell of a lot of documentation to do so.
“Everything described above I’d consider denial of banking services, broadly defined. Yes it’s ultimately a consequence of US laws, but it’s not a case of the IRS directly pursuing individual US persons abroad.”
And?
“And?”
Well my point was earlier, in response to @Jane. Banking restrictions are a problem of course, but the IRS is not currently using a “magnifying glass” to track down expats/accidentals. (We’ve heard not one report of a non-compliant individual being sent a letter from the IRS because of information reported under FATCA – so not yet.) It may be small consolation to someone facing account closure, but it’s an important distinction.
As for the forex issues, that’s another matter. I assume PayPal, CurrencyFair, TransferWise etc. are not acceptable options for some reason?
I can’t imagine what sort of documentation is required to buy a few hundred dollars worth of yen, but I expect it has less to do with international regulations to prevent money laundering – certainly nobody asks questions here if I go pick up a $1000 in euro or sterling or pesos before a trip – and more to do with small-town American banks being strange, inept institutions quite possibly unaware that other currencies even exist. I was never particularly impressed by my banking experiences during the years I lived in the US.
Heidi: thanks for asking. It’s the irreversible aspect of it. It’s having to tell my homelander friends. It’s having to ask for permission to go to the US. It’s showing my kids that I’m giving up a passport that I really wanted to give them (born in 2003 & 2005), because I thought it was a good thing. It’s hoping things will get better, easier. It’s hoping RBT is around the corner. It’s trashing all my work for Democrats Abroad, all the good friends there. It’s avoiding the heartbreak, the divorce from a place that welcomed my parents and gave them wonderful opportunities they didn’t have in France. It’s a sense of loyalty. It’s a sense that I could, if necessary, restart my life in the US. It’s all emotional stuff.
I know all of this is irrational and misplaced and obsolete and I don’t really need the blue passport anymore. I know I’m not going to move back or retire there. But I’m not ready to renounce yet. I’m working on it … 🙂
Whether this works in Japan I don’t know. After a couple of ways of sending and converting money between the US, Canada and the UK were discontinued, I found this could be done fairly easily via PayPal as long as the sender and recipient each has a PayPal account in their home country, each PayPal account is linked to a local bank account, and both parties have internet and email. The slowest part of the process was the sender loading money from the bank into PayPal. This could take a few days or up to two weeks depending on country. Transferring money out to a local bank at the receiving end was much quicker. I have only used this for small sums where a percentage or two worse exchange rates doesn’t matter.
Nonononymous – ”
The young people of whom you speak have no reason to be compliant prior to living in the US. File when you are required to, when working in the US. Not before, not after. There’s no great inquisition if you file your first return in your twenties.
Perhaps that’s what you meant, but it wasn’t clear.”
If non-US-born offspring of mine wanted to experiment with making use of their entitlement to US citizenship by spending time in the US, I would definitely be advising them to file early and often, while stll living outside the US. No better way to make sure they would understand the importance of keeping their exit from the US free and unencumbered – above all, not giving me a US-born grandchild.
@Nonononymous
“”And?”
Well my point was earlier, in response to @Jane. Banking restrictions are a problem of course, but the IRS is not currently using a “magnifying glass” to track down expats/accidentals. (We’ve heard not one report of a non-compliant individual being sent a letter from the IRS because of information reported under FATCA – so not yet.) It may be small consolation to someone facing account closure, but it’s an important distinction.”
A distinction of no difference. I have been saying all along, that for myself, I am not at all worried about the IRS and their magnifying glass. I am concerned about what my banks are doing and what my bank and employers will do and how sharing this data leaves one completely defenseless against ID theft. I do not much care if the bullet is from the red army or the white army, if I get hit, I am equally dead. Additionally, as this train has not even slowed, we must expect further thrills down the line.
“As for the forex issues, that’s another matter. I assume PayPal, CurrencyFair, TransferWise etc. are not acceptable options for some reason?”
Individuals can not receive funds via PayPal Japan. Nor can we use the “Friends and family” service. To receive money via this route one must register as a business.
Other wiring services are available and I use them. But I must allow them to photo copy my Japanese ID card and another photo ID provide my nationality, cell phone number, street address, name and relationship of the person sending me the money and why they are doing so and sign acknowledgement that this info is for tax purposes. Similar is required of money orders, which they now only accept from the US. That was troublesome when that suddenly changed. Prepaid cards and rechargable cards are now popular over here too. The latest info I can find online on the systems my friends have access to is no newer than four years old. Can not find any place that currently accepts then. Have found signs tellng that other companies that offered the same were discontinuing the service at the end of that month.
I have been helping people around the workd get their fix of Japanese culture for several years now. New roadblocks are being erected constantly. Most recently, a friend in Colorado can no longer buy International Postal Money Orders. Their local PO ran out. When they came back later as directed, they were told that the PO could not order more. No official word, it seems, on them being discontinued but this has been a trend for over a year. Some US POs have them and others do not. The friend in Colorado went to every PO in the county. All were out.
Damn near each and every day, another door slams shut.
“I can’t imagine what sort of documentation is required to buy a few hundred dollars worth of yen, but I expect it has less to do with international regulations to prevent money laundering”
They were told that it was new and was to prevent money laundering and financing terrorism.
