# Renunciation - question related to children



## iota2014

Hello, I have just joined this forum. My situation is that I was born in the U.S., came to the UK many years ago, married a Brit and have lived here ever since. Now retired, with dual citizenship, and only recently learned that U.S. citizens are supposed to file tax returns even though living abroad.

This has caused me a lot of anxiety, but after a lot of searching and head-scratching, and with helpful posts from others, I think I've learned that I'm not required to file tax retun or FBARs as my pensions and savings are all exempt. But I still need to divest myself of my U.S. citizenship in order to be allowed to continue to have nomal access to banking facilities, as U.S. citizens are no longer welcome at some banks as they don't want the hassle of FATCA reporting.

So I've read through the forms required to relinquish or renounce. It seems both paths require Form DS-4079, and this form has a question which worries me:

"Did you register your children as U.S. citizens"

Does anyone know why they need to ask this question? I don't see what bearing it has on the question of my own citizenship status, as it relates to other people. But perhaps there is a reason?

Any comments would be welcome.


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## Bevdeforges

I've moved you over here to the Expat Tax section, as there is quite a bit of information on the topic of renunciation tucked in amongst the rhetoric and argument.

The question about whether or not you registered your kids as US citizens relates to whether or not you have availed yourself of "consular services" and probably relates more to whether or not your kids will be able to renounce without having to pay the steep fee (currently $2350) when and if they decide to renounce later in life.

The banking issue may or may not be resolved by renouncing. Unfortunately, your US birthplace (assuming that's where you were born) is a red flag to anyone looking to avoid FATCA issues - and any bank unwilling to deal with you now will want "proof" in the form of a renunciation certificate in the future, so you may or may not solve your problem.

There is also a measure being proposed to exempt banks and US citizens from the FATCA stuff regarding bank and other accounts in their country of residence. Now, the chances of this actually passing and being adopted are anyone's guess, but it's a huge step in the right direction. (IMO at least.)
Cheers,
Bev


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## iota2014

Bevdeforges said:


> I've moved you over here to the Expat Tax section, as there is quite a bit of information on the topic of renunciation tucked in amongst the rhetoric and argument.


Thanks.



> The banking issue may or may not be resolved by renouncing. Unfortunately, your US birthplace (assuming that's where you were born) is a red flag to anyone looking to avoid FATCA issues - and any bank unwilling to deal with you now will want "proof" in the form of a renunciation certificate in the future, so you may or may not solve your problem.


If I can manage to renounce, I'll _have_ proof. That's why I want to renounce.



> There is also a measure being proposed to exempt banks and US citizens from the FATCA stuff regarding bank and other accounts in their country of residence. Now, the chances of this actually passing and being adopted are anyone's guess, but it's a huge step in the right direction. (IMO at least.)


Not until/unless it gets passed, sadly. :-(

Thanks for the reply.


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## Pacifica

Iota2015 said:


> "Did you register your children as U.S. citizens"
> 
> Does anyone know why they need to ask this question? I don't see what bearing it has on the question of my own citizenship status, as it relates to other people. But perhaps there is a reason?



If you’re planning to renounce (_Immigration and Nationality Act_, s. 349(a)(5)), this question will have no bearing on you, as you are a US citizen until the day you renounce (that is, unlike a prior relinquishment, you're not disputing that you currently are a US citizen).

But if a person is applying for a CLN based on a previous relinquishing act -- say, they’re claiming that they relinquished their citizenship in 2012 by naturalising as a UK citizen (_INA_, s. 349(a)(1)) -- they should not have been acting as a USC after the date of their claimed relinquishing act. That’s why the DS-4079 has the questions about voting, using a US passport, did you register your children, etc. 

The DS-4079, “Request for Determination of possible Loss of US Citizenship” is required for relinquishments other than by renunciation. But although it’s not required for renunciations, but Dept of State gives the consulates the option to use it with renunciations if they wish, and quite a few do. It doesn't really play a substantive role in a renunciation, though, as the relinquishing circumstances of a renunciation are very straightforward.

In sum, if you’re renouncing, such questions have no bearing on the outcome of your getting a CLN. They’re not really relevant. Whereas if a person is claiming they relinquished in 2012 but registered their child (or did any act indicative of their being a US citizen) in 2013, that casts doubt on their claim that they really did relinquish their citizenship when they’re claiming they did.


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## BBCWatcher

Iota2015 said:


> But I still need to divest myself of my U.S. citizenship in order to be allowed to continue to have nomal access to banking facilities, as U.S. citizens are no longer welcome at some banks as they don't want the hassle of FATCA reporting.


Have you ever had such a problem?


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## Nononymous

BBCWatcher said:


> Have you ever had such a problem?


I'm inclined to agree here. Have you actually been denied banking services in the UK? Until it happens, renouncing may not be worth the cost.

Currently you are not required to file taxes or FBARs, you claim, so renouncing won't save you paperwork or money. Of course it will protect you from future US government idiocy. If it's an emotional "eff-you uncle sam" sort of decision, that's something I completely understand and support.

If you don't need to file FBARs then presumably you're under the limit for FATCA reporting so it shouldn't really be an issue.


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## Bevdeforges

Have to say that I agree. Not worth the $2350 until and unless you actually have an issue with your bank. And under several of the bilateral agreements, if your existing accounts are under $50,000 equivalent at the end of 2014 or whenever the reporting actually begins, the banks don't have to bother until the balances exceed that threshold. It tends to be in the area of opening new accounts (in a new bank) where folks are running into problems.

But that's decision to make (and your $2350 to spend or not).

One further consideration on renouncing that may or may not affect you - consider if you have assets (particularly bank accounts or IRA-type retirement funds) in the US or if you are eligible for US Social Security benefits. While there is no problem collecting your benefits from overseas if you're a foreigner, there is the little matter of the 30% withholding. As a US citizen, you can normally get out of having the 30% (or in some cases any withholding at all) when you withdraw funds from a US account.
Cheers,
Bev


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## iota2014

@Pacifica -

Thanks so much for your very helpful reply. Much appreciated.


