Tag Archives: renounce U.S. citizenship

Prologue: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – #Americansabroad and forced renunciation of US citizenship

U.S. Citizenship Abroad in a FATCA and FBAR World

FATCA has inflicted pain on the world. The pain has been most acutely felt by those with a U.S. place of birth. The following report is shocking in its brutality.


Listen to the pain and anguish of the woman interviewed who can’t have a bank account simply because she is a “U.S. person”. Listen to the language she uses. Jen is proud to be an American, feels that she is being forced to renounce U.S. citizenship, and considers the current U.S. government to be a “bunch of extortionists”. She is clearly suffering extreme pain and anguish. Listen to the French citizen and resident, who doesn’t speak English and is claimed by the United States to be a “U.S. person”. Then listen to the unnamed “Voice of the Obama Administration”, which says:

“The U.S. Treasury Department has worked tirelessly to address many of these problems and most have been resolved. All you have to do is look to see how many countries have agreed to the law and how many financial institutions have signed on to the law.”

Clearly the voice of the Obama administration is either a liar or is delusional.

How we got there – A brief backgrounder on “how many countries have agreed to the law and how many financial institutions have signed on to the law”

FATCAHunt2
As you know the U.S. Government is hunting for those they consider to be “U.S. persons”. The hunt is taking place outside the United States. The hunt is intended to identify the residents and citizens of other nations that the U.S. chooses to define as “U.S. persons”. The vast majority of those deemed to be “U.S. persons”, are deemed so because they were born in the United States. To put it simply: The United States exercises taxing jurisdiction based on reasons that include “place of birth”. The fact that somebody is a citizen and resident of another nation is irrelevant. If you were born in the United States, then you are subject to U.S. law and control wherever you may reside. The only defense is to have “relinquished U.S. citizenship”. Relinquishment is a broad term that includes “renunciation”. President Obama promised “change you can believe in”. President Obama delivered. The most enduring legacy of the Obama presidency will be that he has made a “Certificate of Loss of U.S. Nationality” (“CLN”) the most sought after document in the world today.
Furthermore, the United States and the United States alone decides who is a U.S. citizen.
See comments about the BBC Interview here and here.
Some of the interesting comments include:

Great job Keith. Hearing Jen (?) speak was very powerful. Even with understanding what is going on with this mess, to hear her speak just opened the wound a little wider if possible.
How they cannot see how absolutely disgusting CBT/FATCA is and how “exceptionally” abusive they are I will never understand. This mess has taught me what hatred feels like, something I could have well lived without.

and

Made my blood pressure boil hearing Treasury quoted as saying the rest of the world wants FATCA – Mythster Stack is a &%#*}#!!!!

and

Giving up US citizenship is not an alternative. It is a last resort solution. Cutting off one’s arm to escape the trap. One doesn’t get rid of a problem by getting rid of the victims of the problem. The only real solution to this problem is for the US to adopt residence as a standard for taxation, the same as every other country in the world. Only then will non-resident US citizens be placed on an equal footing with other non-resident citizens from other countries and no longer have to suffer the consequences of discrimination.

The $2350 "relinquishment fee" does NOT mean that people should simply renounce citizenship


 
On September 6, 2015 it was reported on the Isaac Brock Society that the State Department intended to begin charging $2350 for both “relinquishments” and “renunciations”. The proposed rule is to be published on  September 8, 2015. With respect to “relinquishments” the Federal Register states:

