Category Archives: Renounce U.S. citizenship

Americans Abroad Aren’t Denouncing Because They Want To. They Are Renouncing Because They Feel They Have To

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Introduction/background:

Denunciation of U.S. Citizenship – From the perspective from a U.S. Senator

Renunciation of U.S. Citizenship – From the perspective of a U.S. journalist

It’s hard to have a discussion about why Americans abroad are renouncing U.S. citizenship. There are many different perspectives about renunciation. There is very little “shared reality”. Tax academics (who have the resources to know better), “pensioned intellectuals”, politicians and most journalists see this from a “U.S. resident perspective”. They don’t understand the reality of the lives of Americans abroad. But, Americans abroad are NOT a monolith. The ONLY thing they have in common is that they live outside the United States. Their circumstances vary widely. There is little “shared reality” among Americans abroad of what the issues are. AT the risk of oversimplification, I have attempted to divide “Americans abroad” into four categories (as defined below). The categorization will explain why different groups of “Americans abroad” experience the U.S. extra-territorial tax regime differently.

Hint: Americans abroad aren’t renouncing U.S. citizenship because they want to. They are renouncing U.S. citizenship because they feel they have to.

Politicians, tax academics, “pensioned intellectuals” and many journalists deal in the world of opinions. The opinions they hold are often “myths”. They are not “facts”. They are entitled to their opinions (as misguided and ignorant as they may be). They are NOT entitled to their “facts”.

This post is to describe the facts about how the extra-territorial application of the Internal Revenue Code and the Bank Secrecy Act pressure many Americans abroad to renounce U.S. citizenship. Interestingly a large percentage of those renouncing owe ZERO taxes to the U.S. government. They renounce anyway!

First, a bit of background to the problem – what is the problem and who is affected?

They do NOT meet the test of being “nonresident aliens” under the Internal Revenue Code

As SEAT cofounder, Dr. Laura Snyder explains, in the first of her 16 “working papers” describing the problems of Americans abroad:

The people most affected by the U.S. extraterritorial tax system are not a monolithic group. Some left the United States recently, some left years or decades ago. Some left as adults (some young, some middle-aged, and some retirees), while others left as children (with their families), and some have never lived in the United States (they are U.S. citizens by virtue of the U.S. citizenship of at least one parent). Some intend to live in the United States (again) in the near or distant future, while others do not intend to ever live in the United States (again). Some identify as Americans while others do not. Many are also citizens of the country where they live (dual citizens) while others hold triple or even quadruple citizenships. In referring to this group, there is no one term that sufficiently reflects its full diversity. What unites them is that they do not meet the test of “nonresident alien” under the Internal Revenue Code. Depending upon the context, this series of papers will use terms such as “persons,” “individuals,” “affected individuals,” and “overseas Americans.” The latter term has a drawback, however: it emphasizes connections to the United States while minimizing the important connections that such persons have to the countries and communities where they live.

That said, what divides Americans abroad may be greater than what unites Americans abroad!

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American expats urged to comment on State Dept fee reduction plan by 1st Nov deadline

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October 29, 2023 By Helen Burggraf – American Expat Financial News Journal

Advocates for fairer tax treatment of American expats by their government, including both the Republicans Overseas and Democrats Abroad, are urging such expats not to hesitate in posting comments on a U.S. State Department proposal to lower the fee currently charged those seeking to renounce their U.S. citizenships, the deadline for which expires in less than three days. 

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Official Notice Of Proposed Rule Change: To Lower The Cost Of The CLN Issued Upon Renouncing US Citizenship From $2350 To $450

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Prologue

October 2, 2023 – Notice of Proposed Rule Change

Okay, it’s official. Here is a link to the proposed rule change which is necessary to reduce the renunciation fee from $2350 to $450. Officially, the fee is NOT a fee to expatriate. Rather it is a fee to issue the “Certificate Of Loss Of. Nationality”. also known as a CLN.

There is a 32. day comment period and I strongly suggest that you DO comment!

