Tag: Immigration & Nationality Act

Taxation of #AmericansAbroad in the 21st Century: “Country of birth” Taxation vs. “Country of Residence” Taxation- Part IV

cross-posted from citizenshipsolutions

by John Richardson

Update January 2018: This post has been updated with some new links and discussion

Part I is here.

Part II is here.

Part III is here.

*****

PART IV

U.S. Citizenship law of the present – Breaking The U.S. Connection – Relinquishment

Relinquishing acts – How to lose U.S. citizenship – S. 349 of the Immigration and Nationality Act

Once upon a time, the U.S. would “strip citizens” of their U.S. citizenship for voluntarily becoming naturalized citizens of another country. Like many aspects of U.S. nationality law, this was considered to be a “punitive measure”.

Prior to the U.S. Supreme Court decisions in Afroyim and Terrazas, S. 349 of the Immigration and Nationality Act, mandated an automatic loss of U.S. citizenship for those who became citizens of another country. S. 349 now clarifies that, U.S. citizens who become citizens of another country, will lose their U.S. citizenship only if they intended to relinquish their U.S. citizenship by becoming naturalized citizens of the second country. In other words, U.S. citizens have the right to NOT (absent their consent) be stripped of their U.S. citizenship even if they maintain neither ties nor “connection” to the U.S.

U.S. citizenship law of the past – The requirement of a voluntary connection

Conditions Subsequent – Automatic Loss of Citizenship For Those Born In The U.S.

 

Conditions subsequent to the retention of citizenship – Retention requirements for those born in the U.S.

In the past, U.S. nationality law has included provisions which resulted in the automatic loss of U.S. citizenship for those born in the U.S., and find themselves in the circumstances described in Categories A and B above (born in the U.S.). This was reflected in the old S. 350 of the Immigration and Nationality Act (which has been repealed) and pre-1986 S. 349 of the Immigration and Nationality Act. The general principle was that children who:

– acquired U.S. citizenship as children; and – subsequently left the U.S., and – did nothing to assert a VOLUNTARY connection to the U.S.,

would lose their U.S. citizenship. This was a clear recognition that “citizenship” was more than a “legal status” and required a “voluntary affirmation of citizenship” and/or “connection” to the community.

Automatic Loss of Citizenship For Those Naturalized in the U.S

Interestingly the old S. 352 of the Immigration and Nationality Act mandated the loss of U.S. citizenship (in some circumstances) for naturalized U.S. citizens who left the U.S. after becoming U.S. citizens.

To use an analogy to contract law, there were “conditions subsequent” for certain 14th Amendment citizens to retain their U.S. citizenship.

Conditions Precedent to Citizenship – Inability To Gain Citizenship For Those Born Outside The U.S.

American Citizens Abroad was a pioneer in fighting for the rights of “American Citizens Abroad”. Much of their early work was aimed at ensuring that children born outside the United States to Americans abroad would become U.S. citizens. At one time the U.S. had laws which required those born abroad to U.S. parents to establish residence in the U.S. or lose their U.S. citizenship. As Phyillis Michaus author of The Unknown Ambassadors notes:

“It all started back in 1961, when Phyllis Michaux, an American woman married to a Frenchman and living in France since 1946, found a friend in a similar situation. They began talking about the future of their children, their American and French citizenship and wondered whether there were other women “out there” in a similar position.

They had a question and an idea. The question was, “How many people are affected by the citizenship law 301(b)?” At the time under section 301(b) of the Immigration and Nationality Act of 1960, children born overseas of one American parent would lose their American citizenship unless they lived five consecutive years in the United States between the ages of fourteen and twenty-eight. Essentially, the children would have to move to the United States sometime before their twenty-third birthday to retain their American citizenship. The idea was to find out how many families were affected. This they did. And they did a lot more along the way.”

For this reason, I submit that the problems of Americans abroad, may be more rooted more in the laws of citizenship than in the law of tax.

U.S. citizenship law no longer based on the assumption that “citizenship” requires a voluntary connection to the community. Combining “citizenship” with “taxation” means that the U.S. claims the right to tax large numbers of people with no connection to the U.S.

Significance of U.S. citizenship law of the past …

There was a time when a voluntary affirmation and connection to the U.S. was required to retain U.S. citizenship. One would lose U.S. citizenship without the voluntary affirmation – an “citizenship opt in”. This ensured that those without a connection to the U.S., would NOT be subjected to U.S. taxation.
The repeal of Sections 350, 352, 301(b) (of the 1960 law) and the 1986 amendment of S. 349 of the Immigration and Nationality Act, mean that, it is NO longer a requirement that the children described in Categories A, B and C, affirm a connection to the U.S. in order to retain U.S. citizenship. Absent an “relinquishing act”, the circumstances of birth will be sufficient to establish (under U.S. law) citizenship and a lifetime of tax obligations.