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## iota2014

BBCWatcher said:


> Have you ever had such a problem?


Yes, that's how I learned that U.S. citizens living in another country are supposed to file U.S. tax returns. It came as complete news to me. A couple of weeks ago I tried to open a very simple savings account - no can do.

That one doesn't matter, but NS&I do matter to me. They're closing the accounts of U.S. citizens to avoid having to deal with FATCA. Whether they will apply this to all products, including ISAs and savings certificates, seems to be uncertain at present.


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## iota2014

Bevdeforges said:


> One further consideration on renouncing that may or may not affect you - consider if you have assets (particularly bank accounts or IRA-type retirement funds) in the US or if you are eligible for US Social Security benefits. While there is no problem collecting your benefits from overseas if you're a foreigner, there is the little matter of the 30% withholding. As a US citizen, you can normally get out of having the 30% (or in some cases any withholding at all) when you withdraw funds from a US account.
> Cheers,
> Bev


Thanks for mentioning it. This aspect doesn't affect me, as I have no US accounts or funds of any kind, and am not eligible for any Social Security benefits.


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## iota2014

Iota2015 said:


> ... I think I've learned that I'm not required to file tax retun or FBARs as my pensions and savings are all exempt.


Tax advisor just rang back to tell me that I do have to file both. :-(


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## Nononymous

iota2014 said:


> Yes, that's how I learned that U.S. citizens living in another country are supposed to file U.S. tax returns. It came as complete news to me. A couple of weeks ago I tried to open a very simple savings account - no can do.
> 
> That one doesn't matter, but NS&I do matter to me. They're closing the accounts of U.S. citizens to avoid having to deal with FATCA. Whether they will apply this to all products, including ISAs and savings certificates, seems to be uncertain at present.


If you have a few minutes, please do everyone a favour by reporting the fact that you were denied basic banking services to some of the expat organizations that are fighting FATCA. Bev would have the details for whatever it's called in Switzerland, but I'm sure the Isaac Brock Society (a group pushing through a lawsuit against the Canadian government for agreeing) would love to hear of another example.


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## iota2014

Nononymous said:


> Currently you are not required to file taxes or FBARs, you claim, so renouncing won't save you paperwork or money.


Unfortunately, I was mistaken. Tax advisor says I must file both. So renouncing becomes even more necessary.


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## Nononymous

iota2014 said:


> Unfortunately, I was mistaken. Tax advisor says I must file both. So renouncing becomes even more necessary.


I was a bit skeptical about that - you'd only be exempt from filing if you had very low income (or possibly if it was only UK state pensions) and virtually no savings to report (total of all accounts under $10k). Remember also that FBAR applies to joint accounts held with a non-US spouse.

At this point you have three basic options:

1. Renounce and deal with the exit-the-tax-system procedure, which is basically five years' compliance on tax filings and FBAR reporting (either through the "streamlined program" or simply filing late, a.k.a. "quiet disclosure") plus a few additional forms.

2. Become tax compliant (same two methods as above) and continue going forward without bothering to renounce. This would require that UK banks are willing to keep you as a customer despite your US birthplace.

3. Ignore the whole situation. The US does not know about you yet, and if you are identified by FATCA it's by no means clear that they can or would do anything about it, assuming you are not a multi-millionaire. But of course you'd still have the banking issue to cope with.


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## iota2014

Nononymous said:


> I was a bit skeptical about that - you'd only be exempt from filing if you had very low income (or possibly if it was only UK state pensions) ...


It is indeed only a UK state pension and a UK local authority pension, both to be excluded from gross income according to the instructions I found online. But the tax advisor says not only must I file but will probably have to pay tax because it's not earned income so I don't get the Foreign Earned Income Exclusion. I don't really understand, I admit, how I can be taxed on these pensions if they're exempt.



> ... and virtually no savings to report (total of all accounts under $10k).


Most of my savings - about £20,000 - are in tax-free products with NS&I, which is owned by the UK Government. The instructions say these accounts aren't reportable but the tax advisor says they are.



> Remember also that FBAR applies to joint accounts held with a non-US spouse.


Not got any of those.


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## Nononymous

You may want to consult with another (better) tax advisor. Your own research might be better informed. Particularly the bit about paying tax on a state pension because it's not excluded by FEIE - that just sounds wrong.

This still doesn't solve the problem of being unable to open a bank account, but that may only be a problem with a few specific banks. 

The other issue is whether you'll be FATCA-reported by NS&I. Do they have any record of your place of birth, or anything other indication of US citizenship? If not, and they don't subsequently ask, you would not be reported under FATCA. If they do ask but don't demand proof, you have the option of not answering truthfully.* (And if you were reported, so what, quite possibly you're not obliged to file.)

For the time being you might be best off just continuing as you were, and ignoring the situation.

* This is my current strategy, as a dual citizen in Canada. One financial institution has asked me about US citizenship. I lied to them. No further questions, no proof required. Problem solved.


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## iota2014

I think you may be right about the tax advisor. To be fair, it wasn't a proper consultation - I rang looking for an estimate for getting it all straightened out, all necessary forms filed etc, so his comments about my situation were ad hoc, so to speak. These US/UK tax advisors may not be as well-informed about areas like state pensions etc.

NS&I won't report me, they'll just ask me the question and if they don't like the answer they'll notify me that they're closing the accounts. So far, only ordinary savings accounts are being purged. I had one of those, but snuck in and closed it last week. 

NS&I may yet be challenged on this purge-all-US-accountholders policy, as it is causing quite a bit of resentment that the UK Government should sign up to FATCA with one hand while taking the easy way out with its banking hand (NS&I).

Thanks for the info about your experience. Food for thought.