I encourage you to read the Notice in. its entirety. But, I note that it includes the following:

In the years since the fee was increased, members of the public have continued to raise concerns about the cost of the fee and the impact of the fee on their ability to renounce their citizenship. While there is no legal requirement for individuals to declare their motivation for renouncing U.S. citizenship, anecdotal evidence suggests that difficulties due at least in part to stricter financial reporting requirements imposed by the Foreign Account Tax Compliance Act (FATCA), Public Law 111–147, on foreign financial institutions with whom U.S. nationals have an account or accounts may well be a factor.

After significant deliberation, taking into account both the affected public’s concerns regarding the cost of the fee and the not insignificant anecdotal evidence regarding the difficulties many U.S. nationals residing abroad are encountering at least in part because of FATCA, the Department has made a policy decision to help alleviate at least the cost burden for those individuals who decide for whatever reason to request CLN services by returning to the below-cost fee of $450. Although the prior fee of $450 represents a fraction of the cost of providing CLN services, this change will better align the fee for CLN services with other fees for services provided to U.S. citizens abroad, including, for example, applications for a Consular Report of Birth Abroad, which all are set significantly below cost, even as the costs of providing these services have fluctuated over time.

If you go to the following link you can submit a comment (and even email this to a friend).

https://www.federalregister.gov/documents/2023/10/02/2023-21559/schedule-of-fees-for-consular-services-administrative-processing-of-request-for-certificate-of-loss

Here is a pdf version:

Federal Register Schedule of Fees for Consular Services-Administrative Processing of Request for Certificate of Loss of Nationality (CLN) Fee

John Richardson – Follow me on Twitter @Expatriationlaw

Biden 2024 Green Book: Message To Accidental Americans – Either comply or renounce!

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Part I – Summary of post:

The proposals for Americans abroad include:

1. A provision to (and presumption of) heighten enforcement of the 877A exit tax through changes in the Internal Revenue Code

2. A possible “carve out” from the 877A exit tax for certain Americans abroad with limited ties to the United States (under rules prescribed by the Treasury Secretary)

3. NO RELIEF whatsoever from U.S. citizenship taxation and the way that the rules apply to Americans abroad. This assumes a continuation of U.S. citizenship taxation with no evidence of change.

In other words: Either comply or renounce!

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State Department Announces Intention To Reduce Fee To Issue Certificates Of Loss Of Nationality From $2350 To $450

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Introduction And General Context

On Friday January 6, 2023 the State Department announced its intention to reduce the administrative fee for issuing CLNs (“Certificates Of Loss Of Nationality”) for US citizenship relinquishments from the current $2350 to $450. Notably in 2015 the State Department increased the fee from $450 to $2350.

The precise language found in the Declaration of Assistant Secretary For Consular Affairs Reena Bitter was:

3. Under 31 U.S.C. 9701, 22 U.S.C. § 4219, and Executive Order 10718, the Department has the authority to establish fees to be charged for official services provided by U.S. embassies and consulates. The Department intends to pursue rulemaking to reduce the fee for processing CLN requests from the current amount of $2350 to the previous fee of $450, as set in 75 FR 36522 on June 28, 2010. The Department will consider any necessary changes to this fee, as appropriate, in a future rulemaking.

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The reduction was announced in conjunction with a lawsuit launched by the Association Of Accidental Americans arguing that the $2350 renunciation fee is unconstitutional. The announcement and general context is described in the article at the American Expat Finance News Journal.

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Those wishing to better understand the lawsuit might be interested in a 2020 podcast I did with the lawyer Marc Zell.

Should you delay your renunciation until the new fee is in effect?

On January 9, 2022 there was a live hearing in Washington, DC exploring issues related to the lawsuit. During the hearing the Judge questioned the State Department lawyer about the plans to reduce the fee from $2350 to $450. It is apparent that:

1. There is no clear date on which the reduced fee will take effect.

2. There is no evidence that those who paid $2350 will be entitled to any kind of refund.

In many countries the waiting list to renounce or relinquish US citizenship continues to be long. Some of those waiting are dangerously close to being “covered expatriates” (based on the net worth test). “Covered expatriates” are generally subject to the 877A expatriation tax rules.

