Tales of renouncing citizenship: U.S. @SenTedCruz and @MayorOfLondon Boris Johnson http://t.co/VJwqzRl6vA – It's about your "place of birth"
— Citizenship Lawyer (@ExpatriationLaw) February 5, 2015
In September of 2014, I conducted a “Problems of U.S. Citizenship Session” in Montreal, Canada. As usual many of the attendees were in the midst of their OMG (“Oh My God Moment”). The phrase “OMG Moment” is well known. But, what is the “OMG Moment”? I suggest that the “OMG” moment is one of two things. It is either:
1. The moment that those who believe that they are U.S. citizens (or other “U.S. persons”) learn that they are required (even though they don’t live in the U.S.A.) to obey U.S. tax laws, file U.S. tax and information returns, and are subject to the draconian life altering penalties that are part of membership in Club U.S.A.; or
2. The moment that they learn for the first time that they may be considered to be a U.S. citizen (or other U.S.person).
This post will focus on those in the second group. That is on:
Those who do NOT believe and have not believed they are U.S. citizens and are learning that they “may be considered to be a U.S. citizen”.
They do NOT believe they are “U.S. citizens” because they:
A. Have committed some form of past relinquishment* (a common example is having been naturalized as a citizen of another country); or
B. Never knew that they were a U.S. citizen (people who were born in the United States and left the United States at a young age – they did not choose where they were born and they did not choose to move).
There was lots of group participation. As always, the discussion included frustration over the huge costs of U.S. tax compliance. The reality is that, for many U.S. citizens abroad, the cost of U.S. tax compliance alone (whether they receive services or not) is sufficient to make U.S. citizenship undesirable. But, when the threats of penalties are added the need to NOT be a “U.S. citizen” becomes clear.
Of particular interest in this Montreal session, was that a woman stood up and (in what appeared to have been a rehearsed speech) stated (this is a paraphrase) that:
Citizenship comes with obligations. U.S. citizenship comes with obligations. One of the obligations of U.S. citizenship was to pay taxes to the U.S.
True enough, but … Clearly the woman was missing the point. The point is that (leaving aside the “taxation without representation” debate for those who believe they are citizens) the U.S. considers many people to be U.S. citizens who do NOT consider themselves to be U.S. citizens. The U.S. considers many people to be U.S. citizens who have little or no connection to the U.S. This is NOT an issue of – ‘taxation without representation” (which has been suggested to a “tax motivated reason reason to renounce U.S. citizenship“).
It’s an issue of:
I am not part of your country. I don’t live in your country. I don’t’ want to be part of your country. I can’t possibly be subject to your laws – including your tax laws.
What are the relationships that people can have to governments?
Governments have a range of relationships with people. At one extreme people can be the “slaves” of governments. At the other extreme, people can have “full and equal rights of citizenship”. There is a wide range of relationships between the extremes of “slavery” and “full and equal citizenship”. The status of a “slave” is NOT the same as the status of “full and equal citizenship”. If “citizenship” is different from “slavery” then “citizenship” must include the consent to be a citizen. In many circumstances, what the U.S. defines as “citizenship”, is NOT “full and equal citizenship”. It can (especially in the case of Americans abroad) be a status that does NOT include the rights that Homeland Americans have. It may NOT include the right to vote. I am NOT suggesting that a status less than “full and equal citizenship” is “slavery”. I am suggesting that the status “enjoyed” by Americans abroad is less than “full and equal citizenship”.
What, (from a U.S. perspective), is the defining characteristic of citizenship? In my opinion (and I welcome your thoughts), the U.S. considers the fundamental right of citizenship to be the right to live and work in the United States. If you are a U.S.citizen you also have the right to a U.S. passport and the “right” to receive a U.S. Social Security number. There are many people living outside the U.S. (although not all) who do NOT accept that a “right to live in the U.S. is sufficient to make them a U.S. citizen.
The U.S. claims people as its citizens who do NOT believe they are U.S. citizens. In most cases, the U.S. claim of citizenship is based ONLY on the fact of a U.S. birthplace.