When last I exchanged $ to ¥ I was living in Mississippi. They had to send it to Chicago too. Not a lot of documentation at that time, 20 some years ago. But then again, not a lot of documentation was required to cash a money order at the Japanese P.O. either until rather recently.
@fn0
PayPal is a simple way for people to send each other money in different currencies. How else would private eBay sales work between the US and Canada?
I have both a German and Canadian PayPal account, the former set up long ago and probably not legal now since I don’t have a current residence there but who cares about rules? I considered using this as a way to transfer money back and forth but with the fees and the exchange rate, found it too expensive.
Turns out we rarely need to move money, but if we’re in Germany and need to top up the local account a relatively cost-effective technique for smaller amounts (up to $1000) is to simply make a big ATM withdrawal from the Canadian account and immediately deposit the banknotes into the German.
@JapanT
I think you have a Japan problem as much as (if not more than) you have a US problem. But that’s a separate conversation.
Out of curiosity I had a look at some Canadian forex firms’ rules. Funds have to be traceable. If it’s only getting foreign currency in cash straight from your bank account, no problem, no questions asked, they know who you are and where the money came from. But if you walk into a forex dealer with a load of cash and want to wire the equivalent to someone overseas or exchange it for a different kind of cash, either they don’t want your business or there’s a lot of paperwork. C’est la vie. (Our local gangsters prefer the casinos for money laundering – they move it through the no-skill games and let the house take its percentage. Half the profits go to charity so everyone’s happy – the government, the charities, the casino and the drug dealers.)
@plaxy
The problem with your approach – and I admit I may be guilty of overthinking this – is that when you start filing from overseas, you’ve given the US “offshore indicia”. If I moved to the US and started working, I would much rather suddenly appear out of thin air as far as the IRS is concerned – particularly as a young person who might not have had sufficient income to file in previous years. Then when you leave and vanish again, there aren’t previous returns with a foreign address to give them a clue as to where you might be.
Again, probably overthinking on my part. But that’s the approach I took back in the day, semi-accidentally, and it worked fine. (It never occurred to me that I should have filed before arrival in the US, but once there my instincts told me to never mention Canada, never report any Canadian income, and to stop filing as soon as I left.)
A large part of it is a Japan problem BUT, that problem was learned and learned well decades ago and it did not change until after Sept. 11. From that point on, things have been changing and changing,
“Out of curiosity I had a look at some Canadian forex firms’ rules. Funds have to be traceable. If it’s only getting foreign currency in cash straight from your bank account, no problem, no questions asked, they know who you are and where the money came from. But if you walk into a forex dealer with a load of cash and want to wire the equivalent to someone overseas or exchange it for a different kind of cash, either they don’t want your business or there’s a lot of paperwork. C’est la vie. (Our local gangsters prefer the casinos for money laundering – they move it through the no-skill games and let the house take its percentage. Half the profits go to charity so everyone’s happy – the government, the charities, the casino and the drug dealers.)”
Isn’t that so common in all this. Whether it is money launders ar tax cheats that these policies are supposed to trip up, the stated targets are so far ahead that it would be laughable if it were not for the fact of who is falling victim to this half baked policies. Crazy.
A client whose job is to sell the technologies to fully implement a “cashless society” said it is needed to eliminate money laundering and tax evasion. I laughed, in his face. “You’ve got to be kidding me!?” I asked. Told him that they have LONG ago moved on from cash to other things, art, real estate, prepaid cards, any number of things. He was not happy, but did not care that innocent families suffer because of this. He is aware of FATCA and doesn’t care if his own countrymen get caught up in it. Not one of my favorite people.
“The problem with your approach – and I admit I may be guilty of overthinking this – is that when you start filing from overseas, you’ve given the US “offshore indicia”. If I moved to the US and started working, I would much rather suddenly appear out of thin air as far as the IRS is concerned – particularly as a young person who might not have had sufficient income to file in previous years. Then when you leave and vanish again, there aren’t previous returns with a foreign address to give them a clue as to where you might be.”
They’re not looking. Every year US citizens leave the US, file for their part-year refund (giving their non-US address) and never file again. Why would the IRS care, and what could they do if they did?
Presumably when you took your approach, FATCA did not yet exist; being born in America wasn’t then the ineradicable global curse it has since become.
@plaxy
As I said, I’m probably guilty of overthinking. But I would never counsel my kid to begin filing US returns before a move to the US. Partly out of precaution, partly because it’s simply not necessary. FATCA doesn’t really enter into it because she and I can both dodge it; no US birthplace in her case, Canada not trying very hard in my case.
@JapanT
“I do not much care if the bullet is from the red army or the white army, if I get hit, I am equally dead.”
You may not care, but others here do. They live in countries with no banking restrictions, thanks to weak or indifferent FATCA enforcement; there’s only one bullet to worry about, and it would be coming from the IRS.
FATCA enters into it because young people are prone to fall in love and procreate. If they’re going to be living in the US during those years, they need to have a clear understanding of the importance of not inflicting US birth on any children they may produce. Filing US tax returns from outside the US teaches one very effectively about the downside of US birth.
However, the question is entirely hypothetical for me, as none of my children were ever inclined to make use of their entitlement to US citizenship.
@plaxy
I think I can give her a verbal warning without insisting she file 1040s to drive the point home!
Generally as parents we spend a good part of their youth warning them not to reproduce, so it’s not much extra work to say especially not while living in the US.