In most cases, those seeking to renounce US citizenship are probably best to avail themselves of the opportunity to renounce regardless of the fee on their renunciation date.

John Richardson – Follow me on Twitter @Expatriationlaw

New Location: John Richardson – Information Session – London, UK – Thursday Oct. 13/22 – 19:30 – 21:30

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John Richardson – Information Session – London, UK – Thursday Oct. 13/22 – 19:30 – 21:30

What: John Richardson informal information and discussion session for those impacted by US extraterritorial overreach

When: Thursday October 13, 2022 – 19:30 – 21:30

Where: Sutton Arms – Wine Room
6 Carthusian Street, London, EC1M 6EB

Cost: No charge for the session. You may wish to purchase a beverage at the location.

How to get there: There is a map at the bottom of the home page of the Sutton Arms Site:

https://www.sutton-arms.co.uk/

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Those Who Renounced US Citizenship Or Abandoned Green Cards NOT Eligible For Biden Pardon

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Synopsis

Introduction

On October 6, 2022 President Biden pardoned certain individuals (prospectively and retrospectively) for the simple possession of marijuana (whatever that means). The full text of the pardon is here.

A Proclamation on Granting Pardon for the Offense of Simple Possession of Marijuana

Acting pursuant to the grant of authority in Article II, Section 2, of the Constitution of the United States, I, Joseph R. Biden Jr., do hereby grant a full, complete, and unconditional pardon to (1) all current United States citizens and lawful permanent residents who committed the offense of simple possession of marijuana in violation of the Controlled Substances Act, as currently codified at 21 U.S.C. 844 and as previously codified elsewhere in the United States Code, or in violation of D.C. Code 48–904.01(d)(1), on or before the date of this proclamation, regardless of whether they have been charged with or prosecuted for this offense on or before the date of this proclamation; and (2) all current United States citizens and lawful permanent residents who have been convicted of the offense of simple possession of marijuana in violation of the Controlled Substances Act, as currently codified at 21 U.S.C. 844 and as previously codified elsewhere in the United States Code, or in violation of D.C. Code 48–904.01(d)(1); which pardon shall restore to them full political, civil, and other rights.

My intent by this proclamation is to pardon only the offense of simple possession of marijuana in violation of Federal law or in violation of D.C. Code 48–904.01(d)(1), and not any other offenses related to marijuana or other controlled substances. No language herein shall be construed to pardon any person for any other offense, including possession of other controlled substances, whether committed prior, subsequent, or contemporaneous to the pardoned offense of simple possession of marijuana. This pardon does not apply to individuals who were non-citizens not lawfully present in the United States at the time of their offense.

Pursuant to this proclamation, the Attorney General, acting through the Pardon Attorney, shall administer and effectuate the issuance of certificates of pardon to eligible applicants who have been charged or convicted for the offense of simple possession of marijuana in violation of the Controlled Substances Act, as currently codified at 21 U.S.C. 844 and as previously codified elsewhere in the United States Code, or in violation of D.C. Code 48–904.01(d)(1). The Attorney General, acting through the Pardon Attorney, is directed to develop and announce application procedures for certificates of pardon and to begin accepting applications in accordance with such procedures as soon as reasonably practicable. The Attorney General, acting through the Pardon Attorney, shall review all properly submitted applications and shall issue certificates of pardon to eligible applicants in due course.

IN WITNESS WHEREOF, I have hereunto set my hand this sixth day of October, in the year of our Lord two thousand twenty-two, and of the Independence of the United States of America the two hundred and forty-seventh.

JOSEPH R. BIDEN JR.

The Winners

Notably the pardon is available ONLY to those who are “current United States citizens and lawful permanent residents”. Clearly a former US citizen who is not a Green Card holder would NOT be eligible.