This is extraordinary given that:
People do NOT choose where they born. They do not choose where their parents move.
The idea that a ONLY a “U.S. place of birth” gives the U.S. a moral right to subject people to its laws is questionable. The mere fact of a “U.S. place of birth is NOT a sufficient U.S. connection to justify taxation. Since July 1, 2014 the U.S., has via threats of economic FATCA sanction, forced banks around the world to literally participate in a “hunt” for “U.S. born” people. Once identified they will be handed to the IRS. “FATCA Hunt” – the search for people with a U.S. place of birth – coupled with U.S. “place of birth taxation” has resulted in:
– a formal human rights complaint to the United Nations against the United States questioning the U.S. practice of imposing place of birth taxation
– a Canadian lawsuit against the Government of Canada to prevent Canadian complicity in FATCA Hunt
– a U.S. based lawsuit (which is rumored to be launched in days) challenging the constitutionality of FATCA in U.S. courts
For many individuals, their response to being considered a U.S. citizen is to simply say (as Boris Johnson is believed to have done):
“Okay, if you consider me to be a U.S. citizen, then I renounce U.S. citizenship. What I want is the right to NOT have a U.S. passport.”
What does it mean to “renounce U.S. citizenship”? For many it’s not about giving something up. It’s about acquiring something of value…
Renouncing U.S. citizenship (contrary to the claims of a State Department employee) is expensive and complicated.
The media is awash in news that Americans in general and that Americans abroad in particular are “renouncing their U.S. citizenship”. The media gives little thought or consideration to what “renouncing U.S. citizenship” means to the renunciant. Those who renounce U.S. citizenship are often misunderstood and vilified. In general, the media considers those who renounce U.S. citizenship to be traitors, tax evaders (the modern day equivalent of members of the Communist Party) and other forms of “unmentionable scum”. This reflects a profound misunderstanding of what a “renunciation” of U.S. citizenship really is.
Why people renounce U.S. citizenship
A reunciation of U.S. citizenship is a process where those renouncing U.S. citizenship approach the U.S. government directly. They seek “confirmation” from the U.S. government that the U.S. government will NOT consider the renunciant to be a U.S. citizen. All renunciants are required to pay for this “confirmation”. What reunciants seek is the assurance that the U.S. government will “leave them alone”. The demand for this “confirmation” is sufficiently high that the U.S. government has recently raised the fee from $450 to $2350.
Who are the people who “renounce U.S. citizenship”?
They include a wide range of people. Some renunciants DO consider themselves to be U.S. citizens. Some renunciants do NOT consider themselves to be U.S. citizens. All renunciants are seeking the agreement of the U.S. government that it will NOT consider them to be a U.S. citizen. (It’s important to note that many people are not going to the trouble to “renounce U.S. citizenship”. They are deciding that they are NOT U.S. citizens. The decision of NOT being a U.S. citizen is sometimes based on the unwillingness to accept that mere birth on U.S. soil is sufficient to make them a U.S. citizen. In some cases people believe that they have previously relinquished U.S. citizenship based on a prior expatriating act.)
How do “reunciants” experience renouncing U.S. citizenship?
Some renunciants are sad. Some are happy. Some renunciants do consider themselves to be U.S. citizens. Some renunciants consider themselves to be loyal Americans. Some renunciants consider themselves to be “former citizens”. Some renunciants do not and never considered themselves to be U.S. citizens. Some have served in the military. Some renunciants are Rhodes Scholars. Some say that renouncing U.S. citizenship was a “life altering” experience. But, many (if not most) renunciants feel that they have no choice. They feel that they must renounce renounce U.S. citizenship in order to protect themselves. Many renunciants feel a strong sense of injustice and are working to right the wrongs of U.S. extraterritorial overreach.