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## Nononymous

iota2014 said:


> NS&I won't report me, they'll just ask me the question and if they don't like the answer they'll notify me that they're closing the accounts.


Can't speak specifically to the UK case, but in general, if a suspected-US-citizen customer refuses to cooperate and either closes their account or has their account closed by the bank, that fact is suppose to be reported to the US under FATCA. What if anything happens to that data is anyone's guess, of course. (If you closed the account before the question was asked, you should be okay.)


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## iota2014

Nononymous said:


> Can't speak specifically to the UK case, but in general, if a suspected-US-citizen customer refuses to cooperate and either closes their account or has their account closed by the bank, that fact is suppose to be reported to the US under FATCA. What if anything happens to that data is anyone's guess, of course. (If you closed the account before the question was asked, you should be okay.)


As I understand it, NS&I are closing accounts precisely so that they never have to report anyone to FATCA. They say their systems weren't designed for these kind of demands and can't cope. And since NS&I have "Deemed-compliant" status, they won't be required to report.

Which is better for me than if they were reporting, so I shouldn't get sarcastic - hence the edit.


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## Nononymous

iota2014 said:


> As I understand it, NS&I are closing accounts precisely so that they never have to report anyone to FATCA. They say their systems weren't designed for these kind of demands and can't cope. And since NS&I have "Deemed-compliant" status, they won't be required to report.


Ah, well at least that's a fair policy, though of course if they are deemed compliant they should just continue not caring about citizenship. You might find that when they ask the question, they don't try very hard to verify the answer. All I had to here was check a box saying that I wasn't a US citizen - no signing a W-8 form, no producing proof of where I was born. (If your accent gives you away, tell them you were born in Canada but you've lost your birth certificate and don't have a passport!)

Smaller credit unions here are exempt by virtue of size and having local clients only, and are fine for basic banking - you might find the equivalent in the UK.


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## Nononymous

iota2014 said:


> Most of my savings - about £20,000 - are in tax-free products with NS&I, which is owned by the UK Government. The instructions say these accounts aren't reportable but the tax advisor says they are.


Brief note of caution and clarification: if these are similar to Canadian tax-protected retirement savings vehicles, the deal is that they are exempt under FATCA (so won't be reported by the banks) but you are still supposed to report them on your FBAR if you have more than $10k in total - brilliant, innit? 

Possibly with those accounts you'd have some other sort of paperwork requirement as well when filing US tax returns; I don't know the details myself because I'm not bothering to comply.


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## Bevdeforges

You may want to take a look at the US-UK tax treaty to see what it has to say about pensions (usually refers only to government pensions). United Kingdom (UK) - Tax Treaty Documents

In most of the US tax treaties, government pensions are subject to taxation only in the source country. Other private and savings-type pension may be treated differently. 
Cheers,
Bev


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## jbr439

@Iota2015

Is there a reason you're not considering a past relinquishment via the expatriating act of naturalizing as a Brit? Going this route means you don't pay the $2350 renunciation fee and your CLN is backdated to the date of the expatriating act (naturalization) which may also save you a bunch of tax liability issues.


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## iota2014

Bevdeforges said:


> You may want to take a look at the US-UK tax treaty to see what it has to say about pensions (usually refers only to government pensions). United Kingdom (UK) - Tax Treaty Documents
> 
> In most of the US tax treaties, government pensions are subject to taxation only in the source country. Other private and savings-type pension may be treated differently.
> Cheers,
> Bev


Thanks for the link. My reasoning for thinking I don't have to file is the IRS page at http://www.irs.gov/uac/Newsroom/Inf...ens-or-Dual-Citizens-Residing-Outside-the-U.S. which says:


> As a United States citizen, you must file a federal income tax return for any tax year in which your gross income is equal to or greater than the applicable exemption amount and standard deduction. For information about whether you must file a federal income tax return for a particular tax year, including exemption amounts and standard deductions, see Publication 501, Exemptions, Standard Deduction, and Filing Information, for that year.


Publication 501 for 2014 (http://www.irs.gov/pub/irs-prior/p501--2014.pdf) says on p.3:


> Gross income. Gross income is all income you receive in the form of money, goods, property, and services *that is not exempt from tax*.


And the DTI treaty page at DT: USA: Double taxation agreement, Article 19: Government service says:


> Notwithstanding the provisions of paragraphs 1 and 2 of Article 17 (Pensions, Social Security, Annuities, Alimony, and Child Support) of this Convention:
> 
> (a) any pension paid by, or out of funds created by, a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall, subject to the provisions of sub-paragraph b) of this paragraph, be taxable only in that State;


One of my pensions is paid by a Contracting State (Britain), and the other is paid by a local authority thereof. So I think they are both exempt and not to be included in Gross Income. Which leaves my Gross Income way below the filing threshold.

Hope someone may find this reasoning useful. I only checked one year, 2014.


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## iota2014

Ha! Gotcha, IRS!

From the 1040 instructions (http://www.irs.gov/pub/irs-pdf/i1040gi.pdf):


> *Taxpayer Bill of Rights*
> All taxpayers have fundamental rights they should be aware of when dealing with the IRS. The Taxpayer Bill of Rights, which the IRS adopted in June of 2014, takes existing rights in the tax code and groups them into the following 10 broad categories, making them easier to understand. Explore your rights and our obligations to protect them.
> 
> The right to be informed. *Taxpayers have the right to know what they need to do to comply with the tax laws.*
> [..]


If I had been told that remaining a U.S. citizen would mean filing a pointless complex tax return every year for the rest of my life, I would have naturalized 50 years ago when I married an Englishman. And relinquished my citizenship the same day.


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## iota2014

jbr439 said:


> @Iota2015
> 
> Is there a reason you're not considering a past relinquishment via the expatriating act of naturalizing as a Brit? Going this route means you don't pay the $2350 renunciation fee and your CLN is backdated to the date of the expatriating act (naturalization) which may also save you a bunch of tax liability issues.


