# Renounce or not?



## GirlDownunder (Mar 28, 2015)

I came from the US to Oz in 2007. I became an Aussie in 2012.

When I first found out about FATCA, I was worried and angry. Digging up a civil war era "law" and applying it retroactively to ordinary citizens (ruining many lives) using "offshore bank account tax cheats" as an excuse boiled my blood! FATCA is a data/privacy/money extortion job and no less. The "true" tax cheats have the means & the tax-law, cottage industry lawyers, on their side-- regular folks like "accidental Americans" in Canada have been brutalized for no reason.

There have already been issues for duals re: banking and employment (loss of or not considered as the employer doesn't want THEIR financial details handed to the IRS). There have also been issues with banking, world-wide, due to banks not wanting to bother with a US citizen and all it entails.

https://www.thenewamerican.com/usne...new-u-s-tax-regime-is-devastating-experts-say

I eventually decided that I just couldn't let myself be used this way and relinquished in 2015, based on my original intent of gaining AU citizenship and never returning to the US. I was one of the last who relinquished, and thus paid no fee. Btw, why should you have to pay to be a free human being on the planet? No one else does this. It's considered a human right to live and move freely in the world-- except for the USA. Everyone else uses common sense, resident-based taxation. You pay tax where you earn, live, and receive gov't resources. Only the money-grubbing, privacy-stealing bully which is the US gov't inflicts citizenship-based taxation-- and again, this was initiated during their Civil War!

https://tax-expatriation.com/2014/0...ing-outside-the-u-s-does-it-still-make-sense/

The USA does squat for it's overseas citizens & it cost _me_ thousands of dollars to file, over the years, though I owed nothing. The FATCA "rules" are a moving goalpost where literally NO ONE, _including the IRS_, knows exactly what's what..._but_ the fines and charges are VERY real and HUGE and ONLY the citizen will suffer if every t & i aren't properly handled. Except: no one knows what "properly" actually is. No thanks.

The Dept. of State makes sure that the numbers renouncing, on record, are kept low by simply not showing them. By that, I mean not showing them on their "name & shame", Federal Register. I'll bet MOST US citizens do not know about this list:

https://www.federalregister.gov/quarterly-publication-of-individuals-who-have-chosen-to-expatriate

There are many people I've run into on the various expat forums who renounced and have NEVER seen their name listed. That, is another dirty-deed by the US gov't. They don't want this out in the mainstream, hence you rarely see or read anything about FATCA in mainland US.

If this comes across as angry, it is. I should not have had to give up my citizenship simply to _not_ monetarily support nefarious laws enacted for nefarious reasons. I now have my CLN (certificate of loss of nationality) and I breathed a HUGE sigh of relief when it came in the post. I'm sad this is being forced on so many people just so the USA can bully the world.

Here are some useful links for you:

The Isaac Brock Society in Canada. You'll have to search it because for some reason, this forum won't let me post it??? Very odd, actually...

Home - RepealFATCA.com

https://www.facebook.com/groups/FixTheTaxTreaty/ (specifically for AU)





 (Even an int'l tax law professor can't make sense of it!)

PS: please sign--> https://petitions.moveon.org/sign/petition-to-end-citizen


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## Bevdeforges (Nov 16, 2007)

I've moved you into a thread of your own - but please be advised that this section of the Expat Forum is meant to encourage discussion about tax issues, not to promote renunciation.

Renunciation is an expensive process that can have serious consequences, depending on a person's circumstances. It is NOT something to be entered into lightly. And it is not "the only" solution to those angry about FATCA or other US policies related to reporting and taxation. (Or to US policies in general.)

Be aware that there is now a Common Reporting Standard in effect in many countries (other than the US) that requires banks and other financial institutions to share information about non-resident accounts, and that many other tax systems require taxpayers to divulge foreign bank and investment accounts. While the US FATCA system tends to be somewhat more intrusive than the other national systems, especially with regard to its application to foreign "financial institutions" and their obligations, it's not particularly unusual other than in combination with the US policy of citizenship-based-taxation.

It's also interesting to note that the US is rapidly becoming one of the world's biggest tax havens, given its refusal to share data with other countries in these matters.


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## underation (Oct 25, 2018)

Bevdeforges said:


> Be aware that there is now a Common Reporting Standard in effect in many countries (other than the US) that requires banks and other financial institutions to share information about non-resident accounts, and that many other tax systems require taxpayers to divulge foreign bank and investment accounts.