Many “renunciants” feel they are “forced” to renounce U.S. citizenship
In a FATCA world, many people are forced to take steps to ensure that they are NOT considered to be U.S. citizens. The FATCA rules have created an environment where U.S. citizenship is a frightening accusation. It is an accusation that comes with significant threats and anxiety. U.S citizens abroad sometimes have difficulty maintaining the financial arrangements they need to live a normal lives. In some cases they have difficulty maintaining bank accounts. In some cases they have difficulty maintaining retirement accounts. I have witnessed, Canadian money management firms, purge U.S. citizens from their customer base. (The letter to the U.S. citizen says: Transfer your account away from us in 6 weeks or we will liquidate your account and send you a cheque. Note that the liquidation is a taxable transaction.)
It is therefore understandable that …
"The single biggest threat to Americans living abroad is the US government." http://t.co/pQDQliYx1k
— Citizenship Lawyer (@ExpatriationLaw) February 8, 2015
For many, renunciation of U.S. citizenship is a precautionary measure, taken to ensure that they will never be considered to be U.S. citizens. Renunciants receive a CLN (“Certificate of Loss of Nationality”) that will although them to prove that they do NOT carry (what has now arguably become) the disability of U.S. citizenship.
Why is the U.S. destroying it’s greatest ambassadors?
This is a mystery. It is impossible to understand. That said, the fact is that:
America’s greatest supporters are now becoming America’s greatest detractors. In fact, one U.S. citizen abroad comments that she:
"would rather adopt the citizenship of a corrupt Asian regime" http://t.co/dOOwkhIIRv … we feel more threatened by the “Land of the Free”
— Citizenship Lawyer (@ExpatriationLaw) February 8, 2015
Two tales of renouncing citizenship – The stories of U.S. Senator Ted Cruz and London Mayor Boris Johnson
U.S. Senator Ted Cruz was NOT born in the United States. He was born in Canada and became a Canadian citizen at birth. Like many Senator Cruz moved from his country of birth (Canada) to a new country (the United States). Senator Cruz either was or became a U.S. citizen. It has been reported that Senator Cruz has renounced his Canadian citizenship. This was a simple procedure with virtually no costs.
London Mayor Boris Johnson was born in the United States and therefore became a U.S. citizen upon his birth. He reportedly moved from the United States to England at the age of 5. He either was or became a U.K. citizen. There is some evidence that he didn’t know that he was considered to be a U.S. citizen until the 1990s.
For Boris Johnson to renounce his U.S. citizenship there could have be very significant costs.
These costs could include:
1. The administrative costs of U.S. tax compliance for at least 5 years leading up to the year of renunciation (at least he has paid the U.S. capital gains tax on the sale of his house in England);
2. The payment of any taxes, interest and penalties for that five year period;
3. The “administrative tax” of $2350 which all renunciants pay;
4. The general possibility of an “Exit Tax” payable on the value of his assets (although I acknowledge that in this particular case, that if he was born a dual citizen he could be exempted from this).
In other words Senator Cruz would be in the same position as London Mayor Boris Johnson. The only difference between Senator Cruz and Mayor Johnson is that Senator Cruz was born in Canada and Mayor Johnson had the (since he does live in the U.S.) bad fortune to have been born in the United States.
The United States of America is one of the few remaining countries in modern world where:
“The circumstances of your U.S. birth determine the outcome of your life.”
Our Brave New FATCA World – Have you received a FATCA Letter?
The U.S. is the only country in the world (with the exception of Eritrea) that attempts to control the lives of people who where born in the U.S. but reside in other countries.
This control includes:
– the payment of taxes (according to U.S. domestic tax rules)
– the filing of information returns (U.S. law requires that those born in the U.S., but live outside the U.S. report virtually all their activities to the U.S. government)
– having their tax liability burdened by the (non-U.S.) citizenship of their spouse
– being subjected to travel restrictions (Cuba anyone)
– being subjected to recreational and business restrictions
– being unable to engage in the retirement planning activities like others in their country of residence
– miscellaneous restrictions on their liberties (Bobby Fischer violated the “International Emergency Economic Powers Act by going to Yugoslavia for the chess match against Boris Spassky“.) Incidentally in 1972, the U.S. urged Fischer to go to Iceland to play Spassky.