U.S. citizenship law of the present. A relinquishing act is now required to terminate U.S. citizenship – an “citizenship opt out” (with all the horror of the possible S. 877A United States expatriation taxes)

“For those who had no choice of where or to whom they were born, surely there should be an “opt-into” US citizenship – rather than an “opt-out” of US (or any other country’s) citizenship. Anything else is ENTRAPMENT. I find that very punitive.”

For those with the “legal status” of U.S. citizens abroad, the evolution from the “opt in model” to the “opt out model” reflects a principle that citizenship is defined more in terms of a “legal status” (conferred by birth) than a “voluntary acceptance” of citizenship. This is neither desirable nor consistent with a world of increased mobility and multiple citizenships.

The problems of U.S. citizenship have been exacerbated by the twin principles that:

1. U.S. citizenship has become less and less dependent on the existence of a “voluntary” connection to the U.S.; and 2. U.S. citizenship is now a status imposed on the individual, rather than a status chosen by the individual. (Although the 14th Amendment may have been motivated by a desire to “end slavery” it is now being used as a mechanism to “create tax slavery”.)

To put it another way: U.S. citizenship has become less “something that one chooses to voluntarily connect to” and more something “one is through an accident of birth, chosen for”. This is of huge significance because the U.S. (under the guise of citizenship-based taxation) attempts to control the lives of its citizens living abroad.

What is the justification for “place of birth” taxation? The closest rationale that can be discerned is the idea that:

1. All U.S. citizens must pay taxes to the U.S.
2. U.S. citizens, regardless of where they live are still U.S. citizens.
Therefore, U.S. citizens regardless of where they live have to pay taxes to the U.S.

Interestingly, U.S. Taxation Abroad includes, but is not limited to U.S. citizens

A recent post on the Isaac Brock Society included:

“According to the 14th Amendment of the United States Constitution anyone born in the United States is a de facto US citizen regardless of whatever other citizenship they may hold in the course of their lifetime. Therefore, with the existence of CBT anyone with a United States birth certificate is forever taxable by the US even if they have never lived there as an adult or earned any money there.”

Are those “born in the U.S.” really doomed to a lifetime of U.S. tax servitude?

I was born in Canada by an American mother, so am I an American citizen?

 

Cross-posted from Quora

I was born in Canada by an American mother, so am I an American citizen?

 
Answer by John Richardson , Lawyer (1982-present)

Anybody concerned with the answer to this question should (1) do the appropriate research and (2) get the appropriate advice.

Unless you live in the United States or want to live PERMANENTLY in the United States, you would NOT want U.S. citizenship. U.S. citizens are subject to U.S. taxation on ALL OF THEIR WORLDWIDE INCOME, even if they do NOT live in the United States. In fact U.S. citizens living outside the United States who are “tax residents” of other countries are always “subject(s)” (pun intended) to two tax systems.

The question is: “I was BORN IN CANADA to an AMERICAN mother, so am I an American citizen?” Note that if you were born in Canada you are born in another country where U.S. laws (as much as they would like them to) do NOT presumptively apply. The U.S. Immigration and Nationality Act is the statute that defines who is an American citizen and who is NOT an American citizen.

Here is my answer which is written in a way to encourage caution and to NOT just listen to the first “accountant” (what would an accountant know about this anyway?) or lawyer or immigration consultant.

The answer is “maybe”. It depends. Your approach to this question depends on whether you want to be a U.S. citizen or do not want to be a U.S. citizen.

For those born in Canada and who WANT to be U.S. citizens:

The U.S. Immigration and Nationality Act has specific rules that say under what circumstances a person born to an American mother outside the USA “shall” be a U.S. citizen. The answer is dependent on the mother having a certain number of years of actual physical presence in the United States. (The one year “continuous presence” test was struck down by the U.S. Supreme Court in the 2017 decision of Morales-Santanya).

Therefore, if you want to be an American citizen you would have to establish the existence of specific facts and present those facts to the U.S. State Department and ask them to issue you a U.S. passport. Note that you are NOT entitled to a U.S. passport until those specific facts are proven to the satisfaction of the State Department.