I don't think they'd let me relinquish, as apparently I should have done it when I committed my "expatriating act", i.e. took up UK citizenship.


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## Pacifica

iota2014 said:


> I don't think they'd let me relinquish, as apparently I should have done it when I committed my "expatriating act", i.e. took up UK citizenship.


A person can claim relinquishment at any time – eg there’s no statute of limitations. 

If a person performed a potentially relinquishing act, as set out in the_Immigration and Nationality Act_, s. 349(a), with the intention of relinquishing their US citizenship by so doing and acted accordingly since that time, it is possible to get a CLN effective the date of the relinquishing act, no matter how long ago it was. Depends on the particular details of the person’s case, of course, but it’s pretty common.

Since they can’t get inside one’s mind, the intent is generally inferred from the person’s conduct after the relinquishing act, which is why the 4079 is important in relinquishment cases.

Many years ago both the US and Canadian governments were telling people (warning us basically) that if you naturalised, you’d lose your US citizenship, but they didn't mention CLNs, which almost no one seems to have heard of before 2011. Consequently a lot of people here were pretty surprised/shocked to find out in recent years that they might be considered US citizens after believing we were not, so we’ve been getting CLNs decades after the relinquishing act. I’m one of them and got my CLN 35 years after I actually relinquished.


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## jbr439

iota2014 said:


> I don't think they'd let me relinquish, as apparently I should have done it when I committed my "expatriating act", i.e. took up UK citizenship.


What Pacifica said!

Did you obtain/renew a US passport after naturalizing?


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## iota2014

Pacifica said:


> A person can claim relinquishment at any time – eg there’s no statute of limitations.
> 
> If a person performed a potentially relinquishing act, as set out in the_Immigration and Nationality Act_, s. 349(a), with the intention of relinquishing their US citizenship by so doing and acted accordingly since that time, it is possible to get a CLN effective the date of the relinquishing act, no matter how long ago it was. Depends on the particular details of the person’s case, of course, but it’s pretty common.
> 
> Since they can’t get inside one’s mind, the intent is generally inferred from the person’s conduct after the relinquishing act, which is why the 4079 is important in relinquishment cases.
> 
> Many years ago both the US and Canadian governments were telling people (warning us basically) that if you naturalised, you’d lose your US citizenship, but they didn't mention CLNs, which almost no one seems to have heard of before 2011. Consequently a lot of people here were pretty surprised/shocked to find out in recent years that they might be considered US citizens after believing we were not, so we’ve been getting CLNs decades after the relinquishing act. I’m one of them and got my CLN 35 years after I actually relinquished.


Hmm. Could it be? It would be fantastic not to have to pay the fee. It seems risky. What happens if they say no? Would I still be able to come back and pay the fee and renounce?

I only became a US citizen in 2007. I wonder if that makes a difference.


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## iota2014

jbr439 said:


> What Pacifica said!
> 
> Did you obtain/renew a US passport after naturalizing?


No. I haven't done anything as a U.S. citizen since naturalizing.


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## JustLurking

iota2014 said:


> ...and the DTI treaty page at DT: USA: Double taxation agreement, Article 19: Government service says...


Beware the 'saving clause'. DT: USA: Double taxation agreement, Article 1: General scope says:


> Notwithstanding any provision of this Convention except paragraph 5 of this Article, a Contracting State may tax its residents ..., and by reason of citizenship may tax its citizens, as if this Convention had not come into effect.
> 
> The provisions of paragraph 4 of this Article shall not affect: ...


I hope I'm wrong, but on first reading it looks like for US citizens, Article 19 is not an exception to the above.


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## BBCWatcher

Iota2014, are you sure about NS&I? From what I can determine, there was a temporary kerfuffle back in mid-2014, but by September, 2014, the U.K. press reported that NS&I apologized for screwing up and has no problem with U.S. citizen clients.


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## jbr439

iota2014 said:


> No. I haven't done anything as a U.S. citizen since naturalizing.


You can relinquish based on your naturalization. The only issue is your tax/compliance liability. The rules changed a couple of times in the 2000s, so you need to find out where you stand.


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## JustLurking

BBCWatcher said:


> Iota2014, are you sure about NS&I? From what I can determine, there was a temporary kerfuffle back in mid-2014, but by September, 2014, the U.K. press reported that NS&I apologized for screwing up and has no problem with U.S. citizen clients.


Here are two NS&I brochures dated 1st July 2015, just over four weeks ago, whose T&Cs say that these accounts may not be opened by "_a person who is either a US citizen and/or a US resident for tax purposes_".

http://www.nsandi.com/files/published_files/asset/pdf/income-bonds-brochure.pdf
http://www.nsandi.com/files/published_files/asset/pdf/direct-saver-brochure.pdf


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## iota2014

JustLurking said:


> Beware the 'saving clause'. DT: USA: Double taxation agreement, Article 1: General scope says:
> 
> I hope I'm wrong, but on first reading it looks like for US citizens, Article 19 is not an exception to the above.


If that's the case, one simply cannot win, which is clearly unfair and obviously contravenes both the "Taxpayers Bill of Rights" and European Human Rights legislation.

I just can't believe they would resort to that. Why construct a Treaty if the provisions are totally meaningless?


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## iota2014

jbr439 said:


> You can relinquish based on your naturalization. The only issue is your tax/compliance liability. The rules changed a couple of times in the 2000s, so you need to find out where you stand.


Yes. I'll try to do that. Thanks.


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## iota2014

BBCWatcher said:


> Iota2014, are you sure about NS&I? From what I can determine, there was a temporary kerfuffle back in mid-2014, but by September, 2014, the U.K. press reported that NS&I apologized for screwing up and has no problem with U.S. citizen clients.


