Renunciation and Relinquishment: What are the differences? Is there a difference?

We often use separate terms for “renunciation” and “relinquishment” since there are some notable differences between renunciation and the other methods of terminating one US citizenship. However, renunciation is actually one of the 7 methods of relinquishment, as set out in Immigration and Nationalities Act, s. 349(a).  This post explains some of the similarities and differences.

 

RENUNCIATIONImmigration and Nationalities Act, s. 349(a)(5)

Renunciation is only form of relinquishment where the relinquishing act itself takes place at a US consulate. It is performed by taking the oath of renunciation (form 4080). Form 4081 (Statement of understanding of consequences) is also required. Form 4079 (Request for determination of loss of citizenship) is not strictly required, but the DOS procedure manual does state that “it may prove useful” regarding intent and it seems that most consulates do require it.

Depending on the consulate, renunciation may take one or two visits.   Since 2012, there seems to be a trend to switch to one visit.

Since July 2010, there has been a $450 fee for renunciation.  It increased to $2350 on 12 September 2014.  This fee is payable at the visit where you sign your papers.

In the case of renunciation, the loss of citizenship is effective, for all purposes, as of the date you sign the forms at the consulate.

RELINQUISHMENT BY OTHER MEANSImmigration and Nationalities Act,
s. 349(a)(1)(2)(3)(4)(6)(7)

Of the remaining 6 methods of relinquishment, the most common means is by naturalisation in a foreign country s. 349(a)(1) with the intent of relinquishing one’s US citizenship.

[This is of particular interest in Canada because whilst over 100,000 US-born Canadian citizens believe themselves to be “Canadian Citizen Only,” according to the 2006 census, it’s believed that almost none have a Certificate of Loss of Nationality because we were told we terminated our US citizenship automatically upon taking Canadian citizenship, particularly prior to 1990 when the administrative presumption changed, and almost no one seems to have even heard of a CLN before 2011.]

In the case of relinquishment not done by renunciation (eg. naturalisation), although the loss of citizenship occurs at the moment the relinquishing act is performed, the relinquishment is not effective in the eyes of the US government until the US government is notified by signing forms at a US consulate. Required forms are 4079 (Request for determination of loss of citizenship) and 4081 (Statement of understanding of consequences). It’s also a very good idea to supplement your 4079 with a statement illustrating your intent, how your post-relinquishment conduct has been consistent with lack of US citizenship.  Your post-relinquishment conduct would include indicators of loss of citizenship such as not voting in US elections, travelling on a US passport, etc.

Your CLN will show that the US  govt recognises your loss of citizenship did occur on the date you performed your relinquishing act (eg. naturalisation) not the date you signed your CLN application.

When you attend at the consulate regarding this type of relinquishment, you’re essentially notifying them that you already have relinquished.  Consequently, this requires only one consulate visit.

There is no fee for processing relinquishments done under these sub-articles.   UPDATE:  September 2015 – Dept of State has announced relinquishment-based CLNs will cost $2350 beginning November 9, 2015.

Once this is done, the US government will consider the loss of citizenship effective as of the date of the actual relinquishment, except IRS will consider the loss to have occurred on the date you signed the forms at the consulate.

This IRS policy became effective on 4 June 2004, so it may not apply to you if your relinquishing act was performed prior to that date, in which case you ceased to be a citizen before the law came into effect.  Please see Read These if Relinquishing Act Performed Prior to 4 June 2004 regarding this.

 

530 thoughts on “Renunciation and Relinquishment: What are the differences? Is there a difference?

  1. Hi, has anyone obtained a backdated CLN based on a a “relinquishment” ( becoming a Canadian citizen in 1992 with the intent and knowledge that they would lose their US citizenship) but then still using a US passport on occasion and having it renewed….we could give real good arguments as to why….. but at the end of the day….the passport was still used.
    Never saw the connection between passport use and citizenship???? just was like an extra convenience to have 2 passports???
    thanks

    • cowbell,

      If *an extra convenience* is your only argument for having a US passport, you’ll likely have to have the luck of the gods to be able to claim a relinquishment.

      The fee for both renunciation and relinquishment expatriation is US$2,350 starting November 9, 2015. See: isaacbrocksociety.ca/2015/09/07/the-2350-relinquishment-fee-does-not-mean-that-people-should-simply-renounce-citizenship/.

  2. Hi Don,

    You do not have to give a reason why you have decided to renounce.

    It is optional on the DS-4081 https://eforms.state.gov/editdocument.aspx?documentid=55 to “make a separate written explanation of my reasons for renouncing/relinquishing” if you want to. Generally one does not and it is not required nor expected.

    At the consulate, they usually do not ask why you’ve decided to renounce. But occasionally someone has reported that they were asked. So, I think it’s good to be ready with something short and non-controversial, just in case they do. You don’t have to give a reason, but it seems to me like the kind of situation where if you’re asked, things go more smoothly if you give an answer, as long as it’s short and innocuous.

    I suggest having a one-liner ready, something to the effect of it’s because your entire life has been taking place and will always take place in Canada (or whichever country it is) and you do not wish to have participation in or allegiance to more than one country, or as PatCanadian commented, ” My reply was, “Well not really. I live here now (in Canada).”

    You can read reports of people’s renunciation experiences in the Isaac Brock Society’s Consulate Report Directory. It’s about 220 pages, arranged by consulate location. http://isaacbrocksociety.ca/consulate2/

    The Dept of State’s manual on renunciation is at this link: http://www.state.gov/documents/organization/115645.pdf

  3. Thanks Portland.

    I spoke with John Richardson. He says:

    Any taxation of an RRSP on renunciation of citizenship depends on whether the person renouncing is a covered expatriate.