For those born in Canada who do NOT want to be U.S. citizens:

There are some in the tax compliance industry (what do they know about citizenship law anyway?) who have marketed the idea that U.S. citizenship can be imposed on people born in Canada (and other countries) even if they have never considered themselves to be U.S. citizens.

Can the USA forcibly impose U.S. citizenship on people who were NOT “Born In The USA”? What if one was born to an American mother in China (a country that does NOT allow “dual citizenship”). Can the USA forcibly impose U.S. citizenship on that citizen of China?

If you have accepted that you are a U.S. citizen and have traveled on a U.S. passport (and that kind of stuff) then you would NOT be able to defend the accusation of U.S. citizenship. But, if you have done NONE of those things and just happened to have been born outside the United States to an American mother, then your situation is probably different. You are arguably in a position where you would have the “right” to U.S. citizenship (under U.S. law if you want) but NOT the obligation to accept U.S. citizenship (because you were born in a country where the USA does not have jurisdiction).

I am not aware of a single instance where a U.S. court has ruled that people born outside the United States are required to be U.S. citizens.

In any case, if you were NOT born in the USA, you do not have the objective characteristics that would raise the question of “U.S. citizenship” anyway.

This issue has been discussed at the Isaac Brock Society and other sites. The following post provides some of the “analytical tools” to consider the question.

Help: Can the United States IMPOSE US citizenship on those born outside the US?

If you have read this far you might find the following video of interest:

U.S. citizenship and the Government of Australia

The question of “dual citizenship” and whether somebody IS a “dual citizen” was of practical relevance in Australia in 2017. Basically, seven (at least) Australian politicians were accused of being “dual citizens” (making them ineligible to serve in Australia’s legislative body). This “farce” provides a real world example of why it would matter if somebody born outside the USA to an American other would be an American citizen. See the following:

Australian Greens Senator @LarissaWaters resigns because of her CANADIAN place of birth. Too bad she was born in Canada (with images, tweets) · expatriationlaw

Is the State Department Shutting Down Expatriation Appointments in Canada?

 

An interesting conversation is taking place on the FB group American Expatriates. Journalist Serena Solomon from the publication VICE has requested stories from expats describing the emotional effects of renouncing. You might want to go over and take a read as many are quite interesting. It is a public group so I believe one can read without being a member; not sure if one needs a FB account.

 

Earlier today, there was the following comment, which forms the basis for this post:

Tom Paine A question for those in Canada: It appears that few or no renunciation appointments have been confirmed since January of 2016 when they switched to a centralized Renunciation system for all of Canada. Has anybody in Canada received a renunciation appointment in Canada who applied after February 1, 2016. If so, where was the appointment location? Again, I am asking about those who have applied for an appointment NOT those who had pre-existing appointments under the old system. For those outside of Canada, what has happened is that the demand to renounce in Canada is so great, that DOS has created a centralized renunciation system for all of Canada.

 


 
The change to a centralized renunciation system for Canada occurred this past February. A detailed post describing the procedure can be found here.
 


 
From the Globe & Mail:
 

“It’s very clear that there is no particular attempt to make it easier to get out – to provide more resources or expedite the process,” complained John Richardson, a Toronto citizenship lawyer, who has guided numerous Canadians through the complex process. “Toronto may be the renunciation capital of the world,” Mr. Richardson said.

A U.S. embassy spokesman would not comment directly on the reasons for the long wait times, but he confirmed that it currently takes anywhere from 45 days to 10 months to arrange a mandatory meeting, depending on the location. He acknowledged that the process is not meant to be easy, even as the embassy works to “refine” it.

“Due to the serious implications the decision to renounce U.S. citizenship carries, the process is intended to be deliberative in order to permit individuals to reflect upon their decision before returning to execute the Oath of Renunciation,” the official said.

Is this man serious? A 15 month wait is required to contemplate the seriousness of the action? Since only one appointment is now the norm, the wait is from application until the appointment. Sorry, but this is ridiculous beyond belief. The previous policy of requiring two appointments was designed to accommodate this perceived need to reflect. I originally scheduled my second appointment a week following my first. Seven days. Point being, there was no huge wait necessary before. What could possibly justify the difference between waiting a week and waiting 19 months for an appointment? Are there that many people renouncing and if so, why does the Federal Register not reflect those numbers? We know the Federal Register falls short of what is reported on the FBI’s NICs list. Something just doesn’t add up here (in more than one way).

The original attitude of the Toronto consulate back in the last quarter of 2011 was to try and accommodate the new surge of people applying. I remember phoning Mrs. Anderson at the Consulate for an appointment in late October and she told me it would have to wait until the 2nd appointments of those 22 people were finished. My first appointment was November 30, 2011.