Do you have a link for any of the press reports? That would be very interesting to me. They certainly changed the T&Cs on the Direct Saver account to exclude U.S. citizens. That wasn't in the T&Cs when I opened my DS account. That's why I closed the account - I didn't want to wait to see what would happen.


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## Nononymous

Your best course of action might be to pursue relinquishment, as it costs nothing, and wave the CLN at any English banker who has the temerity to suggest that you're a US citizen. 

Depending on your situation, there may or may not be tax filling requirements required as well. If so, I can't imagine that they'd be very complex. I also can't imagine there would be any consequences if you chose to ignore them.


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## iota2014

BBCWatcher said:


> Iota2014, are you sure about NS&I? From what I can determine, there was a temporary kerfuffle back in mid-2014, but by September, 2014, the U.K. press reported that NS&I apologized for screwing up and has no problem with U.S. citizen clients.


Was it by any chance about the Post Office rather than the NS&I? This Telegraph article is dated Sept 2014:

No Isas for British-Americans: Post Office 'overreacts' over hated US tax law - Telegraph


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## Pacifica

iota2014 said:


> What happens if they say no? Would I still be able to come back and pay the fee and renounce?



If the consulate officer disagrees with a person’s contention that they relinquished, they let the person know. At that point, the person can: (1) choose to renounce on the spot then and there; or (2) they can request the consul send their file to DC anyway.

Re (2), the consulate officer always includes their report with the file and that includes their recommendation -- if the consulate officer feels that a relinquishment did not occur, it would be a negative recommendation. DC has overridden all the cases I’m aware of where the consulate officer was clearly *wrong on a point of law* (mind you, that’s only about 8 cases, but DC consistently went with the law on all of them). 

However, if it’s a fuzzier matter – say, a person is claiming they relinquished but they performed an act consistent with US citizenship after that date, which throws into doubt if they really believed they were no longer a US citizen – chances of an override are *a lot *more iffy, as DC does put a good deal of confidence in the consulate officer’s opinion, as the consulate officer actually meets with the person and can ask them questions for clarification at the meeting if they feel it necessary.

Also, don't know if you've seen this. There's some good information about the relinquishment process in this DoS manual, 7 FAM 1200, Developing a Loss-of-Nationality Case.""]7 FAM 1220, Developing a Loss-of-Nationality Case[/URL]. .


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## iota2014

Nononymous said:


> Your best course of action might be to pursue relinquishment, as it costs nothing, and wave the CLN at any English banker who has the temerity to suggest that you're a US citizen.
> 
> Depending on your situation, there may or may not be tax filling requirements required as well. If so, I can't imagine that they'd be very complex. I also can't imagine there would be any consequences if you chose to ignore them.


But if relinquishment should be refused, could I still renounce? If so, it seems I would have nothing to lose by trying for relinquishment.

I will sleep on it, and see if I wake up knowing the answers to all my questions.  Many thanks to everyone who has responded.


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## BBCWatcher

Yes, this one for example. That article specifically refers to the "Premier Cash ISA" at NS&I. I cannot find any U.S. restriction listed in the disclosure/prospectus for that type of account.

Bear in mind you closed your account, not NS&I. If you read the disclosure/prospectus documents you linked to carefully and literally, they don't actually say they'll close existing accounts held by U.S. persons. They just say they won't open a new account of that type. NS&I didn't close your account, after all. But OK, you went and closed the account on your own. If you want to open a new account at NS&I, the Premier Cash ISA account is available. There may be other account types available there, and of course there are many other financial institutions in the United Kingdom that'll do business with you.

One important caveat on (documented) relinquishment or renunciation: that is when the IRS and U.S. Treasury hear about you, and that is when some tax-related paperwork is required (and when the IRS might contact you). You cannot obtain a Certificate of Loss of Nationality (CLN) "quietly." (A CLN generates notice to the IRS/Treasury.) You can decide how to weigh all the various factors. You've explained that you might be inconvenienced, but getting a CLN (and a clean break from the IRS/Treasury) isn't exactly convenient either.


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## iota2014

Pacifica said:


> If the consulate officer disagrees with a person’s contention that they relinquished, they let the person know. At that point, the person can: (1) choose to renounce on the spot then and there; or (2) they can request the consul send their file to DC anyway.
> 
> Re (2), the consulate officer always includes their report with the file and that includes their recommendation -- if the consulate officer feels that a relinquishment did not occur, it would be a negative recommendation. DC has overridden all the cases I’m aware of where the consulate officer was clearly *wrong on a point of law* (mind you, that’s only about 8 cases, but DC consistently went with the law on all of them).
> 
> However, if it’s a fuzzier matter – say, a person is claiming they relinquished but they performed an act consistent with US citizenship after that date, which throws into doubt if they really believed they were no longer a US citizen – chances of an override are *a lot more iffy*, as DC does put a good deal of confidence in the consulate officer’s opinion, as the consulate officer actually meets with the person and can ask them questions for clarification at the meeting, if they feel it necessary.


Since naturalization, I definitely haven't performed any acts that could possibly have any bearing on U.S. citizenship - haven't used a U.S. passport, or asked for any consular services of any kind. But if they turn me down, I'll pay the fee and escape, rather than ask for it to be sent off to DC. I don't know the law well enough to challenge the Consular Officer's decision. Thanks very much for the information.


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## iota2014

BBCWatcher said:


> Yes, this one for example. That article specifically refers to the "Premier Cash ISA" at NS&I. I cannot find any U.S. restriction listed in the disclosure/prospectus for that type of account.
> 
> Bear in mind you closed your account, not NS&I. If you read the disclosure/prospectus documents you linked to carefully and literally, they don't actually say they'll close existing accounts held by U.S. persons. They just say they won't open a new account of that type. NS&I didn't close your account, after all. But OK, you went and closed the account on your own. If you want to open a new account at NS&I, the Premier Cash ISA account is available. There may be other account types available there, and of course there are many other financial institutions in the United Kingdom that'll do business with you.