U.S. citizens abroad are governed by a separate set of laws that do NOT (in effect) apply to Homelanders. It’s as though they their lives are subject to a separate set of laws (that do NOT in effect apply to Homelanders). Like the British Constitution, the laws are NOT to be found in one place. They are found as sections to other legislative enactments (particularly the Internal Revenue Code). These laws will burden them as long as they are a U.S. citizen. Americans abroad live under a “separate but equal” legal system. But, it gets worse. The laws which apply to Americans abroad will be largely determined by the country they live in.
Why should the taxation of #Americansabroad depend on which country they emigrate to? http://t.co/F6NE8sVoB3 … – Canada vs. New Zealand
— Citizenship Lawyer (@ExpatriationLaw) February 8, 2015
Is it possible that the the constitutional rights of Americans abroad are being violated? What about the 14th amendment right to “equal protection of the laws”? Do Americans abroad enjoy the same constitutional protections as Homeland Americans. There appear to be cases where Americans abroad may NOT be entitled to the same constitutional protections that Homeland Americans enjoy.
It’s very difficult (somewhere between difficult and impossible) for a U.S. citizen to both:
1. Live outside the U.S.; and
2. To be compliant with the U.S. laws that controls his behavior.
For those who do NOT consider themselves to be U.S. citizens and live outside the United States, the accusation of U.S. citizenship abroad is simply intolerable.
Technical U.S. citizenship vs. substantive U.S. citizenship
For a moment, let’s’ NOT consider whether the U.S. should have the right to regulate the lives of those who DO consider themselves to be U.S. citizens AND who do NOT live in the U.S. Let’s consider whether the U.S. has the right to regulate the lives of those who are at best “technical citizens”, but have little connection to the U.S.
I suggest that the U.S. has no legal, ethical or moral right to regulate the lives of those who are “technical citizens”. A “technical citizen” is one who his a citizen by virtue of only a U.S. birthplace, left the U.S. at a young age, and has never had a connection to the U.S.
“U.S. taxation abroad” – the number one form of “life control abroad”
As I wrote in a post discussing the taxation of Americans abroad in the 21st century:
The U.S. currently takes the position that the “legal status” of being a citizen is sufficient to impose taxes on a person who does not live in the U.S. Some of those with the legal status of U.S. citizen were born in the U.S. (making them 14th amendment citizens) and some were born outside the U.S. (making them citizens by an Act of Congress). There are many categories of people born in the U.S.
I suggested that there is a difference between “technical U.S. citizenship” and the kind of voluntary connection that should be a “necessary condition” for the imposition of taxation. In other words, “Not all Americans abroad are the same”. I proposed the following categories of “Americans abroad”:
Five Possible Categories of Those Deemed to be U.S. Citizens Abroad and Their U.S. Connection
Those Born In The U.S. – 14th Amendment Citizenship – Who at a young age are taken by their parents to live outside the United States
The vast majority of U.S. citizens acquired U.S. citizenship because they were born in the U.S. The U.S. is aggressively taking the position that the following types of people, born in the U.S., but residents in other countries, with no economic connection to the U.S. are required to pay taxes to the U.S.:
A. Border babies: Those who were born in the U.S. and returned to Canada within months. (If their parents were Canadian citizens those border babies (who were dual citizens from birth) can renounce their U.S. citizenship without paying an Exit Tax. If their parents were U.S. citizens (meaning the children were not a dual citizens from birth) they are NOT permitted to relinquish U.S. citizenship without being subject to the Exit Tax.)
B. Children born in the U.S. who permanently left the U.S. with their parents as children (before reaching the age of majority) and who never returned to the U.S. They have never worked in the U.S. and have no connection to the U.S.
Members of Group A or Group B do not have and have never had a “voluntary connection” to the U.S. that could convert their “legal status” of citizens to the “voluntary acceptance” of the obligations of “citizenship”. Their birth in the U.S. and their moving from the U.S. were the results of decisions made by their parents. It’s hard to see how the “legal status” of being a U.S. citizen, is sufficient to require the payment of taxes to the U.S. Surely a demonstration of a “voluntary connection” to the U.S. should be required before an obligation to pay taxes is triggered.