An interesting comment from Kevyn Nightengale:


Over a year and a half before this change of procedure (November 4, 2014), Stephen Kish had a most interesting discussion with 2 members of the U.S. Consulate in Toronto.

I had conversations with the C-G and two Consular officials on the wait time to obtain a renunciation meeting in Toronto.

This evening I attended a Toronto meeting of students, Democrats, Republicans, and Toronto US Consular officials which was sponsored by the Munk School of Global Affairs. U.S. Consul General James Dickmeyer gave a short speech and I had conversations with the C-G and two Consular officials on the wait time to obtain a renunciation meeting in Toronto.

Consular Official “R” — I pointed out to R that there are many Canadians in the Toronto area with unwanted U.S. citizenship who need to renounce this citizenship. R advised that the wait time is now up to September 2015, in part because of a three week or so delay caused by the Pan AM games (yes, you heard that right).

C-G — I then spoke to the C-G, explained the situation that these unfortunate people need to get on with their lives, and asked that since he is the “boss” he needs to reorganize staff duties and shorten the time to a renunciation appointment as bookings are now in September. There was some confusion as he felt that I must have meant September past (I believe that he was unaware of the wait time). Once this was clarified he argued that the boss really does not have that much power and that I should go back and speak to R (apparently the man with the money) which I did (see below).

We debated a few points: C-G feels that citizen-based taxation is not “so bad” as taxes are never owed to the IRS because Canadian taxes are higher (I corrected this impression). C-G complained that Canadians are “only now” coming to renounce. I explained that many are only now finding out that the U.S. considers them to be U.S. citizens. I mentioned our FATCA IGA lawsuit and C-G responded by saying that we will just hurt the banks etc…

Consular Official R (second conversation) — Told R that his boss claims that R has the power to shorten renunciation wait times. R responded by saying that the renunciations are a low priority that do not compare with high priority activities such as passport renewals, and that there will be no change in priority. R advised that Toronto people should go to Calgary or Montreal to renounce. I asked R how would a low income person find the funds to do this.

IRS compliant American — Happened to get into conversation with American very proud of filing tax returns to IRS for 30 plus years and paying no tax. Feeling nasty I asked him what does he think will happen when he sells his expensive house that he has lived in for all these years (now he knows).

Dems Abroad — In a short speech Dems Abroad promised that Americans abroad should not worry about the safety of voting in an election because the information is not passed on to the IRS (I think the fellow was serious). One DA presented to R their approach to FATCA (modify but do not kill). I explained that the Alliance and Republicans Overseas want to kill the entirety of the beast.

There was nothing else for me to say, so I left.

Could an official’s personal perception (negative) have an effect on policy? We have seen before, that the State Department is sometimes slow to follow changes that they are legally required to make. One instance of this concerns the issue of CLNs for reqlinquishment via an expatriating act and intent. This affects thousands of Canadian citizens who relinquished in the late 1960’s – 1980 when case law began to include “intent” as a factor in whether citizenship was lost by performing an expatriating act. The difficulty is that those relinquishants were not advised to come down and apply for a CLN. Since at least the 1940 Immigration and Nationality Act (INA), the State Department was supposed to issue CLNs (see Section V Miscellaneous – Paragraphs 501 & 502-but this in no way amounts to a a relinquishment being valid only if one has a CLN).

Another post appearing on FB today:

Today (July 13) Just received an email from Milano Consulate saying to contact them in September for the 2nd appointment for renunciation. My first appointment was in April in Genoa – Her lame explanations were that they are backed up in Milano because of all the renunciations from Switzerland being handled and that there are 200 death certificates to handle.

Why such a difference time-wise? Yes, likely more Canadians trying to renounce but less than 2 months compared to over a year? What gives?

At what point would the actions of the State department amount to disregard for the law and the right of citizens to expatriate?

*****

To reiterate, the primary focus of this point is to determine if the State Department is shutting down/seriously limiting the number of renunciations in Canada by making it more difficult/longer to obtain an appointment. In order to verify that, we need to know/ask:

  1. Has anyone who has applied for renouncing in Canada since mid-February received an appointment (your application would have been processed through Vancouver via the email address: CanadaCLNInquiries@state.gov
  2. Has anyone who has applied for renouncing in Canada under the new system actually completed an appointment?

NB: We are NOT asking if anyone has actually renounced after this date because the appointment may have been made before these changes took place.