There seems to be some confusion. The article is about the Post Office, not about NS&I. It does mention NS&I - says NS&I is closing accounts. NS&I offers Premium Bonds, and Direct ISAs, not Premium ISAs. I am not seeking to open a new account with NS&I. If I can hold on to the ones I have, I'll be happy.


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## BBCWatcher

OK, just looking at NS&I's product brochures, their Direct ISA account brochure has no listed restriction related to U.S. persons. I cannot find anything in their Premium Bonds brochure or in their Children's Bonds brochure either. Their other product brochures (Direct Saver, Income Bonds, Investment Account) do list account opening restrictions for U.S. persons. So half their products are available to open for U.S. persons, and half are not, according to their information. None of the brochures explicitly indicate U.S. persons with existing accounts will have their accounts closed.


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## JustLurking

BBCWatcher said:


> ... So half their products are available to open for U.S. persons, and half are not, according to their information.


The dividing line appears to be FATCA reportability. All three of the accounts you cite are explicitly listed in the US/UK FATCA IGA as exempt.

That said, these three restricted accounts are slim pickings from which to try and build a useful retirement investment or savings portfolio. Particularly as one requires you to be younger than 16 and another is literally a lottery.


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## iota2014

Good-value NS&I investment vehicles come and go at the behest of the Treasury. Many - perhaps most - NS&I customers will have money tucked away in one of the products that's no longer available - as I do. Those products (over-65 bonds, index-linked certificates, etc) have fixed terms, so there's no need to explicitly close anyone's account - they can just refrain from offering U.S. Persons the usual rollover option at maturity. 

Whether they will choose to do that or not is not known, or certainly not known by me.


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## BBCWatcher

I've read through other discussion forums. In my (unscientific) survey I'm not finding any reliable reports of U.S. citizens being denied new NS&I accounts for any/all products, or having accounts closed, with the exception of non-U.K. residents. Moreover, NS&I's customer service representatives are saying the same thing when customers ask about these reports (rumors?) and the rules.

No, I cannot explain why half of their product brochures seem to suggest something else.

Anyway, after looking through reported experiences -- in apolitical discussion forums, importantly -- I'm rather doubting there's any real world problem here. Did NS&I close your account, Iota2014, or deny you the ability to open an account (or add a product)? Are you a bona fide U.K. resident?


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## iota2014

iota2014 said:


> I will sleep on it, and see if I wake up knowing the answers to all my questions.


No magic answers, but after thinking over all the useful advice I've received here and elsewhere, I've decided to go through the Streamlined process (doing the returns myself) and then apply to relinquish - renouncing then and there if refused. If I get the relinquishment I may celebrate by spending the money I've saved on a nice holiday. 

Part of me feels inclined to go down the "conscientious objector" route, but I guess I will knuckle under and toe the line.

Thanks to all for the extremely helpful responses.


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## Bevdeforges

Good luck with your decision, and keep us posted how you're progressing. 
Cheers,
Bev


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## jbr439

iota2014 said:


> No magic answers, but after thinking over all the useful advice I've received here and elsewhere, I've decided to go through the Streamlined process (doing the returns myself) and then apply to relinquish - renouncing then and there if refused. If I get the relinquishment I may celebrate by spending the money I've saved on a nice holiday.
> 
> Part of me feels inclined to go down the "conscientious objector" route, but I guess I will knuckle under and toe the line.
> 
> Thanks to all for the extremely helpful responses.


If you file taxes (go thru Streamlined), then you are acting like a US citizen and quite likely will not be able to claim a relinquishment based on naturalization as a Brit.


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## iota2014

jbr439 said:


> If you file taxes (go thru Streamlined), then you are acting like a US citizen and quite likely will not be able to claim a relinquishment based on naturalization as a Brit.


What do you advise?


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## Nononymous

Relinquish (or renounce) first, then deal with all your tax filings after (or not, depending on whether you feel it's necessary).


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## iota2014

Nononymous said:


> Relinquish (or renounce) first, then deal with all your tax filings after (or not, depending on whether you feel it's necessary).


Ah. I thought that I would have to prove I was compliant taxwise before I could get a CLN. The instructions for renouncing say you must confirm you don't owe any tax or you become a covered expatriate. Form 8854?


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## iota2014

Found this:


> No tax forms are required by the Department of State during renunciation. Legislation from 1996 attempted to require consular officers to obtain tax documents from renunciants, but the proposal was unworkable and probably illegal (no challenge was ever presented, most likely because the rule was never enforced and didn’t affect anyone).
> 
> The Department of State cannot require submission of any tax forms as a condition for renunciation. As the U.S. law currently stands, you have the right to renounce U.S. citizenship regardless of any tax obligations you have, although the expatriation does not clear you of your past obligations.
> 
> Note that the Department of State also does not require or record your Social Security number during the renunciation process. (Under current U.S. law, you need to submit an expatriation form to the IRS after your renunciation, on which you need to write your Social Security number).


From Renunciation: Step by step | Renounce US Citizenship - The Renunciation Guide

jbr439 and Nononymous, thank you very much. I nearly blew it right at the start.


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## Nononymous

There are folks on the forum here, or known of by folks on the forum, who've renounced then completely ignored the tax compliance side of things, with no ill effects. Two separate processes, quite independent, though of course related.

That being said, if your tax situation is relatively simple, five years of basic returns and FBARs with no money owed plus the exit form, it's probably worth the peace of mind to just file and be done with. (Note that being a "covered expatriate" is only a problem if you have relatively high net worth.)


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## iota2014

Definitely worth it for the peace of mind. Once I've been through the relinquishment / renunciation, doing the forms should be pretty straightforward, I think, with my simple situation.


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## Pacifica

jbr439 said:


> If you file taxes (go thru Streamlined), then you are acting like a US citizen and quite likely will not be able to claim a relinquishment based on naturalization as a Brit.


