On August 29, 2014, the U.S. Department of State
("DOS") published an interim final rule in the Federal
Register, which raised the fee for processing renunciations of
United States citizenship from US$450 to US$2,350, a 522.22%
increase. This new fee became effective on September 6, 2014.
The obvious reason for this fee increase is to discourage dual
citizens from renouncing their United States citizenship. During
the past two years, renunciations of United States citizenship have
Every quarter, the U.S. Department of the Treasury publishes the
names of all individuals who have expatriated. For the first two
quarters of 2014, the total number of individuals who expatriated
was 1,577. The total number of individuals who expatriated in 2013
was 2,999. In 2012, the total was only 932.
It is widely believed that this increase in expatriations is due
to the United States' aggressive global tax reporting
obligations, which includes the Foreign Account Tax Compliance
Act ("FATCA"). Among other things, FATCA requires
foreign financial institutions and U.S. withholding agents to
implement new procedures for tax information reporting and
withholding, account identification, and documentation. The
objective of these procedures is to identify U.S. persons who are
evading U.S. tax obligations using financial accounts held outside
of the United States.
The rush to expatriate has created backlogs for renunciation
appointments at United States consular posts in Canada. As a
result, it is currently not possible to schedule a renunciation
appointment until the beginning of 2015.
Many of these proposed renunciants are Canadian citizens who
believed that they had lost their United States citizenship years
ago. However, as a result of FATCA, they have recently obtained
formal legal advice and discovered that they are still United
Individuals who intend to renounce their United States
citizenship should be aware that, as a result of 1996 amendments to
the Immigration and Nationality Act, a former U.S. citizen
who renounces United States citizenship (on or after September 30,
1996) for the purpose of avoiding U.S. taxation will be considered
inadmissible to the United States. In light of this fact, care
should be taken to properly document the reason for the
renunciation in order to avoid this ground of inadmissibility.
Although this ground of inadmissibility is not being aggressively
enforced at the present time, this may change in the future.
In some cases, it will be possible for an individual to argue
that he or she has already lost U.S. citizenship by operation of
law. If the individual is successful, DOS will issue a Certificate
of Loss of Nationality, retroactive to the date of the prior
Arguing a prior loss of United States citizenship is preferable
to renouncing because it will avoid the potential ground of
inadmissibility that could result from a formal renunciation. It
could also reduce or eliminate the individual's potential U.S.
tax obligations. For example, a former U.S. citizen who
successfully establishes that he or she automatically lost
citizenship by operation of law ten years ago would have ceased to
have U.S. tax obligations as of that prior date.
In conclusion, individuals who believe that they lost their
United States citizenship years ago but do not already possess a
Certificate of Loss of Nationality should consult with a qualified
United States immigration lawyer to determine if they are still
United States citizens. Even if they did lose their U.S.
citizenship due to a prior expatriating event, they should apply
for a Certificate of Loss of Nationality in order to properly
document this loss.
If they are still U.S. citizens, they may then decide to
formally renounce their United States citizenship at a consular
post. However, if they do, they should seek guidance from a
qualified United States immigration lawyer to ensure that the
renunciation does not result in their inadmissibility at some point
in the future.
Within the Province of Ontario, a qualified United States
Immigration Lawyer must be admitted to the practice of law in the
United States and must also possess a Foreign Legal Consultant
Permit issued by the Law Society of Upper Canada. Merely being an
Ontario lawyer or paralegal is not sufficient.
Any other individual in Ontario who represents a client in a
U.S. renunciation matter (or any other U.S. legal matter) commits
an offence under the Law Society Act and is subject to a
fine of up to $25,000 for a first offense and $50,000 for each
subsequent offence. Unfortunately, the Law Society of Upper Canada
does not enforce this law so the adage "buyer beware"
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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