Those born outside the U.S. – They choose neither their parents nor where they are born
C. In certain cases, the children of U.S. citizens who are born outside the U.S. are considered to be U.S. citizens. Examples include (but are not limited to), those born in Switzerland to U.S. parents. U.S. laws for the transmission of citizenship from U.S. citizen parents to children born abroad, have a long and complicated history. In fact – “American Citizens Abroad” – was founded to facilitate the acquisition of U.S. citizenship for children born abroad to U.S. citizen parents.
It is clear that that those born outside the U.S. have no connection whatsoever to the U.S. At most they have a connection to a U.S. citizen (that may or may not have a connection to the U.S.)
Those who choose to leave the United States as Young Adults Adults
D. U.S. citizens who were “Born In The USA” but who moved to other nations as young adults (not forced to move with their families), have developed their careers outside the U.S., married, had children and raised their families outside the U.S., done their financial and retirement planning outside the U.S., never had an economic connection to the U.S., and whose lives are have become citizens of their countries of residence.
Many in this group may have left the U.S. under unclear circumstances. Some may have left the U.S. with the intention of returning, some with no thoughts on whether they would return, and some with the clear intention of never returning. Regardless of their intention when leaving the U.S., many gradually become citizens (in a legal and voluntary sense) of their new countries and gradually lost any connection to the U.S. that they may have had.
Members of this group (especially in Canada and Western Europe) fully consider themselves to be primarily citizens of their new countries and no longer U.S. citizens. Example: “You know you are Canadian when you start rooting for Canada over the U.S. in hockey.”
Adults who moved from the USA with the intention of returning to the United States
E. U.S. citizens who move outside the U.S. for short periods of time with the full expectation and understanding that they are returning to the U.S. They live outside the U.S. as Americans and typically neither become citizens of their country of residence, nor disconnect from the U.S. In other words, they are truly “U.S. citizens abroad”. Their situation is very different from those described in Categories A, B, C and D. They have more than the “legal status” of being U.S. citizens. They have a voluntary connection to the U.S.
Citizenship-based taxation and a voluntary connection to the U.S.
It is clear that many of those with the “legal status” of U.S. citizen (Categories A, B, C, and D) do NOT have the “voluntary” (or any other) connection to the U.S. that could reasonably justify U.S. taxation.
The fact that those in Category (E) have a voluntary connection to the U.S. does NOT mean that good tax policy would subject them to U.S. taxation. It does mean that (if citizenship requires a connection to the United States that this is the group which might be subject to “citizenship-based taxation”).
The Obama 2015 Budget Proposal – Change you can believe in?
@VLJeker Perhaps dual citizens at birth can b exempted from S. 877A(g)(4) under IRC S. 7701(a)(50)(B) – Congressional approval not required
— US Taxation Abroad (@TaxationAbroad) February 5, 2015
It is possible that (at long last) the U.S. government is beginning to recognize that there is a difference between “technical citizenship” and a U.S. connection indicative of “substantive citizenship” that might justify taxation.
The relevant provision (page 282) includes:
PROVIDE RELIEF FOR CERTAIN ACCIDENTAL DUAL CITIZENS
An individual may become a U.S. citizen at birth either by being born in the
United States (or in certain U.S. territories or possessions) or by having a parent who is a U.S.
citizen. All U.S. citizens generally are subject to U.S income taxation on their worldwide
income, even if they reside abroad. In contrast, nonresident aliens are taxed on certain income derived from U.S. sources and on income that is effectively connected with a U.S. trade or business.
U.S. citizens that reside abroad also may be subject to tax in their country
of residence. Potential double taxation is generally relieved in two ways. First, U.S. persons can credit foreign taxes paid against their U.S. taxes due, with certain limitations. Second, U.S.
individuals may exclude from their U.S. taxable income a certain amount of income earned from working outside the United States ($100,800 for 2015).
