# Renounciation and Taxes



## Brandon W (Jul 30, 2021)

I have lived in Spain for 4 years now. Before that I spent 32 years in the US and naturalized as citizen there but was born and grew up in Spain. I am looking to renounce my US citizenship because of the dreadful paperwork for taxes, its constant additions in a neverending tax code and its nearly terroristic invasion of privacy by forcing to disclose all banking information and such. I never made over 100k in any year in Spain so I should not have any tax debts in the US but I never disclosed any banking information simply because it's none of their business how much money I have, where outside of the US and what I do with it.

My question is, will the US embassy here in Spain process my renounciation? I know I might have to back file tax returns for 3 years but what if they hit me with penalties for fatca etc?! Will my renounciation even be processed and afterwards, say I owe the government 100k or 200k in idiotically high penalities or interests - will they ever be able to collect that from me in Spain by any means?
Also can they deny my renounciation? I don't think that's possible but worth a question, if I don't want to be citizen anymore I can't be held hostage to a citizenship or can I? From the day I decide to renounce I should be a non-citizen from that day forward.


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## Bevdeforges (Nov 16, 2007)

The embassy reports to the State Department, while the IRS is part of the Treasury Department. State does not work for Treasury, nor vice versa. 

You will be a non-citizen from the day that you turn up at the Embassy to file all the paperwork and pay your fees ($2350) - usually by appointment, however you'll have to wait a couple weeks while your CLN (Certificate of Loss of Nationality) is processed (where and by whom remains a big mystery). 

You will be reminded a few times while at the Embassy that renunciation does not cancel any outstanding debt or obligation to the IRS - but they never actually ask you whether or not you are up to date with your tax filings. You're supposed to file a final tax return (or two, depending on the timing of your renunciation - one part-year 1040 return for the period up to your renunciation date, and the second, a 1040NR for the remainder of the year). Many folks just skip this last bit of paperwork and basically have never heard anything further from the IRS (or from the Embassy).

Start here: Loss of U.S. Citizenship | U.S. Embassy & Consulate in Spain and Andorra

You need to contact the embassy first to set up what paperwork you'll need and then to establish an appointment. (I see the Spanish embassy says that they require two appointments/"interviews" - not all embassies do.) It depends a bit on the embassy, but in general the embassy staff is quite helpful and courteous to deal with. (At least that has been the case in a couple of cases of renunciation I am aware of.)


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## Nononymous (Jul 12, 2011)

What Bev said. Tax compliance is not required for renunciation. According to the IRS, 40 percent of those who renounce never bother with the filing afterwards to properly exit the US tax system.

If you were born in Spain, why not simply ignore this? Use your Spanish ID and keep US citizenship secret when dealing with banks so there is no risk of FATCA reporting, and you will be completely fine to ignore all US tax and FBAR obligations. Don't worry about it. There's really no need to go through the hassle and expense of renouncing.

I assume that you have no US assets in the US, but are you expecting to collect Social Security? Also, no, the US cannot collect penalties from you in Spain.


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## Moulard (Feb 3, 2017)

Brandon W said:


> Also can they deny my renounciation?


Technically yes they can. It goes through the consular officer, the Secretary of State and finally the Attorney General (or at least their delegates)... and conceptually at least any of them can knock you back.

Practically however, so long as if you will not be left Stateless, and the consular official believes that you are of sound mind to make the decision, are not being being coerced and so forth then the chances of it being refused are slim.


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## Nononymous (Jul 12, 2011)

Moulard said:


> Practically however, so long as if you will not be left Stateless, and the consular official believes that you are of sound mind to make the decision, are not being being coerced and so forth then the chances of it being refused are slim.


More importantly, your tax compliance status is not a factor, so unless you go into the interview screaming "I renounce my US citizenship because I oppose US taxes and I will never file US tax returns!!" - which would be a dumb idea - there's no chance of renunciation being denied for tax reasons.

Actually getting a renunciation appointment in the next few years is the real challenge.

Also, you can be left stateless. Nothing in the US law states that you must have another citizenship. It's not recommended, they will try to talk you out of it, but it's allowed. There are a number of slightly infamous cases of Americans becoming voluntarily stateless and living happily ever after. Fun fact: the US won't accept the return of ex-citizens so they can't be deported, to the great annoyance of the New Zealand government in one case.


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## Moulard (Feb 3, 2017)

If Mr Wilfred had been in Australia when he expatriated, he would, most likely, still be in immigration detention 15 odd years later.

Australia has a horrible track record of indefinite detention for those who cannot be deported.

Lucky he was in NZ.


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## Nononymous (Jul 12, 2011)

Part of becoming stateless successfully is choosing the right state to become stateless in!


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