— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) March 30, 2015
This is a good opportunity to engage the people of Quebec on the issues caused by FATCA and U.S. citizenship taxation. In Standtead Quebec approximately 25% of the town residents, including the Mayor Phillippe Dutil (featured in the interview), were born in Vermont, U.S.A.
This is a long post. In fact, it is too long for the average reader. Therefore, I wish to summarize the purpose and possible (but not certain conclusion) of the post in a few simple sentences. Here goes:
If you were born in the United States (and became a U.S. citizen at birth) who moved to Canada and naturalized as a Canadian Citizen prior to June 3, 2004:
1. Without informing the U.S. State Department or applying for a Certificate of Loss of Nationality; and
2. You are hearing from the media and some members of the tax compliance community that you are either still a U.S. citizen and/or are somehow liable for U.S. taxes; then
You should NOT believe that you are still a U.S. citizen and/or are that you are subject to U.S. taxation without getting proper counselling.
In other words you should NOT:
– apply for a Certificate of Loss of Nationality
– file U.S. tax returns
– renounce U.S. citizenship
without a thorough investigation of your situation. You may or may not be a U.S. citizen who is subject to U.S. taxation. Extreme caution is warranted. Every case is fact specific. Please note that this post is NOT legal advice of any kind whatsoever. You meed to discuss your specific circumstances with a competent adviser of your choice.
To understand why, read on … Continue reading →
The “Plain Language” of the S. 877A Rules – To Whom does S. 877A apply? What is the “Relinquishment Date? Synopsis:
Many Americans abroad are confused by the difference between “relinquishment” and “renunciation”. I recently wrote a post explaining that:
1. Renunciation is one form of “relinquishment”; and
2. The issue is the “relinquishment date” and not the form of “relinquishment”.
This post will explain exactly why the date of relinquishment matters. To put it simply:
Those with a “Relinquishment Date” after June 16, 2008 may be subject to the confiscatory provisions of the S. 877A Exit Tax.
This post will make the argument that the “plain language” of the combined effects of S. 7701(a)(50) and S. 877A(g)(4) compel the conclusion that those with a “Relinquishment Date” prior to June 3, 2004 are NOT subject to the S. 877A Exit Tax. My analysis follows. Continue reading →
Dual Citizenship – American style – All Americans are both “Citizens” and “Tax Citizens”
One Country – Two Citizenships
First Citizenship – Citizenship for Nationality Purposes
Americans have always been proud of their U.S. citizenship. Most U.S. citizens regard their U.S. citizenship as the most valuable thing they have. Most Americans will fight for their citizenship. They will die for their citizenship. They believe that their U.S. citizenship gives them rights and privileges that citizens of other nations simply do not have. Whether true or not, this is how U.S. citizenship is regarded. Citizenship for “Nationality” is what gives people the “rights of citizenship”. At present, these rights include: the right to enter the United States (as long as you have a U.S. passport), the right to work and the right to vote (as long as you meet the voting requirements of your State). That’s all. No more and no less (as long as you have a U.S. passport).
Second Citizenship – Citizenship for Tax Purposes
What could be better than U.S. citizenship? Why not a second U.S. citizenship? The United States Congress rewarded U.S. citizens by giving them all a “Second U.S. Citizenship”. On June 3, 2004 the American Jobs Creation Act gave all U.S. citizens a second citizenship. To be specific, on June 3, 2004 all U.S. citizens became U.S. “Tax Citizens”. Interestingly, the U.S. public never asked for “Tax Citizenship”. The status of “Tax Citizen” was simply conferred on them. “Tax Citizens” have no rights. They have only obligations. The obligation is pay taxes. I recently heard it said that:
“U.S. citizenship is the gift that keeps on taking.”
Updated August 2020 with this video where this complex issue is discussed
Q. Is a CLN always required to have lost US citizenship for purposes of taxation? A. It depends on when the relinquishing act took place (unless you believe that S. 877A is retrospective and retroactive) Issue discussed with @IRSMedic and @Keith__Redomond https://t.co/HF4EfloKf3
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) August 16, 2020
This item just in via an “activity” report from the U.S. Embassy in Bern, Switzerland, headlined “Soul Legend Relinquishes U.S. Citizenship.”
“Long-time Swiss resident Tina Turner” was in the embassy Oct. 24 to sign her “Statement of Voluntary Relinquishment of U.S. Citizenship under Section 349 (a)(1) of the INA” — the Immigration and Naturalization Act. …
The key word in the embassy report apparently is the term “relinquishment.” That means, a knowledgeable source told us, that she did not “formally renounce her U.S. citizenship under 349(a)(5) Immigration and Nationality Act, but took Swiss citizenship with the intent to lose her U.S. citizenship.” As opposed to formal renunciation — a much more complex process, we were told — there are no “tax or other penalties for loss of citizenship in this fashion.”
For the difference between relinquishing and renouncing U.S. citizenship, see here. As this detailed post makes clear, the tax consequences are the same whether one relinquishes or renounces U.S. citizenship. Previous press coverage suggested that Ms. Turner’s actions may be motivated in part by a desire to escape the new FATCA regime.
As you know, on May 2, 2014 ACA Global Foundation sponsored a debate on “21st Century Taxation of Americans Abroad: Citizenship-based taxation vs. Residence-based taxation. The debate featured Professor Michael Kirsch of Notre Dame University law school and Dr. Bernard Schneider of Queen Mary University in London, UK.
The debate has previously been discussed here and here. In addition, I used the ideas in the debate for a separate post on question of what connection to the United States should be required to justify citizenship taxation.
The video of the debate as been released and is referenced in the above tweet.
I reiterate my thanks to ACA Global, Professor Kirsch and Dr. Schneider.
I welcome your comments.