Relinquished before 2004? Applying for CLN now? What are the IRS consequences?

reposted from Maple Sandbox .

Posted on March 6, 2013 by Pacifica777 .

There’s no question with renunciation (Immigration and Nationalities Act, s. 349(a)(5)).  You are relinquishing your citizenship and notifying the US government of it at the same time, and that’s the date your US citizenship ends.

But what if you relinquished your citizenship by a different method of INS, s. 349(a), such as taking citizenship in another country with the intent to relinquish your US citizenship (349(a)(1))?

The State Department is clear.  No matter when you notify the US govt of your relinquishment, once your CLN application is approved, your US citizenship ended on the date you actually relinquished it (that is the date your performed the relinquishing act, eg. naturalised as a citizen of another country — this date is indicated as your expatriation date on the the CLN.)

The IRS, however, according to s. 877A(g)(4) of the US Tax Code, considers the date of your relinquishment for IRS purposes is not the date of your actual relinquishment but the date you notified the US government of it (your consulate meeting).  This was not the case prior to 2004, however [the relevant section was 7701(n) in 2004 and it was replaced by 877A in 2008].

So, what if you relinquished your US citizenship long ago, but only recently learned of US law and policy changes which make it important to be able to prove you are not a US citizen, and wish to obtain Certificate of Loss of Nationality (a document you probably never even heard of before)?  What if the current law regarding IRS and citizenship termination did not exist at the time you relinquished?  Logic  leads one to the conclusion that laws passed after a person ceases to be a citizen are irrelevant.  The IRS has never made a definitive statement on this issue, however their instructions for the 8854 (expatriation tax form) are only directed at people with expatriation dates “after June 3, 2004.”

Tax lawyers Michael J. Miller and Ellen Brody have just published an excellent article on this matter, Expats Live in Fear of the Malevolant Time Machine, in which they point out the legal, as well as common sense, absurdity of a retroactive application position.  It’s very clear reading with useful references to legislation and case law as well.

One Couple’s Experience

reposted from Maple Sandbox

Posted on August 14, 2012 by johnnb

We moved to Canada from the United States in 1968 and received what was then called Landed Immigrant Status.  My wife was with me and I was a draft dodger.

It became obvious to us after only a couple of years that we wanted to stay in Canada so we looked into getting Canadian citizenship.  At that time there was a mandatory five year waiting period before you could apply so we just continued to gather information.  We were told that becoming a Canadian citizen would, by US law, mean we lost out US citizenship and we were told that at the citizenship ceremony we would be required to sign a renunciation of our US citizenship. Continue reading “One Couple’s Experience”

Don’t let fear push you into overcomplying, overpaying and losing your sanity!


This is a comment that stands alone as a post in itself. It was made in response to a post on the IsaacBrock Society

Petros, who authored the post this comment is a response to, is the pen-name of the founding administrator of the Isaac Brock Society. He has started this series of Petros Principles as a means of communicating guidelines which he believes have helped him and others deal with the United States’ world-wide tax invasion. He says:

Inordinate fear of the IRS is dangerous because it has caused some people to lay down all of their normal defense mechanisms and like an innocent lamb to stand paralyzed before the toothless lion.

One of the major roles of the cross-border compliance industry has been to frighten their clients and the public about the IRS’s power, and the media has too often created panic by consulting the compliance industry as their principle experts for information on US expat tax issues

The following response, by USCitizenAbroad will be of great help to anyone who is (understandably), in a confused and frightened state and in danger of being so overwhelmed, that reason and a considered assessment of what can/cannot be done by the IRS, that they simply over-comply, over-pay and lose way too many LCU’s.
USCitizenAbroad says
July 18, 2016 at 10:26 am


With due respect and appreciation for ALL the comments on this thread, this comment is to remind people of what Petro’s original point is (I think):

Petros is saying that fear can be such a dominant factor that it overwhelms all else and makes it much harder to make a “decision”. When “fear” is the dominant factor, people will “react to the fear” and NOT “decide on the facts”. There is NO way to know for certain what would be the result of any one decision.

Petros is not (I don’t think) saying that people should be “fearless”. He is simply saying that one cannot allow decisions to be made primarily based on fear. On this point, I do agree (for what it’s worth) with him.

My perception of the Fear, The IRS, The Condors and Americans (so called) abroad:

About the fear:

I seriously doubt that long term Americans abroad are on the radar of the IRS. But, I don’t know and nobody really knows. Nevertheless, there is no indication to think that they are.