The Losers

The pardon is NOT AVAILABLE to:

– former US citizens who relinquished their US citizenship

– possibly (depending on interpretation) former lawful permanent residents who abandoned their Green Card

– US Nationals who are NOT US citizens

– non-citizens currently lawfully present in the United Staes under a visa who are NOT current Green Card holders

– current US citizens or lawful permanent residents who were NOT “lawfully present in the United States at the time of their offense” (think undocumented aliens)

And to be very clear

Regardless of current status, if one was not legally present in the United States at the time of offense then one is NOT eligible for the pardon. (Think undocumented aliens at the time of the offense.)

Why should the “status” of the person matter when offering this pardon?

An excellent twitter thread from David Bier discusses this issue …

It’s very clear that in 2022 no person should be convicted of a criminal offense for the mere possession of marijuana. The pardon is offered in recognition of that sentiment. Possession of marijuana is simply not conduct which should be deemed to be a criminal offense. Since the conduct should NOT be deemed a criminal offense, why should the pardon be restricted to those who are:

current United States citizens and lawful permanent residents

The ONLY possible explanation is that ONLY “current United States citizens and lawful permanent residents” are deserving of fair treatment. Who cares about the rest of them?

Let’s put it this way:

Assuming possession of marijuana should not be a crime, it’s still okay to punish those who are NOT “current United States citizens and lawful permanent residents”.

The pardon should apply prospectively and retrospectively to ANY individual who violates this unreasonable law. Why condition the pardon on status?

John Richardson – Follow me on Twitter @Expatriationlaw

Buying Their Freedom: Toward A More Efficient Process Of US Citizenship Renunciation

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Buying Their Freedom – A More Efficient Renunciation Process – The “Readers Digest” Version Of This Post …

The effects of US citizenship taxation enforced by FATCA are causing great distress to the US citizens who reside in and are tax residents of other countries. They are being constructively forced to renounce US citizenship because of (1) the out of pocket costs of US tax compliance (2) the possibility of double taxation (3) the US taxation of things that are not taxable in their country of residence (4) the “opportunity cost” of their inability to engage in financial and retirement planning and in some cases (5) the threat or reality of bank/financial account closures. In addition, these circumstances are unfair to their countries of residence who are forced to deal with a group of people who are more likely to require “social assistance” in their retirement years. US citizenship is a problem for US citizens who attempt to live outside the United States and for the countries where they live.

Although many people are constructively forced to renounce US citizenship, the US has made renunciation very difficult from both a cost and availability perspective.

The purpose of this post is to suggest that the process of renouncing US citizenship should be facilitated in the US citizen’s country of residence by that government. Renunciation could be achieved more quickly, at lower cost and (under my proposal) partially subsidized by the government of residence (which would justify this as “buying back their citizens” from any US claim of taxation or other regulatory burdens). I believe that this proposal would benefit the individual US citizen, the US citizen’s country of residence and the United States itself. The following post describes how this can be achieved under the existing US laws.

As President Obama once said:

“The circumstances of one’s birth should not determine the outcome of one’s life.”

This post is composed of the following parts:

Part A – Introduction
Part B – The US Government And The Oppression OF Americans Abroad
Part C – The Legal Framework Of Renunciation
Part D – The Logistics – How The New Renunciation Process Would Work
Part E – Reviewing The Benefits Of The New Renunciation Process
Part F – The Revised Renunciation Fee
Part G – Democratizing Renunciation – Making It Available To All – A Financing Proposal
Part H – Sadly this could all be be prevented if the United States were to end citizenship taxation and adopt the world standard of residence taxation. But, …
Part I – Conclusion – “All Roads Lead To Renunciation”

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US Citizenship Was A Problem For Boris Johnson Before He Even Knew About The Tax Issues

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I recently was alerted to this article written by Boris Johnson in 2006. Most people are aware of the tax problems. Fewer are aware of the problems of travel as a US citizen.

To be clear:

US citizens are required to both enter and leave the United States on a US Passport!

Boris Johnson Spectator article