Indeed. And the CRS, being modelled on FATCA, would apply to expat US citizens, if it wasn’t for the IGAs.

For example, if an EU Member State decided to pull out of its IGA (which is unlikely , US-born residents would still be questioned by banks about tax-residence, and required by the banks to sign a W9 form. The banks are never going to stop asking US dual citizens about tax-residence, now that they’ve been given a legal obligation to enquire and a compelling reason to comply.



> It's also interesting to note that the US is rapidly becoming one of the world's biggest tax havens, given its refusal to share data with other countries in these matters.


Indeed.


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## underation (Oct 25, 2018)

> Everyone else uses common sense, resident-based taxation. You pay tax where you earn, live, and receive gov't resources. Only the money-grubbing, privacy-stealing bully which is the US gov't inflicts citizenship-based taxation...


Actually, the US government also uses residence-based taxation. It’s just that US tax law does not provide US citizens with a route whereby they can become officially non-US-resident. There are proposals to fix this, but whether it will ever actually happen is anyone’s guess.

In the meantime, US expats have quite a few options. Dual citizens who want to keep being dual citizens can either file US tax returns, or not file US tax returns. Those who don’t need / don’t want the US citizenship can renounce. It is indeed expensive, but a good-value purchase for those who want it and can afford it.


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## Bevdeforges (Nov 16, 2007)

underation said:


> Actually, the US government also uses residence-based taxation. It’s just that US tax law does not provide US citizens with a route whereby they can become officially non-US-resident. There are proposals to fix this, but whether it will ever actually happen is anyone’s guess.


Do be careful what you wish for, though. Simple example is one of a USC resident overseas who has a modest income based on US SS and perhaps an IRA, both of which are taxable by the US under some tax treaties. As non-resident taxpayers, they pay 30% on 85% of the SS benefit and 30% on all US source income past that point.



> In the meantime, US expats have quite a few options. Dual citizens who want to keep being dual citizens can either file US tax returns, or not file US tax returns. Those who don’t need / don’t want the US citizenship can renounce. It is indeed expensive, but a good-value purchase for those who want it and can afford it.


Renunciation is not something to do lightly. There are implications beyond just "no more having to file US tax returns every year." It's an option, yes, but one of several (which include several "levels" of compliance).


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## underation (Oct 25, 2018)

> Do be careful what you wish for, though. Simple example is one of a USC resident overseas who has a modest income based on US SS and perhaps an IRA, both of which are taxable by the US under some tax treaties. As non-resident taxpayers, they pay 30% on 85% of the SS benefit and 30% on all US source income past that point.


Ideally, US expats really should consider relevant treaty provisions before they ever make the decision to emigrate - and plan their retirement savings accordingly. Most of us probably didn’t, though. I would bet that in most cases, a US expat with all-US pensions is one who identifies as American and won’t be wanting to renounce.



> Renunciation is not something to do lightly. There are implications beyond just "no more having to file US tax returns every year."


US expats don’t have to renounce in order to not file US tax returns. Most US expats don’t file US tax returns, having little or no US-source income and therefore not owing US tax.



> It's an option, yes, but one of several (which include several "levels" of compliance).


Two options, for a US citizen who lives outside the US.

a) Report worldwide income to the IRS under penalty of perjury, paying any resulting tax due to the US under US tax law.

b) Report worldwide income only to the residence country, and pay tax to the residence country, claiming tax credits for any foreign tax withheld on foreign income.

If the expat reports only some of their worldwide income to the IRS, omitting what they think they can get away with, that’s perjury, not compliance.


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## Moulard (Feb 3, 2017)

While I respect your decision to renounce, and have seriously considered doing so myself, (although I suspect for very different reasons), there are a number of factual errors and misconceptions in what you write...

1). FATCA is not a civil war era law that has been retroactively applied. 

Reporting of foreign financial accounts in one shape or form has been around since the introduction of the Bank Secrecy Act in 1970. FinCEN was set up in 1990. I will admit that compliance prior to 2010 was probably negligible for foreign resident US persons. 

Yes, personal income tax was introduced as part of the Revenue Act of 1861, in part, to fund the Civil War. However the tax at the heart of Tait v. Cook was actually part of the Revenue Act of 1921. Interestingly enough a literal reading would suggest of the ruling could be used to suggest that a dual citizen is exempt from citizenship taxation. But 1921 was well before the Perkins, Afroyim and related cases.