The Department is expanding the application of and renaming item 8 in the Schedule of Fees to “Administrative Processing of Request for Certificate of Loss of Nationality.” The fee will be applied to cover not only services to U.S. nationals (i.e., U.S. citizens and non-citizen nationals) who relinquish nationality by taking the oath of renunciation under 8 U.S.C. 1481(a)(5), but also to cover services to U.S. nationals who relinquish nationality under 8 U.S.C. 1481(a)(1) to 1481(a)(4) or any earlier-in-time relinquishment statutes administered by the Department of State and request a Certificate of Loss of Nationality. Currently, the fee is paid by those taking the oath of renunciation under 8 U.S.C. 1481(a)(5) at the time the oath is sworn. The fee would be collected from an individual claiming to have relinquished nationality at the time that person requests the Certificate of Loss of Nationality (that is, after completing Form DS-4079 and signing before a consular officer Part II of Form DS-4079 entitled “Statement of Voluntary Relinquishment of U.S. Citizenship”). The Fiscal Year 2012 Cost of Service Model update demonstrated that documenting a U.S. national’s relinquishment of nationality is extremely costly whether the service is for a relinquishment under 8 U.S.C. 1481(a)(1) to 1481(a)(4) or a relinquishment by renunciation under 8 U.S.C. 1481(a)(5). Both require American consular officers overseas to spend substantial amounts of time to accept, process, and adjudicate cases. The cost of the service is not limited to the time consular officers spend with individuals prior to and at appointments. The application is reviewed both overseas and domestically to ensure full compliance with the law. The consular officer must determine that the individual is indeed a U.S. national, advise the individual on the consequences of loss of nationality, and ensure that the individual fully understands the consequences of loss, including the inability to reside in the United States unless properly documented as an alien. Through documentary review, consideration of the individual’s circumstances, and careful interviewing, the consular officer also must determine whether the individual is seeking loss of nationality voluntarily and with the requisite intent, as required by U.S. Supreme Court case law and by statute (8 U.S.C. 1481). This determination can be especially demanding in the case of minors or individuals with a developmental disability or mental illness.

The consular officer must also ensure that the commission of an expatriating act was as prescribed by statute, which is often an issue in non-renunciation relinquishment cases. The loss of nationality service must be documented on several forms and in consular systems as well as in a memorandum from the consular officer to the Department’s Directorate of Overseas Citizens Services in Washington, DC (“OCS”), in the Bureau of Consular Affairs. All forms and memoranda are closely reviewed in OCS by a country officer and a senior approving officer, and may include consultation with legal advisers. This review entails close examination of whether the requirements of voluntariness and intent are satisfied in the individual case. Some applications require multiple rounds of correspondence between post and the Department. The final approval of the loss of nationality must be done by law within the Department (8 U.S.C. 1501), by OCS, after which the case is returned to the consular officer overseas for final delivery of the Certificate of Loss of Nationality to the individual. In addition, every individual issued a Certificate of Loss of Nationality is advised of the possibility of seeking a future Administrative Review of the loss of nationality, a time-consuming process that is conducted by OCS’s Office of Legal Affairs.

Currently, nationals who renounce nationality pay a fee of $2,350, while nationals who apply for documentation of relinquishment of nationality by the voluntary commission of an expatriating act with the intention to lose nationality, do not pay a fee. However the services performed in both situations are similar, requiring close and detailed case-by-case review of the factors involved in a request for a Certificate of Loss of Nationality, and both result in similar costs to the Department.

In the past, individuals seldom requested Certificates of Loss of Nationality from the Department to document relinquishment. Although the Department was aware that an individual relinquishment service was among the most time consuming of consular services, it was rarely performed so the overall cost to the Department was low and the Department did not establish a fee. Requests for a Certificate of Loss of Nationality on the basis of a non-renunciatory relinquishment have increased significantly in recent years, and the Department expects the number to grow in the future, causing the total cost of this service to increase. At the same time, the Department funds consular services completely from user fees. The Cost of Service Model continues to demonstrate that such costs are incurred by the Department when accepting, processing, and adjudicating relinquishment of nationality cases; therefore, the Department will collect a fee from all individuals seeking a Certificate of Loss of Nationality. Taking into account the costs of both renunciation and non-renunciation relinquishment processes, the fee will be $2,350.

The fee will take effect on November 9, 2015. I have been aware of this impending fee increase for some time. Hence, it comes as no surprise. Furthermore, if you accept the validity of the $2350 fee for renunciations then a similar fee for “relinquishments” is justifiable.

