Renunciation Costs To Soar

If this report in Diplopundit is accurate, the cost to renounce U.S. citizenship will soar from $450 to $2350.

The percentage increase in the renunciation fee is 422%. With an estimated 2,378 annual renunciation of citizenship cases, this increase would net the USG an estimated $4,518,200. Using the projected FY 2014 workload, Consular Afffairs’ estimated change in annual fees collected for affected consular services is $64,003,862.

U.S. Department of State is expected to justify this with this statement:

The CoSM demonstrated that documenting a U.S. citizen’s renunciation of citizenship is extremely costly, requiring American consular officers overseas to spend substantial amounts of time to accept, process, and adjudicate cases.

Hmmm. I seems no one thought of another solution. Make the process easy. Allow it to be done via mail like Canada and many other countries do.

Renounce, Relinquish or Do Nothing

I am convinced I gave up my US citizenship decades ago, but the US State department may not agree with me, so I waffle about what I should do.dither

The way I see it, there are some real uncertainties in our future:

  • Enough money may not be raised to see the Charter challenge through to completion.
  • The Charter challenge may not win.
  • The Canadian government may cede even more to the US and stop what little protection Canadians have from IRS collection of taxes and fines.
  • Bank may or may not start asking all account holders if born in the U.S.
  • Customs officials at border crossings may intensify hassles crossing US border on Canadian passport, or even deny entry.
  • Don’t know what further actions the IRS may take to press the FATCA/FBAR/tax return issue.
  • Have no way of knowing whether coming to the attention of US State department will put family members at risk of being identified as possible US persons.
  • Have no idea of level of communication between US State department, IRS and Canadian banks.

To try to help me see things more clearly, I drew up a list of pros and cons. I’m sure I haven’t thought of all the possible ramifications of each action, since I’m still dithering. At any rate, here’s my list. Continue reading

Synopsis: Solving U.S. Citizenship Problem with John Richardson (London, Ontario)

Finally, I’m posting a synopsis of Solving the Problem of US Citizenship information session presented by John Richardson of citizenshipsolutions.ca that was held in London, Ontario on February 8, 2014.

I apologize for the delay. Other FATCA projects have consumed my life.

You can read the synopsis in the link, but here are a few highlights:

CITIZENSHIP:

John first gave an overview of US citizenship laws, tax laws, renunciation and relinquishment and many changes that have taken place over decades.

People have many differing circumstances and each one is unique. Because of the complexities, John stressed:

 “The bottom line is you have to check the law at the time the act took place.”

 For people born in Canada to one or more parent born in the U.S., John suggested they should not automatically assume they are US citizens or US persons. There are many different rules around that. In addition John questions whether the US can apply their laws on people born outside of U.S.  So, he recommended people explore that before making an assumption they must be a US citizen.

He said:

“I would never, never, never under any circumstances advise someone to simply swallow hook line and sinker, well my father was American, therefore I am American for a number of reasons.:

A Supreme Court decision from the 1960s dealt with the forcible destruction of US citizenship. John confirmed many in the room felt they were being forced to relinquish US citizenship.

John believes:

The forcible destruction of US citizenship is going to become THE argument on this issue.

 

John explained renunciation is one form of relinquishment, along with other expatriating acts like becoming a citizen of another country with the intent of relinquishing US citizenship, working for a foreign government and other actions.

For numerous reasons, John recommended people who are renouncing or relinquishing by other means should get a Certificate of Loss of Nationality (CLN) through US Department of State by renouncing or reporting relinquishing at a US Consulate.

John reported there are various reasons to

“Deal with this sooner, rather than later.”

For many different reasons, John thinks:

“U.S. citizenship is probably the most dangerous, toxic citizenship in the world today.”

Lynne advised people who became naturalized Canadian citizens may be able to get information from their Canadian citizenship file by applying through Access to Information at (http://www.cic.gc.ca/english/department/atip/form-imm5563.asp)

PERSONAL EFFECTS:

John recognized the toll these issues are taking on people.  He stressed:

“Your life, your health, your family is so, so much important than any of this stuff. If you focus on this in a way that jeopardizes the things that make life worthwhile, you’re going to let these people win–absolutely destroy your life.”

TAXES:

John said there are two types of US persons:

1. Those Who Are Compliant

2.  Those Who Are Not Compliant

No matter what, you’re going to have a problem.  “When we talk about U.S. taxes, we’re talking about much more than taxes. It’s a whole information reporting regime, which is a huge problem.”

He covered many of the issues relating to taxation, but said the most important message was:

“One thing you should absolutely not do is enter the Offshore Voluntary Disclosure Program” (OVDP).

CANADA REVENUE AGENCY, CANADIAN COURTS:

John explained that under the Canada-US Tax Treaty, CRA will not collect penalties for the IRS for Canadian citizens or residents. CRA also will not collect taxes for the IRS on a US citizen who also was a Canadian citizen at the time the tax liability arose.

Plus, under the Revenue Rule, Canadian courts will not issue a judgement for the IRS.

FATCA:

John thinks FATCA is a “gross abuse of power” by the United States.

“FATCA allows them to redefine any time they want what the information is and any person who is affected.”

 Lynne noted the proposed legislation to allow FATCA to be implemented will prevail over other federal laws, including banking, privacy and human rights laws.  Some individuals have contacted a constitutional lawyer about this and more information will be posted at Maple Sandbox (maplesandbox.ca and Isaac Brock Society (isaacbrocksociety.ca)

UPDATE: Money was raised and constitutional lawyer Joseph Arvay was retained on March 10 by Dr. Stephen Kish and Lynne Swanson to provide a legal opinion on a possible challenge to the FATCA IGA enabling legislation under the constitution and Charter of Rights and Freedoms.

 

Relinquishment of US Citizenship by Persons-Born-Dual or who Naturalised in a Foreign Country as a Minor

I was very happy to report on a born-dual friend’s successful consulate meeting this week, in which he applied for a CLN based on his relinquishment at the time of taking government employment.

However, people have reported some consulate personnel erroneously telling them that a person born dual or who acquired their non-US citizenship as a minor is unable to expatriate except by renouncing.  In fact, there is no automatic disqualification of such persons from having the capacity to perform certain other relinquishing acts.

Such consulate personnel are probably conflating s. 349(a)(1) of the Immigration and Nationality Act with all other non-renunciation methods of relinquishing one’s citizenship.  Section 349(a) (1) is naturalising in a foreign country after Continue reading

US Senate Finance Committee Submission–Richardson, Yates and Kish

Here’s an excellent submission (Request for Tax Rule Changes) to the U.S. Senate Finance Committee.

This was written by Toronto lawyer John Richardson, University of Toronto professor Dr. Stephen Kish and (this is huge!) U.S. attorney Willard Yates.  Mr. Yates’ involvement is significant because he retired from Office of Associate Chief Counsel (International) (ACCI), Internal Revenue Service after 31 years of service.

The 32 page comprehensive submission deals with everything from problems of citizenship based taxation to the financial and psychological costs of renouncing US citizenship. Despite the complexity of issues covered, it is quite easy to understand for most of us who have been around this issue for a while (although newbies may very well find it overwhelming and frightening).

The report is also posted at citizenshipsolutions.ca, John Richardson’s Canadian website designed to counsel US citizens abroad who find themselves having to live in a FATCA and FBAR world.