August 9, 2020
DRAMATIC INCREASE IN US EXPATRIATES SURRENDERING THEIR CITIZENSHIP (AND TAX FILING REQUIREMENT WITH THE IRS) -HERE ARE LEGAL RULES - THERE ARE ALSO SEPARATE AND COMPLEX IRS TAX RULES
A. THE IMMIGRATION & NATIONALITY ACT Section 349(a)(5) of the Immigration and Nationality Act (INA) (8 U.S.C. 1481(a)(5)) is the section of law governing the right of a United States citizen to renounce abroad his or her U.S. citizenship. That section of law provides for the loss of nationality by voluntarily and with the intention of relinquishing nationality: "(5) making a formal renunciation of nationality before a diplomatic or consular officer of the United States in a foreign state, in such form as may be prescribed by the Secretary of State."
B. ELEMENTS OF RENUNCIATION A person wishing to renounce his or her U.S. citizenship must voluntarily and with intent to relinquish U.S. citizenship: appear in person before a U.S. consular or diplomatic officer, in a foreign country at a U.S. Embassy or Consulate; and sign an oath of renunciation Renunciations abroad that do not meet the conditions described above have no legal effect. Because of the provisions of Section 349(a)(5), U.S. citizens can only renounce their citizenship in person, and therefore cannot do so by mail, electronically, or through agents. In fact, U.S. courts have held certain attempts to renounce U.S. citizenship to be ineffective on a variety of grounds, as discussed below. Questions concerning renunciation of U.S. citizenship in the United Statespursuant to INA section 349(a)(6) must be directed to United States Citizenship and Immigration Services (USCIS) of the Department of Homeland Security.
C. REQUIREMENT - RENOUNCE ALL RIGHTS AND PRIVILEGES A person seeking to renounce U.S. citizenship must renounce all the rights and privileges associated with such citizenship. In the case of Colon v. U.S. Department of State, 2 F.Supp.2d 43 (1998), the U.S. District Court for the District of Columbia rejected Colon’s petition for a writ of mandamus directing the Secretary of State to approve a Certificate of Loss of Nationality in the case because, despite his oath of renunciation, he wanted to retain the right to live in the United States while claiming he was not a U.S. citizen.
D. DUAL NATIONALITY / STATELESSNESS Persons intending to renounce U.S. citizenship should be aware that, unless they already possess a foreign nationality, they may be rendered stateless and, thus, lack the protection of any government. They may also have difficulty traveling as they may not be entitled to a passport from any country. Statelessness can present severe hardships: the ability to own or rent property, work, marry, receive medical or other benefits, and attend school can be affected. Former U.S. citizens would be required to obtain a visa to travel to the United States or show that they are eligible for admission pursuant to the terms of the Visa Waiver Program. If unable to qualify for a visa, the person could be permanently barred from entering the United States. 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 (8 U.S.C. 1182(a)(10)(E)), as amended. Renunciation of U.S. citizenship may not prevent a foreign country from deporting that individual to the United States in some non-citizen status.
E. TAX & MILITARY OBLIGATIONS /NO ESCAPE FROM PROSECUTION Persons who wish to renounce U.S. citizenship should be aware of the fact that renunciation of U.S. citizenship may have no effect on their U.S. tax or military service obligations . You must file special forms and final tax returns with the IRS to avoid having to file taxes in the future. In addition, the act of renouncing U.S. citizenship does not allow persons to avoid possible prosecution for crimes which they may have committed or may commit in the future which violate United States law, or escape the repayment of financial obligations, including child support payments, previously incurred in the United States or incurred as United States citizens abroad.
F. RENUNCIATION FOR MINOR CHILDREN/INDIVIDUALS WITH DEVELOPMENTAL OR INTELLECTUAL DISABILITIES Citizenship is a status that is personal to the U.S. citizen. Therefore parents may not renounce the citizenship of their minor children. Similarly, parents/legal guardians may not renounce the citizenship of individuals who lack sufficient capacity to do so. Minors seeking to renounce their U.S. citizenship must demonstrate to a consular officer that they are acting voluntarily, without undue influence from parent(s), and that they fully understand the implications/consequences attendant to the renunciation of U.S. citizenship. Children under 16 are presumed not to have the requisite maturity and knowing intent to relinquish citizenship; children under 18 are provided additional safeguards during the renunciation process, and their cases are afforded very careful consideration by post and the Department to assess their voluntariness and informed intent. Unless there are emergent circumstances, minors may wish to wait until age 18 to renounce citizenship.
G. IRREVOCABILITY OF RENUNCIATION Finally, those contemplating a renunciation of U.S. citizenship should understand that the act is irrevocable, except as provided in section 351 of the INA (8 U.S.C. 1483), and cannot be canceled or set aside absent a successful administrative review or judicial appeal. Section 351(b) of the INA provides that an applicant who renounced his or her U.S. citizenship before the age of eighteen (or lost citizenship related to certain foreign military service under the age of 18) can have that citizenship reinstated if he or she makes that desire known to the Department of State within six months after attaining the age of eighteen. See also Title 22, Code of Federal Regulations, section 50.20. See also Section 50.51 of Title 22 of the Code of Federal Regulations regarding the administrative review of previous determinations of loss of U.S. citizenship. Renunciation is the most unequivocal way by which a person can manifest an intention to relinquish U.S. citizenship.
In addition to the legal rules set forth above, you must also separately comply with the IRS rules to achieve your goal of no longer filing US tax returns and paying US taxes. Those rules are complex and require filing the form 8854 along with a final tax return. We have counsel hundred of clients in this procedure and assisted them filing the required forms with great success for over 10 years. Contact us if you need assistance and help. We are CPAs and Attorneys and can provide you with ALL of the expertise you need. Our next blog post will discuss the Tax requirements adn rules. EMAIL US WITH QUESTIONS FOR FOR HELP