There has been and continues to be extensive discussion of this increase. What does it mean? Why now? Is this to discourage “relinquishments”? What does this say about the character of the U.S. Government?  At a bare minimum, the fee increase is a continuation of a pattern of abuse of Americans abroad. That said …
The purpose of this post is to comment on a question asked by, USXCanada, who is a long time (I believe) blogger at the Isaac Brock Canada. He or she includes an interesting question in this comment:

The best thing about the utterly predictable extension of the $2350 fee to relinquishers?
Not having to endure any more speculations about the convoluted retroactive possibilities for exhuming prehistoric personal intentions to lose U.S. citizenship – especially by extraterritorials who did any such thing as (1) hold a U.S. passport (2) vote in a U.S. election (3) file any U.S. taxes (4) work a week as a temp janitor for a non-U.S. municipality.
How about a Brock contest to see who can do closest guess on (1) when the current fee next increases? (2) how much it goes up by? Here’s mine: September 2016 to a round $3000. Further out? At least $6000 by September 2020.
Off-the-top-of-the-head question:  Is there now any circumstance at all where an exiter will prefer to seek relinquishment because the morass of rules confers some benefit that would be lost through renunciation? (PS – Staying off the name-and-shame list is NOT one.)

The answer is yes! The “relinquishment fee” is an irritation but it is NOT a reason to simply default into a “renunciation”. Now, I am writing this post quickly and I invite others to add their thoughts. But, here are categories  of reasons why those who believe that they have validly relinquished U.S. citizenship, under U.S. law, should insist on a CLN based on a relinquishment.
Category 1 – For at least “citizenship purposes” the relinquishment date is always prior to the renunciation date.
Category 2 – The difference in treatment under other U.S. laws between “renunciations” and other forms of relinquishment.
Let’s examine each category.
 
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Taxability Freedom Day: On what day does a "U.S. person" cease to be a "U.S. taxpayer"?

Update: October 9, 2015
This post focuses largely on the role of form 8854 in relinquishing U.S. citizenship for tax purposes. See also my more recent post which discusses the role of the Certificate of Loss of Nationality in relinquishing U.S. citizenship.


 
Introduction …
There is a difference between:

  1. What is your tax liability IF you are a “U.S. person” for tax purposes”;and
  2. Whether you are a U.S. person for tax purposes at all.

I find that many of the blog posts and articles confuse these two issues.
Remember that “U.S. person” for tax purposes INCLUDES (but is not limited to) U.S. citizens and Green Card Holders.
What this post is NOT …
This post is NOT to discuss your specific U.S. tax liability – the AMOUNT of U.S. taxes owing in general. It is NOT to discuss how U.S. taxes are calculated in general. It is NOT to discuss the “taxes that may be triggered” by expatriation. Only those who are “U.S. persons” are subject to U.S. taxation. Therefore, in order to end the “jurisdiction of the United States to impose taxes on you (your “taxability”):
You must terminate your status as a “U.S. person” for tax purposes. This means that you must either “relinquish your U.S. citizenship” under ALL applicable legislation or terminate your Green Card.
What this post IS …
This post is to explain the date that you cease to be a “U.S. person” for tax purposes. At what point, can you say with confidence:
“I’m free. The U.S. no longer has the right to treat me as a “U.S. person” for tax purposes. Nothing that I do from this point on will generate “U.S. tax liability”.
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Relinquish or renounce U.S. citizenship – The course

[youtube https://www.youtube.com/watch?v=uOjdP7sAN6Y&w=560&h=315]

U.S. Citizenship – Where taxation and citizenship intersect

“Relinquish or renounce U.S. citizenship – The Course”
What: Relinquish or Renounce U.S. Citizenship – The Course
Who: John Richardson – Toronto Lawyer – Specializing in “solving the problems of U.S. citizenship” and the relinquishment of U.S. citizenship
When:
Toronto, Canada – Saturday October 1/16 – 10:00 a.m. – 3:00 p.m.
Where: Toronto Downtown – Exact address TBA
Cost: $500 per attendee plus taxes
Enrollment limited to 10 participants!
Why would you participate in this seminar?
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Thoughts on: Major updates to Foreign Affairs Manual on U.S. citizenship renunciation procedures


In a well researched post, “Eric” at the Isaac Brock Society writes about updates to the U.S. FAM “Foreign Affairs Manual” on RENUNCIATION (not relinquishment) procedures. The revised procedures are here:
115645
It appears that  “two interviews” will be required, but that only the second interview (actual renunciation”) must be in person.
On balance, it’s clear that the State Department is directing it’s attention to the question of whether the would be “renunciant” really does intend to relinquish U.S. citizenship (after going through all the work of tax compliance, paying the fees, etc.).
The following changes are notable:
1. In the view of the State Department the “intention” to relinquish U.S. citizenship requires an “understanding of the consequences” of no longer being a U.S. citizen.

