(Editor’s note: See here for Part I of this story.
The following is a firsthand story of how and why a former US citizen—who kindly shared this information on condition of anonymity—decided to renounce his US citizenship. It’s packed with practical advice and priceless insights into this momentous decision. Whether or not you take the ultimate step of renunciation, I believe you will find value from the author’s experiences.)
There are two forms for the applicant to fill out: DS-4079—a questionnaire about the applicant’s intentions to give up US citizenship; and DS-4081—a “Statement of Understanding” (that the applicant knows and understands the consequences of giving up US citizenship, and that doing so is irrevocable). DS-4079 is technically only for a “Relinquishment” filing, but may also be requested for a “Renunciation” filing. For a Renunciation proceeding (but not for a Relinquishment), the consular officer also prepares DS-4082, the Oath of Renunciation. The Oath is administered orally, after which the applicant as well as the consular officer signs the DS-4082.
Then the consular officer prepares a DS-4083, Certificate of Loss of Nationality (CLN). But the applicant will not be given a copy of the CLN at this time, as the application must first be approved by a State Department bureau in Washington. Embassy/consular staff were careful to remind me that my expatriation would not be finalized until these documents were reviewed in Washington—in particular my CLN, and my application was approved in Washington.
The time necessary for that State Department review process apparently has varied quite widely in recent years. Its duration may also depend at least somewhat on the embassy or consular office where one makes their expatriation application (perhaps taking longer from embassies with higher expatriation caseloads). Again, it may be useful to shop around among various embassies/consular offices which may be relatively accessible to an expatriation-seeker. The Isaac Brock website may be a very useful resource in this regard.
In my case, approval of my renunciation was fairly prompt—only about a month. As soon as the embassy or consular office receives confirmation from the State Department in Washington that the applicant’s filing has been approved, the embassy/consular office will provide the applicant an approved, sealed copy of the CLN.
For a renunciation, the effective date of expatriation is the date the Oath of Renunciation was performed; but for a relinquishment, the effective date of expatriation—as far as the State Department is concerned (but not the IRS)—is the date the “potentially expatriating act” (such as obtaining citizenship in another country) occurred. The IRS considers one’s expatriation date to be the date the applicant completes his or her filing with the embassy/consular office—provided only that that filing is subsequently approved by the State Department.
Of course, the “potentially expatriating act” may have occurred quite some time before one’s expatriation filing is made—but in such a case, it’s important for the person seeking to expatriate to avoid availing himself of any significant privileges/benefits of US citizenship, such as voting or using his or her US passport.
The State Department seems to have developed formulaic criteria for whether an applicant really intended to give up citizenship at the time they performed the “potentially expatriating act.” Even if one really did intend at the time one did the “potentially expatriating act” to give up citizenship and declares so in the application, the State Department will apparently refuse to accept that fact, if the person subsequently “continues to avail oneself” of any “significant”—whatever that means—benefits of US citizenship.
Once you’ve succeeded in expatriating, it will be important to be able to produce your CLN at various times in the future, as there will be no other official document you can offer as proof that you really did give up US citizenship. As FATCA and similar measures eventually become widespread (which unfortunately seems much more likely than not), the few remaining foreign financial institutions which have continued to accept US individuals as clients will dwindle further. So providing your CLN will likely become essential to open or even retain already existing financial accounts.
You should probably make several good copies of your CLN, including a high-resolution color scan (quite useful for online purposes). Sometimes it may be important to have some sort of notarization or other official recognition of it. You may want to do that sometime when you’re in the US, as notaries abroad tend to be a lot more expensive, less prevalent, and may refuse to even deal with documents not originating in their own country. Because loss of citizenship is irrevocable, there is logically no expiration to the CLN, so it should not matter when a copy of it is notarized. But alas, bureaucrats everywhere are not well known for their reliance on logic.
Once you’ve been notified that your expatriation application has been approved in Washington, you will be able to begin the process of applying for a visa to enter the US, if you wish to—that is, if you don’t hold a passport from a country on the US visa waiver list. Some people advise waiting for some time before applying for a visa, but there’s no formal requirement to do so.
Do keep in mind that the State Department considers that every applicant for a visitor visa to the US has the burden of proving (to the consular officials where the visa application is made) that the applicant will not try to stay illegally in the US. One might think that an expatriate, having gone to the considerable trouble of giving up citizenship, would be highly unlikely to want to stay too long in the US—but there’s no evidence that the State Department recognizes such an argument. One factor which does lend considerable support to an applicant’s (implied) assertion that they will not try to stay illegally in the US is to have “substantial ties” to another country—residency, social and/or familial ties, etc.
There’s no hard and fast requirement to apply for a US visa only at your “home”-country US embassy or consular office, but it’s generally considered better to do so. For instance, it’s likely easier to provide evidence of one’s substantial ties to that other country from within that country (and easier for the consular staff there to verify that evidence).
One very critical point to understand is that you should NEVER state that you are expatriating to avoid taxes. It could end up complicating matters if you ever intend to return to the US.
If your dossier with the US government states that you renounced for tax purposes, that information should be assumed to be readily available to any number of agencies—including those dealing with visas and immigration—and likely could be used to deny you a visa or otherwise deny entry into the US.