I'd like to point out that this is not necessarily the case. If you’ve suddenly back-filed as part of your expatriation plan, DoS hasn’t been holding this against people.

You might as well *not* file in advance. You don't have to, as you have until June 15th the year after expatriation to wrap things up with IRS. That's what I think I'd do. But *if *a relinquisher has already backfiled prior to their embassy meeting, they shouldn’t worry, as far as I can tell. It hasn’t been proving fatal in the cases I’m aware of (about 8) because it was done with the intention of expatriation.

At one time, US citizenship was terminated for all purposes (including DoS and IRS) the date of the relinquishing act. 

But since 2004 (it was in the _American Jobs Creation Act_, of all things), IRS considers a person to have relinquished their citizenship the day they notify the Secretary of State of their relinquishing act. So if the relinquishing act was 2007 and the CLN is applied for in 2015, IRS considers the person to be a USC until 2015 for tax purposes.

As appointments at some embassies/consulates are backlogged (around 8 months at Toronto, last I heard,), it can well be worth booking an appointment as soon as possible to get one in this calendar year. Hopefully London’s wait time is a lot shorter (some places are much shorter). 

A person (relinquisher or renunciant) does not need to be up to date on taxes in order to deal with Dept of State – DoS doesn’t care (not their department) and the citizenship itself (and the issuance of the CLN) is not dependent on one being tax compliant (or not). 

FWIW, if a person chooses never to file at all, the citizenship itself remains terminated and the CLN remains valid .


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## iota2014

Thanks, Pacifica. Useful to know.

I've heard about the long waiting times in London. I'm thinking of trying Edinburgh or Belfast instead - combine it with a bit of a break.


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## Nononymous

Doesn't need to be in the UK, either - could be Dublin or somewhere on the continent if you want to make a holiday of it.


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## iota2014

Good idea. Copenhagen would be perfect.


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## BBCWatcher

BBCWatcher said:


> ....I'm not finding any reliable reports of U.S. citizens being denied new NS&I accounts for any/all products, or having accounts closed, with the exception of non-U.K. residents.... I'm rather doubting there's any real world problem here.


Quoting myself.

Issuance of a CLN generates notice to the IRS/Treasury. The IRS's Streamlined Program alone is incompatible with IRS Form 8854 -- 3 years versus 5 -- but it can be used as the first 3 years out of the 5 required for 8854.


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## jbr439

BBCWatcher said:


> Quoting myself.
> 
> Issuance of a CLN generates notice to the IRS/Treasury. The IRS's Streamlined Program alone is incompatible with IRS Form 8854 -- 3 years versus 5 -- but it can be used as the first 3 years out of the 5 required for 8854.


People include additional years in Streamlined for renunciation purposes. The IRS will process those additional years and happily take any tax owing for them.


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## BBCWatcher

jbr439 said:


> People include additional years in Streamlined for renunciation purposes. The IRS will process those additional years and happily take any tax owing for them.


Correct -- and also part of what I wrote.


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## jbr439

BBCWatcher said:


> Correct -- and also part of what I wrote.


You said:
"The IRS's Streamlined Program alone is incompatible with IRS Form 8854 -- 3 years versus 5 -- but it can be used as the first 3 years out of the 5 required for 8854."

If a person is using Streamlined for the "*first* 3 years out of the 5", then they'd have to wait another 2 (tax) years in order to reach the 5 required for 8854, since Streamlined is interested in the most recent 3 years. So, I'm not sure how a person could read the above and think that it's saying they can file 4 or 5 years in Streamlined; and in fact it implies that they can't, as I read it.


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## iota2014

iota2014 said:


> Definitely worth it for the peace of mind. Once I've been through the relinquishment / renunciation, doing the forms should be pretty straightforward, I think, with my simple situation.


I guess I will have to wait a few years before filing the returns through the Streamlined procedure. I don't have the necessary information to file FBARs for years earlier than 2012. That means I won't be able to file until 2018. I was hoping to get this done and dusted, and not be at risk of any penalties. Any solution to this, or do I just have to keep my fingers crossed for the next three years?


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## Nononymous

Supposedly you need to have all the exit tax stuff sorted within a year of renouncing so waiting until 2018 might not work. I would do streamlined plus the additional years of tax returns. If you really can't file the earlier FBARs (lost the account numbers?) then I'd probably just ignore it - you could claim that your balances were under $10k and therefore you have no obligation to file. I doubt they'd follow up for such small amounts.

If you can relinquish and have the CLN back-dated to when you took UK citizenship, possibly it's so long ago you can ignore it.


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## iota2014

Nononymous said:


> Supposedly you need to have all the exit tax stuff sorted within a year of renouncing so waiting until 2018 might not work.


I suppose it might be better to wait until 2017 to renounce?



> ...lost the account numbers?


The bank no longer exists. I'll have thrown all the paperwork away after a year or two, since at that time I wasn't aware I was going to need it for U.S. tax returns. :-(


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## BBCWatcher

(Sigh.) The word "first" does not always refer to chronology. It often refers to priority or precedence, as in "Judges put Denmark's figure skater in first place." Or it may refer to _filing_ chronology.

Thank you for elaborating, but you weren't contradicting.


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## Pacifica

iota2014 said:


> The bank no longer exists. I'll have thrown all the paperwork away after a year or two, since at that time I wasn't aware I was going to need it for U.S. tax returns. :-(


I'm thinking if the amount on deposit was relatively small – and the records are really obscure to obtain – maybe just give it your best estimate. I agree with Nononymous that it seems unlikely they’d follow up for small amounts.

Re the records themselves, I'm wondering, as bank records are pretty serious documents,

(1) if the bank no longer exists, were they bought out/merged with another bank (which would have the records)?

(2) if the bank went completely out of business (no buy-out or merger, it just goes out of business), might their records then be held by some government department? 