Section 877A imposes special rules on certain individuals who relinquish
their U.S. citizenship or cease to be lawful permanent residents of the United States
(“expatriates”). Expatriates who are “covered expatriates” generally are required to pay a mark-to-market exit tax on a deemed disposition of their worldwide assets as of the day before their
An expatriate is a covered expatriate if he or she meets at least one of the
following three tests:
(1) has an average annual net income tax liability for the five taxable
years preceding the year of
expatriation that exceeds a specified amount that is adjusted for inflation
(the “tax liability test”),
(2) has a net worth of $2 million or more as of the expatriation date (the
“net worth test”), or
(3) fails to certify, under penalty of perjury, compliance with all U.S. Federal
tax obligations for the five taxable years preceding the taxable year that includes the expatriation date (the “certification test”).
The definition of covered expatriate includes a special rule for an
expatriate who became at birth a citizen of both the United States and another country at birth and, as of the expatriation date, continues to be a citizen of, and taxed as a resident of, such other country. Such an expatriate will be treated as not meeting the tax liability or net worth tests if he or she has been a resident of the United States for not more than 10 taxable years during the 15-taxable year period ending with the taxable year during which the expatriation occurs. However, such an expatriate remains subject to the certification test. Because U.S. citizens are subject to U.S. Federal income tax on their worldwide income, dual citizens who choose to expatriate may be required to pay a significant amount of U.S. tax before they are able to certify that they have satisfied their U.S. tax obligations for the five taxable years preceding the year in which they expatriate.
Reasons for Change
Individuals who became citizens of both the United States and another
country at birth may have had minimal contact with the United States and may not learn until later in life that they are U.S. citizens. In addition, these individuals may be citizens of countries where dual citizenship is illegal. Many of these individuals would like to relinquish their U.S. citizenship in accordance with established State Department procedures, but doing so would require them to pay significant U.S. tax.
Under the proposal, an individual will not be subject to tax as a U.S.
citizen and will not be a covered expatriate subject to the mark-to-market exit tax under section 877A if the individual:
1. became at birth a citizen of the United States and a citizen of another
2. at all times, up to and including the individual’s expatriation date, has
been a citizen of a country other than the United States,
3. has not been a resident of the United States (as defined in section
7701(b)) since attaining age 18½,
4. has never held a U.S. passport or has held a U.S. passport for the sole
purpose of departing from the United States in compliance with 22 CFR §53.1,
5. relinquishes his or her U.S. citizenship within two years after the later
of January 1,
2016, or the date on which the individual learns that he or she is a U.S.
6. certifies under penalty of perjury his or her compliance with all U.S.
Federal tax obligations that would have applied during the five years preceding the year
of expatriation if the individual had been a nonresident alien during that
The proposal would be effective January 1, 2016.
This was the subject of significant discussion at the Isaac Brock Society.
My thoughts on this part of the Obama budget proposal are:
Although this will not be passed into law, it actually would (I think) help a large number of people. Yes, the requirement of “not having applied for a U.S. passport” (except to leave the U.S.) will be a problem for some. (You would be surprised how many “accidentals” living in Canada have never applied for a U.S. passport.)
This seems to be designed to provide relief for ALL (regardless of whether they knew they were a U.S citizen) for a two year period commencing Jan. 1/16. Those who didn’t know they were U.S. citizens will be allowed an additional two years from the point of learning that the U.S. considers them to be a citizen.
It’s also interesting that there does not appear to be an “age limitation”.
The “passport limitation” is significant. It reflects the view of the administration that applying for a U.S. passport is somehow an affirmation of U.S. citizenship (which is a highly questionable assumption).
I believe that this proposal is VERY significant. It indicates that the administration accepts that there is a difference between a “technical definition of U.S. citizenship” and U.S. citizenship in a meaningful sense.
Put another way, it suggests that the administration is coming around to the idea that taxation is NOT appropriate unless there is a connection to the country.
It is clearly NOT a retreat from U.S. “citizenship-based taxation”. Is is simply a recognition that NOT all people born in the U.S. have a ties to the U.S. could justify taxation.
