Category Archives: Relinquishment and Renunciation

Renunciation Costs To Soar

Citizenship, FATCA, Relinquishment and Renunciation

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

FATCA, Relinquishment and Renunciation

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 Renounce, Relinquish or Do Nothing →

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

Canadian Information and Resources, Citizenship, FATCA, FBAR, General Info, IRS, Relinquishment and Renunciation

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

Citizenship, Relinquishment and Renunciation

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

US Senate Finance Committee Submission–Richardson, Yates and Kish

Citizenship, FATCA, FBAR, IRS, Relinquishment and Renunciation

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.

Cruzing in Reverse

Citizenship, FATCA, IRS, Relinquishment and Renunciation, , , , , , ,

Canadian immigration lawyers have said U.S. Ted Cruz should be able to renounce Canadian citizenship “lickety-split” if there are no security or mental health issues.
Cruzing Out of CanadaA letter/article from Lynne Swanson (aka Blaze) to Senator Cruz asks him what’s taking so long to shake his embarrassing Canadian citizenship.  Cruzing In Reverse also tells Senator Cruz how different the situation is for “accidental American” Canadians who simply (like him) want to shake free from their country of “technical” citizenship.
Continue reading Cruzing in Reverse →

Expatriation Appointments at Vancouver – Now in ONE Meeting!

Citizenship, Relinquishment and Renunciation

It’s been months since I’ve seen any availability for Vancouver appointments. Thanks to Cyal8rUS, who posted the following comment on the “About the Isaac Brock Society” page:  Quote “If someone with authorship privileges would be able to blog this: The Vancouver US Consulate FINALLY has new appointments available for “other” ACS services. If you have been trying to book a renunciation appointment, get there quickly.  …” End Quote  So, I posted on Brock and here.  Seems there’s been quite a change at Vancouver.

The Vancouver website says;  “If you would like to make an appointment to renounce or relinquish your U.S. citizenship, please email VancouverCLN@state.gov ”  So, I e-mailed that address a few minutes ago and got an immediate automated reply (very comprehensive with detailed instructions).  Of particular interest is this paragraph [emphasis added]:  Quote “IMPORTANT NOTE REGARDING APPOINTMENTS.  If you arrive fully prepared for your appointment, we will likely process your loss of nationality in one interview.  If you do not have the forms filled out or if you do not have all required original evidence, you will need to return for a second appointment.” EndQuote
So:  (1) only one visit is required, (2) you must book through Vancouver.CLN@state.gov (not through the online calendar).
Full text of the e-mail after the arrow. Continue reading Expatriation Appointments at Vancouver – Now in ONE Meeting! →

Relinquished before 2004? Applying for CLN now? What are the IRS consequences?

Citizenship, IRS, Relinquishment and Renunciation, ,

There’s no question with renunciation (Immigration and Nationalities Act, s. 349(a)(5)).  You are relinquishing your citizenship and notifying the US government of it at the same time, and that’s the date your US citizenship ends.
But what if you relinquished your citizenship by a different method of INS, s. 349(a), such as taking citizenship in another country with the intent to relinquish your US citizenship (349(a)(1))?
The State Department is clear.  No matter when you notify the US govt of your relinquishment, once your CLN application is approved, your US citizenship ended on the date you actually relinquished it (that is the date your performed the relinquishing act, eg. naturalised as a citizen of another country — this date is indicated as your expatriation date on the the CLN.)
The IRS, however, according to s. 877A(g)(4) of the US Tax Code, considers the date of your relinquishment for IRS purposes is not the date of your actual relinquishment but the date you notified the US government of it (your consulate meeting).  This was not the case prior to 2004, however [the relevant section was 7701(n) in 2004 and it was replaced by 877A in 2008].
So, what if you relinquished your US citizenship long ago, but only recently learned of US law and policy changes which make it important to be able to prove you are not a US citizen, and wish to obtain Certificate of Loss of Nationality (a document you probably never even heard of before)?  What if the current law regarding IRS and citizenship termination did not exist at the time you relinquished?  Logic  leads one to the conclusion that laws passed after a person ceases to be a citizen are irrelevant.  The IRS has never made a definitive statement on this issue, however their instructions for the 8854 (expatriation tax form) are only directed at people with expatriation dates “after June 3, 2004.”
Tax lawyers Michael J. Miller and Ellen Brody have just published an excellent article on this matter, Expats Live in Fear of the Malevolant Time Machine, in which they point out the legal, as well as common sense, absurdity of a retroactive application position.  It’s very clear reading with useful references to legislation and case law as well.

Twenty Ways IRS Can Find Yankees (That May Include Us!)

Citizenship, FATCA, General Info, IRS, Relinquishment and Renunciation, , , ,

Yikes! This is scary stuff!   Twenty Ways IRS Can Find Yankees.  That could include those of us who have not thought for decades we were “Yankees.”
This somehow reminds me of Simon and Garfunkel’s Fifty Ways to Leave Your Lover.(I’m showing my age again.)

Just slip out the back, Jack
Make a new plan, Stan
Don’t need to be coy, Roy
Just get yourself free
Hop on the bus, Gus
Don’t need to discuss much
Just drop off the key, Lee
And get yourself free.

We thought we did all those things ages ago.  We hopped on the bus (or plane), slipped out honestly, made a plan for our lives in our new countries and had no need to be coy.  We didn’t discuss much because US Consulate was clear and firm. We were no longer “Yankees.”
Now, we need to find new ways to drop off the key and get ourselves free. Can we come up with 50 ways or even 20 to do that?

FATCA: The Death of the American Economy

FATCA, IRS, Relinquishment and Renunciation, ,

I’ve never heard of Adam Bilzerian or The Bilzerian Report, but this guy understands FATCA:  The Death of the American Economy.

Mr. Bilzerian predicts

On January 1, 2013, the Foreign Account Tax Compliance Act (FATCA) will go into effect, thereby causing the greatest exodus of capital from the American economy in history.

He gives numbers from Washington Post to support his position:

Richard Rahn of the Washington Post writes that FATCA will risk causing the exodus of up to $14 trillion dollars of capital from the American market and could cost well over 10,000,000 jobs.

Mr. Bilzerian also understands problems faced by countries such as Canada where #FATCA violates laws:

This puts the banks in these jurisdictions in the precarious position of deciding whether to abandon the US jurisdiction altogether or break the law in their home country.

So, Mr. Bilzerian asks what is the benefit:

Surely the benefits of this legislation must be significant to warrant such tremendous risk, right? The answer of course is no, because as with most things coming out of Washington these days, logic and rationality have no bearing on the decision-making process. So while the government officials responsible for FATCA estimate that the legislation will bring in about $800 million in additional revenue per year, almost all relevant experts estimate that FATCA stands to cost American taxpayers billions. The implementation alone will require hundreds, if not thousands, of new IRS agents, with the administrative capacity to match. Then there is the private sector, which will have to spend hundreds of millions of dollars re-organizing their entire operations just to comply with the legislation.

Finally, Mr. Bilzerian concludes:

With lunacy like this becoming commonplace in Washington, is it any wonder why wealthy Americans are renouncing their citizenships in record-breaking numbers?

He doesn’t mention it is not only wealthy Americans. It is middle class Americans just trying to live a normal life outside of US.
Unfortunately, Mr. Bilzerian does not seem to write for the mainstream media and no one in Washington is interested in listening.