I am paraphrasing here, but administration of FinCen reporting compliance and penalties was transferred at some point to the IRS. From a personal filing perspective, all FATCA Act of 2010 did was double up already existing reporting requirements. 

For what its worth FATCA reporting rules are pretty straight forward. They may not make any sense, from an accounting perspective, but you need to bear in mind that their origin is in Anti-Money Laundering rules not in accounting. 

2) the fines are not very real.

I will but a little asterisk on this one. The fines may be real, but to my knowledge they have not been applied to a US person who is resident outside the United States. Every example I have ever seen, the US person is a US resident. If you are without the US, with no US assets then really there is nothing the IRS can do to force compliance unless you happen to be in a country with a mutual collection clause in the tax treaty. Outside of the treaty, the US would have to rely on extradition, which in the case of Australia has never occurred for a compliance related penalty to my knowledge.

3) It costs thousands to comply.

This is your own experience, so I will not contradict your personal experience, but it probably doesn't have to be that way. Yes, you can pay thousands for someone else to prepare your US tax return. You can do the same for an Australian return if you choose. You can also value your own time or daily rate, and come up with a figure in the thousands too. But there are easy ways to minimize costs. Did you ever consider getting a professional to file one return, and then take the effort to "clone" that return in following years? Would that have save you thousands in professional service fees? Have you invested a few hours to create a template so that you can cut and paste your Australian income and convert it into US dollars. Do you manage your own Australian tax affairs, which for the most part is likely to be the same income you had to report on your US return. Me? I pay about $100 AUD a year for a downloadable product, so that I don't have to second guess my sums, nor do I have to enter my details on the top of each form. About 20 years ago I modified a spreadsheet I use to help prepare my Aussie return, added a currency converter and some logic to be able to differentiate which return a deduction was allowable for. As a result I figure I spend less "billable hours" preparing my US return than I do on my Australian return.

Let me finish by saying this is not meant to be an attack on you personally. I fully understand the overwhelming fear that can consume one on these sorts of matters. I respect your decision to renounce. That the burden was not worth the benefit. Yes compliance can be opaque and the threats appear very real. Yes it is inequitable. Yes, these policies are worth challenging by any and all who have the means to do so. 

And, I would not question that renunciation was the right choice for you.


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## GirlDownunder (Mar 28, 2015)

Bevdeforges said:


> I've moved you into a thread of your own - but please be advised that this section of the Expat Forum is meant to encourage discussion about tax issues, not to promote renunciation.


To "pretend" that the USA/FATCA is "just like other countries...is absolutely ridiculous.

No "other" country has the means to extort like the USA does. "Do it, or else"-- is their motto now, or:

a 30% withholding to any financial institution who does not "comply". (Resistance is futile, anyone?).

No place else is anywhere near what's happening with the USA.

Renunciation IS a tax issue. You either fall on your back and submit to pointless & expensive laws which would be illegal applied to mainland citizens, or you say, "enough".

Not one person I know of who has had to choose the latter, "wanted to"-- they were forced out. To ignore what's happening won't help anyone or anything.


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## GirlDownunder (Mar 28, 2015)

Moulard said:


> While I respect your decision to renounce, and have seriously considered doing so myself, (although I suspect for very different reasons), there are a number of factual errors and misconceptions in what you write...
> 
> 1). FATCA is not a civil war era law that has been retroactively applied.
> 
> ...


Have a discussion with Prof Christians. Have a look at the lawsuits currently being waged. The USA is attempting to force other countries to become their tax collectors and toss their own citizens under the bus to do so (challenging the autonomy of these country's own citizen protections).

1) why should I have to report my information of my own bank account, in the country in which I reside, which is connected to my employer in my country to the "financial crimes" leg of the USA? 
Yes, it is a civil war era law. It may have been spiced-up for the modern age, but it began there to stop men from running away to Canada. History, it's called.

2)The fines are real. Again, have a look at what is happening, especially to Canadians.

3)I run a business in AU. Whole different ballpark re: taxes.

I cannot believe how many times I've read your type of reply & all I can say is, "good luck". Hope it works out for you & you don't get bumped out of a job or bank, because lots have.

Passionately arguing for or against these details, illegally imposed (no discussion by representatives about FATCA-- it was slipped into the "Hire Bill" and no one read it, btw), will never make it okay. I guess it comes down to what sort of abuse you're willing to abide from your gov't.