But, why should those who were NOT born dual citizens be excluded? It’s quite possible that they may have fewer ties to the U.S. than those born with dual citizenship.
I predict that this is the beginning of a dialogue that will eventually result in residence based taxation.
All things considered good news. It is evidence of a rethinking of taxation and a connection to the country. Perhaps it will be the foundation for further change.
*Past relinquishments of U.S. citizenship
The true number of “relinquishers” far exceeds the number who “renounce”
“Renouncing” U.S. citizenship is just one way of “relinquishing U.S. citizenship”. Those seeking to “relinquish U.S. citizenship” seek a status where they will NOT be considered to be U.S. citizens.
Those who “relinquish” U.S. citizenship by renouncing seek a certification from the U.S. government that the U.S. will NOT consider them to be U.S. citizens.
Those who “relinquish” U.S. citizenship in other ways prescribed in S. 349(a) of the Immigration and Nationality Act, do NOT consider themselves to be U.S. citizens, but do NOT seek the specific agreement of the U.S. government. S. 349(a) of the Immigration and Nationality Act does NOT condition “relinquishment”on notifying the U.S. Government.
(Note that since 2004, the U.S. Internal Revenue Code has made it such that one is still subject to U.S. taxes until one notifies the State Department of the relinquishment. This issue will be addressed in a separate blog post.)
By focusing on “renunciations” the media focuses ONLY on those who take the step of going to a U.S. consulate to seek the agreement of the U.S. that they will NOT be treated as citizens. “Relinquishing” U.S. citizenship is a broader term that includes other expatriating acts which include:
becoming a naturalized citizen of another nation with the intention of relinquishing U.S. citizenship.
There are many “U.S. born” people who have lost their U.S. citizenship by “relinquishing citizenship without informing the government. Many of the those in this group (who have previously relinquished U.S. citizenship), are with justification, believing that the recent attack on Americans abroad has no application to them.
In addition, given the U.S. government’s war against Americans abroad (FATCA, FBAR, PFIC, etc.), it is suspected that the vast majority of those who likely ARE “Americans abroad” will continue to stay under the radar. Although these numbers cannot be quantified it is clear that they exceed the numbers who are coming into U.S. tax compliance or who are formally “renouncing” U.S. citizenship.
(In contrast to those “under the radar” there are a large number of Americans abroad who have faithfully filed their U.S. tax returns (if not FBARs) for all of their years abroad.) Because they are U.S. tax compliant they are in a better position to “renounce U.S. citizenship and the indications are that taking advantage of their tax compliance to “get out while the getting out is semi-good”.
An excellent discussion of this complex situation. One size indeed does not fit all. To complete the picture you could also include the green card holders who left, were never citizens anyway, and have no intention of returning. They are also caught in this mess.
My son and many other sons and daughters like him, meet these definitions 1. through 4. — but they are not allowed to renounce (nor a parent, guardian or trustee to act on their behalf, even with a court order) because they do not have *requisite mental capacity* and must not be influenced by anyone in doing so.
1. became at birth a citizen of the United States and a citizen of another country, CHECK
2. at all times, up to and including the individual’s expatriation date, has been a citizen of a country other than the United States, CHECK
3. has not been a resident of the United States (as defined in section 7701(b)) since attaining age 18½, CHECK
4. has never held a U.S. passport or has held a U.S. passport for the sole purpose of departing from the United States in compliance with 22 CFR §53.1, CHECK
5. relinquishes his or her U.S. citizenship within two years after the later of January 1, 2016, or the date on which the individual learns that he or she is a U.S. citizen, SORRY – NO WAY — ENTRAPPED!
6. certifies under penalty of perjury his or her compliance with all U.S. Federal tax obligations that would have applied during the five years preceding the year of expatriation if the individual had been a nonresident alien during that period. NOT ALLOWED TO EXPATRIATE BECAUSE OF LACK OF *REQUISITE MENTAL CAPACITY* — & LACK OF *REQUISITE MENTAL CAPACITY TO COMPLETE ALL OF THIS EITHER*