The following post is the fifth of a series about American values sparked by my renunciation of US citizenship in November 2015.
In my journey through the wilds of US law as it applies to overseas Americans, I’ve joined a few Facebook groups where people in this situation share information about tax law, FATCA, and individual countries’ IGA (Intergovernmental Agreement) rules, as well as news about renunciations and related lawsuits.
A fellow overseas American I know from one of these groups pointed out an irony about renunciation that I think is worth sharing with a larger audience.
Written Statement about Renunciation
When Americans renounce their citizenship, as I did, we are required to sign a form called “Statement of Understanding Concerning the Consequences and Ramifications of Relinquishment or Renunciation of U.S. Citizenship” (Form DS-4081) that includes the following:
I am exercising my right of renunciation/relinquishment freely and voluntarily without force, compulsion or undue influence placed upon me by any person.
The forms are sent to the US State Department after signing, where the application is approved before the person renouncing can receive a Certificate of Loss of Nationality (CLN). The CLN is necessary to do any banking and in many employment situations where being an American can mean banks and other companies refuse to do business. It may also be necessary for travel to the US, where those born in the US are required to use their US passport.
We are also allowed—but not required—to include a written statement explaining why we have renounced:
I do / do not choose to make a separate written explanation of my reasons for renouncing/relinquishing my United States nationality. (Form DS-4081)
It’s not clear what the purpose of this separate statement is, but I handed one in because I had a strong feeling that I couldn’t do something so irrevocable without someone—anyone—hearing why I did it, and hearing that I did it extremely reluctantly.
Two of the employees behind the counter at the consulate read it while I waited, and one told me that he would recommend that my request be granted. He said that my statement made it clear that I was not acting under duress but had thought out the decision carefully.
The implication of this is that the State Department can also turn down an application to renounce. This leads to lots of questions: what happens if they turn it down? Is there an appeals process? And do I get my $2350 back? What if someone does not hand in a statement, like the man who renounced just before me that day? Are they more likely to get the application rejected?
Renouncing Under Duress
‘Under duress” means that you were somehow forced or pressured to renounce citizenship, and I agree that no one should be forced. However, many people who have renounced recently, or are planning to renounce, state that they have to do so: they are forced into it by circumstances.
For some, it’s a matter of being unable to find a bank to do business with because the banks don’t want the expense of complying with the new FATCA disclosure rules.
For some, renunciation is necessary because otherwise, according to their adopted country’s IGA with the US, they’ll be double-taxed on sales of property or pension payments.
For some, including me, it’s a matter of the cost of paying an accountant and dealing with a resentful non-US spouse who ends up handing his financial information over to the US government.
You could, then, interpret our reasons for renouncing as being an example of acting “under duress,” except the pressure comes from the US government itself!
In my written statement, I did indeed write that I was renouncing due to various US government actions against overseas Americans. My application for renunciation will either be rejected or approved.
Hypothetical situation number 1: rejection
- Because the State Department sees that I am acting under duress, it rejects my application to renounce citizenship.
- The fact that the US government rejects the situation as a case of duress confirms that its own policies are oppressive.
- And, if that happens, I’m remaining a US citizen under duress in that I no longer want to be a citizen.
Quite ironic, isn’t it?
Hypothetical Situation number 2: approval
- The State Department accepts my statement as valid reasoning to approve my renunciation.
- In that case, its acceptance of the validity of my grievances implies that citizen-based taxation and all of the consequences of it (FATCA, privacy-invasion, etc.) are indeed causing the increase in renunciations.
- The State Department is thus reaffirming that the FATCA regime is unjust.
Of course, it’s unlikely that my application or anyone else’s will be rejected. The US is only interested in getting tax dollars from overseas Americans, not serving our needs in any way. I don’t think the government really cares if we renounce, as long as we pay up: both any taxes we may owe plus the exorbitant renunciation fee. The form I was required to sign also states:
My renunciation/relinquishment may not exempt me from United States income taxation. (Form DS—4081)
So even after renouncing (which I’ve done already) and receiving my CLN (which I haven’t), I won’t yet be free. The IRS can still audit my returns to see if I did them right, and can still impose fines if they notice differences between my returns and the account information the banks send them under FATCA rules.
I think someone at the State Department needs to look up the meaning of “duress”!
To jump back to the first post in this series, click here.