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## underation (Oct 25, 2018)

GirlDownunder said:


> Not one person I know of who has had to choose the latter, "wanted to"--


I did, for what it’s worth. And I doubt if I’m the only one.

I only kept the US citizenship to use the passport when visiting family. I think a lot of American emigrants are probably in a similar position


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## Nononymous (Jul 12, 2011)

GirlDownunder said:


> 1) why should I have to report my information of my own bank account, in the country in which I reside, which is connected to my employer in my country to the "financial crimes" leg of the USA?
> Yes, it is a civil war era law. It may have been spiced-up for the modern age, but it began there to stop men from running away to Canada. History, it's called.


You don't have to report anything if you answer "no" to questions about US citizenship. That is impossible in some countries, very possible in others. Enforcement in Canada is extremely lax, banks are only required to ask the question, not validate the answer. Self-certification is sufficient. I expect that Australia isn't too different.



> 2)The fines are real. Again, have a look at what is happening, especially to Canadians.


Citation please. Are non-compliant Canadians being fined? I think not. You may be remembering the Dewees case. He is a US citizen without Canadian citizenship, so one of a small category of people who are vulnerable to the mutual assistance in collection agreement, and his lawyer made him do a very stupid thing by coming into compliance, at great cost when he was hit with penalties for not properly reporting his business, and unfortunately the Canadian authorities were compelled by treaty to collect on behalf of the IRS. But otherwise, how are Canadians being fined? The IRS has no means to collect from dual citizens with no US assets or income. If there was mass fining of Canadians going on, we'd know about it.



> Passionately arguing for or against these details, illegally imposed (no discussion by representatives about FATCA-- it was slipped into the "Hire Bill" and no one read it, btw), will never make it okay. I guess it comes down to what sort of abuse you're willing to abide from your gov't.


Right now, in Canada, it's very easy to deal with FATCA by simply not admitting to US citizenship. I agree that it's not a good situation and the world would be better without this particular law, but it's not exactly causing widespread suffering because most US persons are simply ignoring it, and for those who don't, there are no consequences beyond the reporting (admittedly bad enough) as nobody is being denied banking services or having accounts closed.

US taxation is even less of an issue. There's no reason to bother with compliance for anyone without US financial or family ties, so most don't bother, unless some idiot lawyer or tax accountant scares them into filing US returns with tales of terrible (non-existent) fines if they don't.

Honestly I think one reason renunciation numbers aren't higher is that lots of people have figured out that continued non-compliance is perfectly safe, so why spend the money?


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## Bevdeforges (Nov 16, 2007)

GirlDownunder said:


> To "pretend" that the USA/FATCA is "just like other countries...is absolutely ridiculous.


No one is saying that the US is "just like other countries" - it is the only First World country with this citizenship based taxation thing. (Eritrea being the only other country that does things that way.)



> No "other" country has the means to extort like the USA does. "Do it, or else"-- is their motto now, or:
> 
> a 30% withholding to any financial institution who does not "comply". (Resistance is futile, anyone?).


Though if you base it on actual enforcement, the IRS power looks somewhat more limited - especially as underfunded as they are currently. Not sure of whether or not they have invoked that 30% withholding thing against any foreign financial institutions at this point - but apparently that's now the price of foreign financial institutions that want to continue doing business in the US. 



> No place else is anywhere near what's happening with the USA.
> 
> Renunciation IS a tax issue. You either fall on your back and submit to pointless & expensive laws which would be illegal applied to mainland citizens, or you say, "enough".
> 
> Not one person I know of who has had to choose the latter, "wanted to"-- they were forced out. To ignore what's happening won't help anyone or anything.


There actually are other reasons to renounce - but as far as being "illegal" as applied to mainland citizens, they'd have to have a second nationality and an appropriate visa in order to remain in the US after renunciation. But that's a technicality.

I know a few folks who were "forced out" because they wanted to take a nationality that would not permit dual citizenship (i.e. usually German or Austrian). Nothing to do with US taxation (though the end of having to file was an added "bonus"). So it's not always "simply" a tax issue.

What I'm hoping to avoid here is for renunciation "enthusiasts" to jump in on every and any discussion of US tax complications for those living overseas, claiming that the "only" solution is to renounce. There are simpler and less expensive alternatives available for those who don't want to go that route (for whatever reasons).

Oh, and we do actually have some discussions here in the Expat Tax section about tax complications for other citizens - UK and Australia particularly.


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