Comprehension
: When faced with a potential renunciant, a consular officer must make a judgment whether the individual fully understands what he or she is seeking to do, including the consequences such as losing the right to reside in the United States without documentation as an alien. Absent such an understanding, it cannot be said that the individual intended to relinquish his or her U.S. nationality when he or she executed the oath of renunciation. You must also assess whether the person is acting of duress, coercion, or undue influence from others and without reservation. (See 7 FAM 1290 for guidance about minors,persons with mental incompetenceor mental or developmental disability, prisoners, criminal defendants or convicts in pleabargain cases, members of cults, and other …

2. There is NO “intent to renounce” if you intend to continue to live in the United States

Potential renunciants may also express the intention to continue to reside in the United States or its territories and possessions without documentation as aliens. Since this right of residency is a fundamental right that U.S. citizens and nationals possess, potential renunciants who wish to retain this right do not possess the intent necessary for an effective renunciation. Consular officers must not take renunciations from any individual who seeks to retain the right to reside in the United States or one of its territories or possessions.

3. No lawyers – “whether the person is acting of duress, coercion, or undue influence from others and without reservation”

In order for the consular officer to ascertain whether the renunciant’s action in relinquishing his or her U.S. citizenship is a product of his or her own free will, a parent, guardian, attorney, legal representative, or other representative should not participate in any interview, including a telephonic one, conducted by the consular mission member or attend the administration of the oath of renunciation.

4. Interesting – The State Department views U.S. citizenship as ALLEGIANCE to the United States

If possible, the renunciant should stand and raise his or her right hand while taking the Oath of Renunciation. This formality and the symbols of the United States underscore that the renunciant is severing all ties of allegiance to the United States and in doing so loses the protections that the U.S. Government provides to citizens and noncitizen nationals

5. It’s possible that a RENUNCIATION might not be approved by the State Departement

If a renunciation is undertaken but not approved by the Department, the fee is not refundable.

6. U.S. citizenship continues to be primarily about taxation and renunciants should be warned about the Reed Amendment

a.If a would – be renunciant indicates a desire to renounce U.S. citizenship for the purpose of tax avoidance, (see INA 212(a)(10)(e) and any pertinent guidance adopted by the Department), you should consult 7 FAM 1262.4(i) regarding recordation in the consular officer opinion of the purpose stated by the renunciant, and should inform the person that:
(1) Renunciation may not exempt him or her from U.S. income taxation; and
(2) If the Department of Homeland Security determines that the renunciation is motivated by tax avoidance purposes, the individual will be found inadmissible to the United States under Section 212(a)(10)(E) of the Immigration and Nationality Act (INA 212(a)(10)(E), 8 U.S.C
.
1182(a)(10)(E)), as amended.

7. The Consular officer has the right to postpone the “renunciation interview” (those who are renouncing prior to age 18 1/2 should take particular note of this provision)

Consular Officer Discretion
Prior to administering the Oath of Renunciation and recommending loss, the consular officer must exercise his or her judgment that the renunciant is acting voluntarily and with the intent to lose U.S. citizenship. The consular officer has discretion to request a further period of reflection should this not appear to be the case.

8. Form 4079 is NOT required for “renunciation cases” – but may be useful for the DOS…

While Form DS – 4079, Request for Determination of Possible Loss of United States Citizenship, is not standard or typically necessary for renunciation cases, where there is a question about intent it may prove useful.
Further, the DS -4079 may serve as a helpful tool for information gathering in appropriate cases regarding, for example, ties to the United States and the host country, or possible earlier commission of an expatriating act. In short, consular officers should not seek completion and signature of the DS – 4079 in renunciation cases as a matter of routine but only if pertinent as described above.

Hmmm…. It strikes me that renunciants should NOT seek to complete the form either. Clearly, nothing good can come from it. On the other hand, Form 4079 will continue to be vital for those claiming “relinquishments”. Clearly, the Department of State is beginning to separate “renunciations” from “relinquishments”.
 