Or perhaps as Nononymous suggests, just ignore it if you think it was likely that your total was under $10 K.


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## Pacifica

Nononymous said:


> If you can relinquish and have the CLN back-dated to when you took UK citizenship, possibly it's so long ago you can ignore it.


Unfortunately, it won’t make a difference in Iota's case.

In this case, the relinquishing act was 2007 and the embassy meeting will be, let’s say, 2015. 

Because the relinquishing act occurred after the 2004 law came into effect, the citizenship termination for IRS purposes will be 2015.


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## BBCWatcher

Maybe I'm old fashioned, but has Iota2014 confirmed that his/her NS&I accounts have been closed or that he/she has been unable to open any?

Most rational people don't sign up for open heart surgery unless they've got a heart problem that would benefit from such surgery, and that's a pretty good analogy. So what's the problem? Or did this whole conversation run 5+ pages only because a newspaper published a scary story that doesn't actually seem to be true?

Remember, there is no such thing as a quiet CLN. To extend the analogy, your doctor will notify your employer (the IRS and Treasury) that you're no longer fit for duty due to your heart operation. So do you actually have a heart problem (an actual problem that possession of a CLN would cure)? That's not even asking how you would weigh the cost/inconvenience of that problem versus the costs/inconveniences of obtaining a CLN, though that's important too. But most rational people would assess zero as zero, so "what's the actual problem?" I've yet to see one in all these pages upon pages of discussion.

As I said, maybe I'm old fashioned, but happily so on this occasion.


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## Nononymous

Maybe the OP simply doesn't want the US citizenship, full stop. Could be principled opposition to the tax system. Could be to protect against future US government idiocy. Not really our place to challenge an informed decision. Painful though this must sound, there are people out there who make a rational decision that they're better off without it.


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## iota2014

Pacifica said:


> Re the records themselves, I'm wondering, as bank records are pretty serious documents,
> 
> (1) if the bank no longer exists, were they bought out/merged with another bank (which would have the records)?
> 
> (2) if the bank went completely out of business (no buy-out or merger, it just goes out of business), might their records then be held by some government department?


It collapsed in the wake of the crisis, got bailed out, staggered on for a few years, got split into separate investment / retail parts, and eventually those separate parts got sold off. I'm not sure where the records of previous accounts would now be. I'll try ringing a few possibles.



> Or perhaps as Nononymous suggests, just ignore it if you think it was likely that your total was under $10 K.


Unfortunately the total was over, and this missing ISA was the bulk of it (about £12000). As you say, the records must be somewhere, and no doubt IRS or Financial Crimebusters or whatever would know exactly where to look even though I don't. I think I'll have to try to trace it. 

Looking on the bright side, if I _write_ to the various inheriting entities, in longhand and send it by snail mail, that should serve as evidence that I could produce, should IRS come looking for me, to show that I was trying to assemble the necessary information to go through the Streamlined programme. While not leaving a Big-Data-friendly ready-digitized trail that might in itself attract their attention before I'm prepared. (I realize I'm probably being a little paranoid.)

I think that's what I'll do. Thanks very much, Pacifica and Nononymous.


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## iota2014

Nononymous said:


> Maybe the OP simply doesn't want the US citizenship, full stop. Could be principled opposition to the tax system. Could be to protect against future US government idiocy. Not really our place to challenge an informed decision. Painful though this must sound, there are people out there who make a rational decision that they're better off without it.


I just want (a) to get straight with the IRS because if I don't they might charge me big penalties, and (b) to get free of U.S. citizenship so that, once I'm through the Streamlined Procedure, I don't have to keep filing pointless tax returns and FBARs every year for the rest of my life.


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## BBCWatcher

Quite unlike the United Kingdom and HMRC, if you genuinely owe zero U.S. tax then the total penalty for failure to file a U.S. tax return is zero.

Informational reports are different, e.g. FinCEN Form 114, if you meet the filing threshold. There is a published penalty for non-filing or late filing.

I don't care whether somebody terminates a citizenship or not, but I do try to understand and appreciate facts. So, as best we can determine, NS&I isn't closing or refusing to open accounts for U.K. resident U.S. citizens. Glad we cleared that up.


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## iota2014

BBCWatcher said:


> Informational reports are different, e.g. FinCEN Form 114, if you meet the filing threshold. There is a published penalty for non-filing or late filing.


Yes. I hope to reach a point where I'm no longer at risk by going through the Streamlined Procedure.



> So, as best we can determine, NS&I isn't closing or refusing to open accounts for U.K. resident U.S. citizens.


I don't think they're _refusing_ to open accounts. If it states in the T&Cs of an account that U.S. citizens aren't eligible, presumably U.S. citizens will accept that and not apply. So far, as far as I'm aware, the only accounts that have been closed are the Direct Saver accounts - which is one of the products that's had its T&Cs changed to exclude U.S. citizens. I'm pretty sure they're entirely within their rights both to change the T&Cs and to close accounts for those who no longer qualify under revised T&Cs. Once I've renounced, I'll no longer be affected, should the T&Cs change on the products I still hold.


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## BBCWatcher

Did NS&I close your Direct Saver account, at their (not your) instigation, or not? If they did, are you a bona fide U.K. resident?

Scary newspaper articles notwithstanding, I cannot actually find any U.K. resident U.S. citizen who reported (in other forums) having an NS&I account of any type involuntarily closed. There are plenty of U.S. citizens who report the contrary.

What are the *facts*?


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## jbr439

Pacifica said:


> I'm thinking if the amount on deposit was relatively small – and the records are really obscure to obtain – maybe just give it your best estimate. I agree with Nononymous that it seems unlikely they’d follow up for small amounts.
> 
> ...


Not sure if anyone else mentioned this, but there's no penalty in over-reporting. So, take your best guess and then add a 'comfort' premium to it, if it makes you feel better - 10%, 20%, whatever.


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