    Most people would not (pay tax to the IRS on an RRSP on renunciation.)

    John also says:

    Terry Ritchie generally is an excellent commentator on cross border tax issues.

    Renouncing U.S. citizenship along with the possibility of being subjected to U.S. Exit Tax rules makes for a very complex situation.

    Unfortunately, it is difficult to convey the complexity in an interview as short as this. As a result, the interview has incomplete information and in some cases misleading information. At a minimum, further research is required.

    I will contact Rob Carrick and urge him to do another interview with John.

  4. Here is a video from Carrick Talks Money in today’s Globe and Mail.

    Does it make financial sense to renounce American citizenship?

    Terry Ritchie of Cardinal Wealth Management gives the “come clean” bath. (Hello? We’re not dirty!)

    He says something I have not heard before. He says upon renouncing, there is an “immediate 30% tax imposed” on RRSPs.

    Does anyone know where that came from? I have not heard of anyone renouncing who has had to pay that and don’t recall ever reading that. Is that accurate? Is it fear mongering? Is it related to the Exit Tax?

    Rob Carrick concludes:

    “I think you just convinced me not to suggest people renounce. It’s just too much trouble and too much money.”

    There is no mention of folks who relinquished years or decades ago. There is no mention of There is no mention that people are being forced to renounce so they can have normal lives. There is no mention of FATCA, FBARs or FinCen.

    Ther is no mention of of how much trouble and how much money it is to not renounce or relinquish.

    We need to see if John Richardson can do a video with Rob Carrick.

    • Hi Lynne. Pretty dumb of Carrick to try and cover the subject in 2 minutes. The ‘immediate 30% tax on RRSP’ probably refers to line 7b of the exit tax form 8854. The full value of an ‘ineligible tax deferred account’ is included in income for that year.
      There are several issues. Is it certain RRSPs are ineligible? Why bother filing a 8854? Why mention your RRSP? If you are a dual at birth, the net worth test doesn’t apply. Etc. Etc.
      As Todantsteur posted on IBS “in the cross border tax area , the (accountant) captures its’ prey with ignorance and fear.” Mr. Ritchie’s comment about not being able to go to the US after renouncing is fear mongering. He is also wrong in his statement that you need to be compliant in order to renounce.

  5. Patrick Cain has an excellent article at Global.

    Unwilling dual citizens face 10 month wait to shed U.S. citizenship in Toronto.

    It tells the story of Dale who flew to Calgary from Ontario to report his relinquishment because of the long waiting list in Toronto and no response from other Canadian consulates.

    The U.S. military veteran “really screwed things up. (He) served five years (in Vietnam) then fled to Canada.”

    Like many of us, Dale did not receive a CLN when he became a Canadian citizen.

    “Once FATCA hit the news, I said: ‘This is ugly stuff, and I don’t want any part of it,’” he explains.

    For people who have to renounce instead of report a relinquishment for a CLN, the huge increase in the fee is not slowing down the rate of renunciations. Cross-border accountant David Lesperance says:

    “The resentment is there, but the cost is not enough for them to not do it, because the relief they will get from having ceased to be a U.S. person is greater than the cost. I haven’t had a single client who has said ‘I was going to expatriate, but they increased the cost, and not I’m not going to.’”

    I suspect rates of renunciation would be even higher if the cost was lower and the process was simpler–like how easy and economical it was for Ted Cruz to renounce Canadian citizenship.

  6. @ Briggs,

    Congratulations! It’s such a joy to get that envelope! To me, getting my CLN was a great feeling that my life back on track, and as did yours, mine came earlier than expected, so I was really surprised, kind of in shock – happy shock! I’m glad to everything worked out for you and relatively quickly.

  7. Good day to all! Just stopped at mail box and in it was the Xpresspost envelope I purchased when I had my appointment at consulate in May to relinquish US citizenship. In it contained the CLN and destroyed passport. I was pleasantly surprised, I was told it would take at least a year.

    Thought I should share the good news.

  8. Thanx for your advice and information. I think I managed to work my way through the clicks. It seems, as you say, that they will send me a copy in my citizenship file, which may include a copy of the oath. Some on-line versions I found mention pledging loyalty to the Queen of Canada and her heirs. As remember it in 1974 we still had the right to a British Passport. I don’t know if that still applies at this date. In a large sense in 1974 those who got their citizenship then were still British Subjects?
    It is all interesting and confusing. Glad I ran onto your website. I am filling out the forms in handwriting carefully page by page. The advice on the forms it to contact an attorney. I would think in my case that would not be necessary, as yet anyway. Thanx again..Uli

  9. @Ulli, Congratulations on your retirement. That’s a milestone to be celebrated, but I do understand it can be quite an adjustment. I don’t know exactly when Lynne will be able to take part again in Maple Sandbox; right now she’s just concentrating on getting better.

    I don’t think you’re going to find the previous oaths on the govt website. I got mine by writing away and asking for a copy of all my records around citizenship. A copy of the oath I signed was included in the documents.

    Lynne had given you the link earlier to apply for your records, but here it is again, http://www.cic.gc.ca/english/DEPARTMENT/atip/requests-atip.asp

    The instructions are on the site (and are pretty straightforward I found), and the fee is only $5.00. But, if you have all of the documents from your citizenship ceremony, I would think that would be included? No?

    John Richardson has given several information sessions on ‘solving the problems of US citizenship’, and can be contacted through his website http://citizenshipsolutions.ca/

    I don’t know what his fees are (or any other lawyer for that matter), but you (or your partner) can read the information on his website and choose to  contact him and see if you want to go any further with him (or not).

    I don’t believe it’s necessary to send them originals when you submit the paperwork for relinquishment. I have checked into the requirements, and they want it submitted by email, so obviously that could just be a copy.

     

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