 

Part 2: Cook v. Tait 1924 – The evolution of Citizenship, Taxation and "Citizenship Taxation"


Part 1 of this post traced the evolution of taxation. This brings us to:
Part 2 – The Evolution of Citizenship

In 1924, the Supreme Court of the United States, per Justice McKenna ruled in Cook v. Tait that U.S. “citizenship taxation” was constitutional. Since that time Cook v. Tait has been cited to justify the constitutionality, although not necessarily the propriety, of “citizenship taxation”. Note that “citizenship taxation” contains both the words “citizenship” and “taxation”. As a result, Justice McKenna’s decision along with the relevant statutes, may tell us a great deal about what “taxation” and “citizenship” meant in 1924.
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Part 9 – For #Americansabroad: US "citizenship taxation" is "death by a thousand cuts, but the S. 877A Exit Tax is "death by the guillotine"

1995 – The origins of the S. 877A Exit Tax – Video of House Oversight Committee
 

 
This testimony in this video covers a number of perspectives. It includes a consideration of whether the S. 877A rules are a “human rights violation”. This video should be watched in its entirety. It illustrates the viciousness of the Exit Tax and the attitude of the Clinton administration. There is a suggestion that the purpose of the S. 877A rules was to “keep people from leaving”. If you find any testimony or questions that address the problems of “Americans Abroad”, please leave a comment describing the speaker, time and the substance. It appears that there was little or no consideration of how this would affect “American Citizens Abroad”.
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Part 6 – "Surely, expatriation is NOT worse than death! The two million asset test should be raised to the Estate Tax limitation – approximately five million dollars – It's Time"

This is Part 6 of a 9 part series on the Exit Tax.
The 9 parts are:
Part 1 – April 1, 2015 – “Facts are stubborn things” – The results of the “Exit Tax
Part 2 – April 2, 2015 – “How could this possibly happen? Understanding “Exit Taxes” in a system of residence based taxation vs. Exit Taxes in a system of “citizenship (place of birth) taxation”
Part 3 – April 3, 2015 – “The “Exit Tax” affects “covered expatriates” – what is a “covered expatriate”?”
Part 4 – April 4, 2015 – “You are a “covered expatriate” – How the “Exit Tax” is actually calculated”
Part 5 – April 5, 2015 – “The “Exit Tax” in action – Five actual scenarios with 5 actual completed U.S. tax returns.”
Part 6 – April 6, 2015 – “Surely, expatriation is NOT worse than death! The two million asset test should be raised to the Estate Tax limitation – approximately five million dollars – It’s Time”
Part 7 – April 7, 2015 – “The two kinds of U.S. citizenship: Citizenship for immigration and citizenship for tax”
Part 8 – April 8, 2015 – “I relinquished U.S. citizenship many years ago. Could I still have U.S. tax citizenship?”
Part 9 – April 9, 2015 – “Leaving the U.S. tax system – renounce or relinquish U.S. citizenship, What’s the difference?”
_________________________________________________________________________________________
Introduction
Many Americans abroad have had their lives turned upside down by the combination of FATCA and the enforcement of U.S. “place of birth” taxation. Those who are “long term” residents abroad find themselves caught between a “rock and a hard place”.
On the one hand they can’t afford the costs and complexity of filing U.S. tax returns.
On the other hand, many “middle class” Americans abroad cannot relinquish their U.S. citizenship (freeing themselves from the complexity of U.S. tax laws and the IRS) without paying the U.S. an “Exit Tax”.
Many Americans abroad can neither afford to comply with U.S. tax laws nor afford to relinquish U.S. citizenship.
The “Exit Tax”
Yes, many “long term” U.S. citizens abroad are in a position where they are forced to “buy their freedom from the U.S. Government”. I am reminded of one of Ronald Reagan’s great speeches where he noted, that when it comes to Americans:


 
“The price of our freedom has sometimes been high. But, we have never been willing to pay that price”.
I often wonder what President Reagan would have thought of the America today. Yes, the United States of America has joined some of the nastiest regimes in history with it’s “Exit Tax”. (Well, we all know, there must be a good policy reason for it. Just ask your Congressman.)
Not all Americans abroad are subject to the “Exit Tax”. Only “covered expatriates” are subject to the “Exit Tax”.
The obvious question is:
“How does somebody become a “covered expatriate?”
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Renouncing US citizenship? How the S. 877A "Exit Tax" may apply to your Canadian assets – 25 Parts


