Biden 2024 Green Book: Message To Accidental Americans - Either Comply Or Renounce!

Part I – Summary of post:

The proposals for Americans abroad include:

1. A provision to (and presumption of) heighten enforcement of the 877A exit tax through changes in the Internal Revenue Code

2. A possible “carve out” from the 877A exit tax for certain Americans abroad with limited ties to the United States (under rules prescribed by the Treasury Secretary)

3. NO RELIEF whatsoever from U.S. citizenship taxation and the way that the rules apply to Americans abroad. This assumes a continuation of U.S. citizenship taxation with no evidence of change.

In other words: Either comply or renounce!

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State Department Announces Intention To Reduce Fee To Issue Certificates Of Loss Of Nationality From $2350 To $450

Introduction And General Context

On Friday January 6, 2023 the State Department announced its intention to reduce the administrative fee for issuing CLNs (“Certificates Of Loss Of Nationality”) for US citizenship relinquishments from the current $2350 to $450. Notably in 2015 the State Department increased the fee from $450 to $2350.

The precise language found in the Declaration of Assistant Secretary For Consular Affairs Reena Bitter was:

3. Under 31 U.S.C. 9701, 22 U.S.C. ยง 4219, and Executive Order 10718, the Department has the authority to establish fees to be charged for official services provided by U.S. embassies and consulates. The Department intends to pursue rulemaking to reduce the fee for processing CLN requests from the current amount of $2350 to the previous fee of $450, as set in 75 FR 36522 on June 28, 2010. The Department will consider any necessary changes to this fee, as appropriate, in a future rulemaking.

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The reduction was announced in conjunction with a lawsuit launched by the Association Of Accidental Americans arguing that the $2350 renunciation fee is unconstitutional. The announcement and general context is described in the article at the American Expat Finance News Journal.

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Those wishing to better understand the lawsuit might be interested in a 2020 podcast I did with the lawyer Marc Zell.
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Being An Accidental American: A Tax Perspective

While being an American citizen comes with many privileges, it also comes with a host of tax obligations. This is where things get tricky for accidental Americans โ€“ people unaware of their U.S. citizenship. In recent years, the issue of accidental Americans has garnered attention due to the increasing global mobility and their potential to face significant financial consequences in the United States.

In this article, we will explore the challenges they are facing and discuss strategies for avoiding the tax implications of accidental citizenship.

Who Is an Accidental American?

Anย accidental Americanย is a term used to describe someone who holds dual citizenship in the United States and another country, but is unaware of their U.S. citizenship status. They may have acquired U.S. citizenship even if theyย have never livedย in the States orย have only spent a limited amount of timeย in the country. For many accidental Americans, the discovery of their citizenship comes as an unpleasant surprise โ€“ often through a realization of the tax filing obligations to the United States.

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Darlene Hart

On September 6, 2019, the Internal Revenue Service (IRS) announced a new procedure which allows certain non-compliant US citizens who relinquished their US citizenship to become US tax compliant.

This procedure is geared towards โ€˜Accidental Americansโ€™ who were unaware of their US tax obligations. As well, under this procedure, no US social security number is required.

The main eligibility points include:

1.ย ย ย ย ย ย  Prior compliance failures were non-willful.

2.ย ย ย ย ย ย  Past tax liability is not in excess of $25,000 for the six years of returns to be filed.

3.ย ย ย ย ย ย  Less than $2 million in net assets as of expatriation date.

4.ย  ย  ย  ย Expatriated after March 18, 2010.ย  Must expatriate prior to filing under this procedure.

5.ย  ย  ย  ย It is limited to individuals only.

6.ย  ย  ย  ย The taxpayer has no tax filing history as a US citizen or resident.

7.ย  ย  ย  ย Must include a copy of approved form DS-403, Certificate of Loss of Nationality with the filing.

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Manasa Nadig

Stop the presses, hold the phones, drop everything you are doing! The Internal Revenue Service announced “Relief Procedures for Certain Former Citizens” on September 6th, 2019. If you are an “Accidental American” and planning on renouncing your U.S. Citizenship, you should be reading this.

Let’s dig back a bit and refresh our memories: The United States Constitution provides through the 14th Amendment that “all persons born or naturalized in the United States” are citizens of the USA. A person born abroad to a U.S. citizen parent or parents acquires U.S. citizenship at birth if the parent or parents meet conditions as specified in ยง 301 and following sections of the U.S. Immigration and Nationality Act.

Those who have acquired U.S. citizenship in such a manner may not be aware of the obligations and consequences of this status. As you my dear readers already know from my blog, that by law, U.S. citizens regardless of where they live have to report and possibly pay tax on their world-wide income to the Internal Revenue Service.

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France And US

The head of the French Banking Federation has formally warned France’s finance minister that he country’s banks may be forced to close as many as 40,000 bank accounts by the end of the year, owing to problems these banks have in complying with the U.S. tax information reporting law known as FATCA.

The 40,000 bank accounts in question are understood to be those of individuals who are either Americans or dual American and French citizens. The fact of their American citizenship obliges banks in France and elsewhere around the world to provide data on these clients to a French agency that subsequently supplies it to the U.S., as the Foreign Account Tax Compliance Act requires.

In his letter to French foreign minister Bruno Le Maire, dated July 17, French Banking Federation chairmanย Laurent Mignon noted that France’s banks say theyย face significant financial penalties from the U.S. if they fail to provide it with such information as the so-called Tax Information Numbers (TINs) of all of its American clients, and yet, he explained, they are unable to do this because many of these “French-speaking [French] citizens born on American soil” lack “lackย any concrete link with the United States, where they no longer reside,” and therefore don’t have TINs or other documentation the U.S. is seeking.

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French And US Flag

So-called “Accidental Americans” in France and elsewhere in Europe expressed disappointment, and in some cases dismay, after France’s top administrative court ruled that the current regime under which France provides information to the U.S. under its controversial Foreign Account Tax Compliance Act could stand, and didn’t need changing or to be scrapped.

In its decision, published yesterday, the Conseil d’Etatย said it sawย no legal basis to support claims by the Paris-based Accidental Americans Association that the way France currently implements FATCA violated the privacy of dual French/American citizens.

It also rejected arguments that the reporting regime is one-sidedย โ€“ that is, that it doesn’t oblige the U.S. to provide the same amount of information about French citizens living in the U.S., and thus the information flow is one-sided โ€“ according to French news reports.

“The [Conseil d’Etat] ruled that the claims by the accidental Americans, that the regulations under which FATCA is enforced in France, lack legal legitimacy, are unfounded,” theย French news agency, AFPย reported.

It added that theย decision was in line with statements made at a hearing on the matter earlier this month by the public rapporteur that the problems having to do with FATCA at most had to do with “technical difficulties of implementation.”

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William Byrnes

An interesting read by the Telegraph that walks an Accidental American through the process of renunciation of American citizenship to avoid paying a life time of US taxes, penalties, interest, and potentially criminal offences for non-filing. Read it here. Excerpts below:

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