When people experience fear and the trauma associated with the fear they seek safety which includes certainty. They incorrectly believe they have a “tax problem”. They don’t a tax problem they have a “compliance” (maybe) problem. Suggest you read an old post on this issue:

The Taxpayer, the IRS and the Professionals; Where to Go From Here

About the tax compliance community

If you go to a “tax lawyer/accountant” you will achieve CERTAINTY. But, the CERTAINTY will be at the cost of (possibly) turning over a lot of money to the process (U.S. taxes, compliance fees, etc.). Understand that if you go to a “cross border professional” they will approach the problem in terms of compliance with the Internal Revenue Code. Actually, in most cases they will suggest “heightened compliance” (“we are not really sure if this form is required, so you should file it anyway” – WRONG, WRONG, WRONG and WRONG). Understand that U.S. tax law is NOT enforced by the IRS. It is enforced by the tax compliance community.

About the Internal Revenue Code

Because the Internal Revenue Code is a U.S. law which applies outside the USA, there is no way to know with certainty whether you are ever in compliance anyway. I don’t think (just my opinion) that you respond to this uncertainty with “over compliance”. I think (just my opinion) that you solve it by “defensible compliance”. “Over compliance” means that you have absolutely and completely entered the “prison of citizenship taxation”. Your life is absolutely over unless you renounce. “Defensible compliance” means that you are doing the best can, but when things are ambiguous (“Not even your IRS knows for sure”), you don’t resolve ambiguities in favor of the IRS. One example of this would be the ongoing discussion of whether TFSAs and RESPs are “foreign trusts”. Although this example is “overdone”, it is an example where tax compliance people are likely to say: “Well, we don’t know for sure, so why not fill out these forms!” Well: you are not the one who must live with the consequences of filling out the forms!

About Americans abroad

If the “compliance process” costs you a significant percent of your net worth (and it could depending on your situation), you will no longer have “fear” but you will have extreme (dangerously so) “anger”.

In other words, you will have converted the disabling emotion of “fear” into the disabling emotion of “anger”. As a great and late trial lawyer used to say in his closing remarks to the jury:

“It’s not what you take from them, it’s what you leave them with”

See this older post:

Collective psychotherapy – U.S. citizens outside U.S. – Not what they take from you, it’s what they leave you with

My point is largely this:

Whether you are in U.S. tax compliance or not you have a problem. The problem is that you have a U.S. connection. After destroying Americans abroad, the USA will begin destroying the Homelanders (who will think it is just great).

So, you have three options:

1. Take steps to get a CLN (usually renunciation) so that you CANNOT be accused of being American. In most cases this means the 5 years of compliance and renunciation. If you can achieve this for the cost of a used car you are doing well. The difference is that:

– used car is just a depreciating “asset”

– a CLN is simply the best investment that any human being can have in the world. It will grow in value every second of every minute, of every hour, of every day, of every month, of every year for the rest of your life!

2. Take steps to understand why you are NOT American so that you can defend the accusation of being American. (The FATCA IGA specifically allows for this possibility).

3. Live your life and ignore the whole thing.

I am neither discouraging this nor encouraging this. It depends entirely on you. In some cases, the cost of “buying your freedom” is so low that it might be worth doing. In fact there are many Canadian citizens (who with the help of the tax community”) have actually “pretended they are Americans” (even though they know they are NOT) so that they can renounce and get a CLN.

The people who have paid the highest price in emotional and financial terms are the ones who have turned this over to the lawyers and accountants to “do the right thing”. And I am NOT saying that ALL lawyers and accountants are a problem. But, enough are they you should be VERY careful in your choice of adviser. For a recent example, have a look at the following post from Jack Townsend’s blog where he references the story of two women in their 90s and one in her 80′s who tried to do the “right thing”. It was NOT the decision of the three elderly women to enter OVDP. It was the decision of their lawyer. Now, we can’t tall all the factors leading to the lawyer’s decision to enter OVDP, but we can certainly see the consequences of the decision. Returning to the original point, this is what happens when people have so much fear that they cannot think clearly (or at all).

New Case Filing Challenging Streamlined Transition Disparity with Streamlined

In conclusion:

Petros is not saying ignore fear. Petros is not saying don’t have fear. What Petros is saying is:

Do NOT allow the fear to overcome everything else – a point that I do agree with!

What would FDR likely say about this crisis and trauma?

It is NOT true that the ONLY thing we have to fear is fear itself!

It IS true that the most dangerous thing we have to fear is fear itself!

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:
  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.