Introduction:
usexittax
There is much discussion of the U.S. rules which operate to impose taxation on the residents of other countries and income earned in those other countries. You will hear references to “citizenship taxation”, “FATCA Canada“, PFIC, etc. It is becoming more common for people to wish to relinquish their U.S. citizenship. The most common form of “relinquishment is renunciation”. The U.S. tax rules, found in the Internal Revenue Code, impose taxes on everything. There is even a tax on “renouncing U.S. citizenship”. I don’t mean the $2350 USD administrative fee which everybody has to pay. (Isn’t that really a tax?). I mean a tax on your assets. To be clear:
You must pay a price to NOT be a U.S. citizen.
This tax is found in S. 877A of the U.S. Internal Revenue Code.
It’s defined as the:
Tax responsibilities of expatriation
Few people are aware of this tax. Fewer still understand how it works.  As FATCA operates to enforce U.S. taxation on many Canadian citizens, and increasing numbers wish to NOT be U.S. citizens, the importance of understanding the U.S. “Exit Tax” increases.
It is particularly important to understand what triggers the “Exit Tax”. You will be subject to the “Exit Tax” if you are a “covered expatriate”. You must know what that means and why, sooner or later, everybody will become a “covered expatriate”.
The “Exit Tax” is not a simple “token tax”. For Canadians, the tax can be a significant percentage of their net worth. Furthermore, the tax is payable NOT on actual gains, but on “pretend gains”. (Where would the money come from to pay the tax?)
Hang on to your seats. You will shocked, amazed and horrified by this.
Since the advent of FATCA in Canada, this issue is increasingly important.*
To be forewarned is to be forearmed!
This is a 22 part series which is designed to provide you  with some basic education on:
How the U.S. S. 877A Exit Tax rules work; and
How they particularly affect Canadians with a U.S. birthplace, who lived most of their lives in Canada.
This will be covered over a 9 day period in a “9 part” series. (It has since been expanded to 16 posts and counting.)
Although this series is beginning on “April Fools Day”, I assure that this is NOT a joke.
The 16 parts are:
Part 1 – April 1, 2015 – “Facts are stubborn things” – The results of the “Exit Tax
Part 2 – April 2, 2015 – “How could this possibly happen? “Exit Taxes” in a system of residence based taxation vs. Exit Taxes in a system of “citizenship (place of birth) taxation
Part 3 – April 3, 2015 – “The “Exit Tax” affects “covered expatriates” – what is a “covered expatriate“?”
Part 4 – April 4, 2015 – “You are a “covered expatriate” How is the “Exit Tax”  actually calculated
Part 5 – April 5, 2015 – “The “Exit Tax” in action – Five actual scenarios with 5 actual completed U.S. tax returns
Part 6 – April 6, 2015 – “Surely, expatriation is NOT worse than death! The two million asset test should be raised to the Estate Tax limitation – approximately five million dollars – It’s Time
Part 7 – April 7, 2015 – “Why 2015 is a good year for many Americans abroad to relinquish U.S. citizenship – It’s the exchange rate
Part 8 – April 8, 2015 – “The U.S. “Exit Tax vs. Canada’s Departure Tax – Understanding the difference between citizenship taxation and residence taxation
Part 9 – April 9, 2015 – “For #Americansabroad: US “citizenship taxation” is “death by a thousand cuts, but the S. 877A Exit Tax is “death by the guillotine”
Part 10 – April 10, 2015 – “The S. 877A Exit Tax and possible relief under the Canada U.S. Tax Treaty
Part 11 – April 11, 2015 – “S. 2801 of the Internal Revenue Code is NOT a S. 877A “Exit Tax”, but a punishment for the “sins of the father (relinquishment)
Part 12 – April 12, 2015 – “The two kinds of U.S. citizenship: Citizenship for “immigration and nationality” and citizenship for  “taxation” – Are we taxed because we are citizens or are we citizens because we are taxed?”
Part 13 – April 13, 2015 – “I relinquished U.S. citizenship many years ago. Could I still have U.S. tax citizenship?
Part 14 – April 14, 2015 – “Leaving the U.S. tax system – renounce or relinquish U.S. citizenship, What’s the difference?
Part 15 – May 22, 2015 – “Interview with GordonTLong.com – “Citizenship taxation”, the S. 877A Exit Tax, PFICs and Americans abroad
Attention: Parts 16 – 21 focus on the “dual citizen exemption in the context of Canada’s Citizenship laws.
Part 16 – February 16, 2016 – “Why the S. 877A(g)(1)(B) “dual citizen exemption” encourages dual citizens from birth to remain US citizens and others (except @SenTedCruz) to renounce” – Note that this module is composed of Parts 16 – 21 – six posts.
Part 17 – February 16, 2016 – The history of Canada’s citizenship laws: Did the 1947 Canada Citizenship Act affirm citizenship or “strip” citizenship and create @LostCanadians?
Part 18 – February 16, 2016 -The S. 877A “dual citizen” exemption – I was born before the first ever Canada Citizenship Act? Could I have been “born a Canadian citizen”?
Part 19 – February 16, 2016 – The S. 877A “Dual Citizen” exemption: The 1947 Canada Citizenship Act – Am I still a Canadian or did I lose Canadian citizenship? (The “Sins Of The Father”)
Part 20 – February 16, 2016 -The S. 877A “Dual Citizen” exemption: The 1947 Canada Citizenship Act and the requirements to be “born Canadian
Part 21 – February 16, 2016 – “The S. 877A “Dual Citizen” exemption: I was born a dual citizen! Am I still “taxed as a resident” of Canada?
Part 22 – February 29, 2016 – “The S. 877A “Dual Citizen” exemption: MUST certify tax compliance for the five years prior to relinquishment
More on the United States Expatriation Tax – ongoing miscellaneous:
Part 23 – “How the 1966 desire to “poach” capital from other nations led to the 2008 S. 877A Exit Tax
Part 24 – “Clinton Treasury representative Les Samuels explains why the U.S. Exit Tax SHOULD apply to the assets of Americans abroad
Part 25 – “Relinquishing US citizenship: South African Apartheid, the Accidental Taxpayer and the exit tax
 