Although the authority to exclude a person from re-entering US on that basis is of questionable validity, and formal regulations on this have never even been proposed or implemented, State Department guidance to overseas posts does explicitly state this as a reason to reject a visa application.
The increasingly great difficulty (largely due to FATCA, FBAR, and Form 8938 reporting requirements) of trying to lead a normal life while living overseas as a US citizen is—and ought to be—reason enough for many to give up their US citizenship.
Some experts advise against giving any reason for why you’re expatriating in any of your interaction with US consular officials at any point during the expatriation process—and particularly in any of your responses on the DS-4079 Questionnaire. But these responses may be useful later on to have established that one did have substantial non-tax-avoidance reasons for expatriating. In any case, it would probably be best not to express opposition to the regime in DC too strongly or explicitly as the reason for expatriating—even if that is a major factor in one’s decision.
Do keep in mind that visa applicants are required to have a face-to-face interview with a US consular agent before a visa can be approved. The application (using form DS-160) must be completed using the State Department’s online system. The interview itself may be conducted in a more or less assembly-line manner, in a bank-teller-window-like setting. The main purpose of the interview requirement seems to be to assess the general nature of the applicant and his or her situation—and to attempt to ferret out any adverse factors for which US officials there might want to reject the application (such as lacking strong enough ties to one’s new home country, or an actual—or even fleeting—thought on the applicant’s part to remain illegally in US).
The lead time for getting the interview appointment will vary considerably by location and time of year, ranging anywhere from just one day up to several weeks, maybe even months. Consult the online appointment calendar of the embassy/consular office where you plan to submit your application and try to avoid applying during whatever peak periods may exist there.
It will probably only take a few business days after successfully completing the interview to receive your passport back with your visa. You’ll be advised at the end of the interview whether or not your application is being recommended for approval; apparently an application is very rarely rejected after a successful interview.
The parameters of any US Visitor visa you may be issued—its validity period (in years), number of entries allowed, and maximum length (in days or months) of each visit—will depend on the passport under which you apply for that visa.
It’s not very easy to locate country-specific State Department policy on these parameters, but this page on the State Department’s website has a selection box to check at least the default visa validity period and default number of entries allowed for any particular country. Unfortunately, this page has no information about the default length of stay permitted for US visa holders of a particular nationality.
(Editor’s Note: See the VisaHQ website to see what kind of visa passport holders from country X need to enter country Y while living in country Z.)
Another point to note: regardless of whether you enter the US under the visa-waiver rules or under your own visa, doing a “visa run” (a quick trip to a nearby country to reset one’s visa or visa waiver period) is not so easy. US Immigration authorities require you to perform a “substantial” departure, meaning you must go at least as far away as continental South America—no quick trips to Canada, Mexico, nor even any Central American or Caribbean country!
Without question, you’re likely to have some fairly keen feelings at least the first few times when you come back to the US as an “alien” (what a horrible word—as if people living elsewhere are some sort of suspicious or even dangerous intruders). When you come back to the US, you’re likely to be quizzed a little bit by the immigration officer (and maybe also the Customs inspector), but in the half-dozen or so times I’ve been back so far, I’ve not been given a hard time at all.
Of course, past performance is no guarantee of future results, so one will always face the risk of more hassles down the road. But given that US border authorities already claim that even US citizens have no Constitutional rights at entry points, there are risks for everyone.
I didn’t expatriate because I expected it to make my life easier overall—it has not made it easier overall (at least for me). Yes, some things are easier now: I can open financial accounts overseas and invest directly in overseas securities, many of which have become effectively off limits to US individuals.
Also, I sleep better at night, relieved to no longer be even an unwilling, passive participant in the ever-escalating wars against the growing assortment of “evils” declared by Washington. And I no longer have to worry about making an honest mistake or omission on any of the ever-increasing IRS reporting requirements. But it’s at least somewhat more difficult to travel—this depends a lot on the other passport(s) one has.
Another significant trap to be wary of is the IRS’s Substantial Presence criteria, which risks you getting sucked back into the whole US tax regime (including all the overseas reporting requirements). This occurs if you stay too long while visiting in the US. Not only must one stay in the US no more than 182 days in any one year, you must also ensure that your weighted average number of days within the US over the most recent three years isn’t too high.
There are several other ways one may be required to continue dealing with the IRS after successfully expatriating, especially if you continue to have any US-based assets. At a minimum, in the first year after expatriation, it will be necessary to file Form 8854.
If you are considered a “covered expatriate”, preparing Form 8854 (and both of its associated 1040 forms) will be at least fairly complicated, and will almost certainly require the services of one of the small number of professionals who are experienced with Form 8854 and the “mark to market exit tax.”
I’m still in the early days of my post-expatriation life—really far too soon to judge with any certainty whether I made the right decision (even according to my own thinking, let alone what anyone else thinks). But so far, I’m satisfied that I did do the right thing—for myself. The “silence implies consent” credo is very deeply ingrained in my outlook; this tends to trump the drawbacks, at least for myself. I find implied endorsement of this thinking in Nassim Taleb’s Antifragile, especially in a number of passages in chapter 22. In the end, expatriation is a momentous decision and will be unique for each person considering it—there’s no one right answer for everyone.
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