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* Why this is of increased importance: The role of FATCA and U.S. taxation in Canada
A picture/video tells a thousand words. Have a look at the “Rick Mercer FATCA video” in the following tweet:


FATCA is U.S. law which is designed to identify financial assets and people, outside the United States, that the U.S. believes are subject to its tax laws. (It makes no difference whether the person is a Canadian citizen”.) This includes people who were:
– born in the U.S.
– Green card holders
– people born to U.S. parents in Canada
– “snow birds” who spend too much time in the United States
The Government of Canada is assisting the United State to implement FATCA in Canada. To be specific:
– on February 5, 2014 the Government of Canada formally agreed to change Canadian law to identify “U.S. connected” Canadians in Canada
– in May of 2014, the Government of Canada passed Bill C 31 which contained the implementing legislation
– on July 1, 2014 FATCA became the law in Canada
– since July 1, 2014 many Canadians have received a “FATCA Letter” (can the U.S. claim you as a taxpayer?)
The Alliance For The Defence Of Canadian Sovereignty has sued the Government of Canada in Federal Court on the basis that the participation of the Canadian Government in FATCA, is in violation of the Charter Rights of Canadians. You can keep up with their progress on the Alliance blog” which is here.
FATCA is a tool to enforce “U.S. taxation in Canada”. The result is that more and more Canadian citizen/residents  will be forced to pay U.S. taxes. But, U.S. tax rules include much more than tax. They are source of comprehensive information gathering and “information returns”. Typical returns required by U.S. taxpayers in Canada include: FBAR, FATCA Form 8938, Form 5471, Form 3520, Form 3520A and many more.
In addition, U.S. tax rules are different from Canadian tax rules. The most painful example is that when:
– Canada allows a “tax free” capital gain on your principal residence
– the U.S. imposes a 23.8% tax on the sale of your principal residence (you get a $250,000 deduction)
Sound horrible?
It is, but:
It’s only Canadian citizens with a past “U.S. connection” who will be subject to these taxes. It is estimated that approximately one million Canadians may be subject (as “U.S. Subjects”) to these rules. But, Canadians with a “U.S. connection” are members of families. Therefore, U.S. taxation in Canada will impact all members of a Canadian family which has at least one “U.S. connected” member.
 
John Richardson
 

The "plain language" of S. 877A – To whom does the U.S. Exit Tax apply?

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.
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