Immigration Alert – Americans Continue to Relinquish U.S. Citizenship Under Trump
October 3, 2017
Americans living abroad continue to relinquish U.S. citizenship in record numbers. A trend started during the Obama administration continues under President Trump as well, and we can thank FATCA for that. The onerous Foreign Account Tax Compliance Act (FATCA) enacted in 2010 directs that non-U.S. banks and financial institutions around the world must reveal American account details or risk big penalties. As a result, Americans living abroad report problems with simple events like opening bank accounts in other countries, because foreign banks are sufficiently worried about keeping the IRS happy that many do not want American account holders. Rather than dealing with the ever-changing U.S. tax compliance regulations, onerous reporting obligations and mounting professional fees to accountants and advisors, ordinary Americans living abroad are taking steps to simplify their lives by giving up U.S. citizenship. Our article will provide an overview of the steps, timelines and consequences for relinquishing U.S. citizenship.
The so-called “Voluntary Renouncement” is the most common process used to relinquish U.S. citizenship. Typically, the applicant has two interviews with an officer at a U.S. consulate or embassy abroad. The first interview is an informative meeting designed to confirm the person’s U.S. citizenship, as well as to discuss the consequences of renunciation. After the initial interview, any individual who decides to proceed will be required to undergo a waiting period to make sure that he or she has enough time to adequately ponder the irreversible decision. The required waiting period can be an hour or two at some diplomatic posts and up to three months at other places.
During the second meeting, the individual will be interviewed to assess whether he or she is acting intentionally and voluntarily. Consular officers follow guidelines to assure that the intent is truly voluntary. If so, the consular officer administers an oath of renunciation, and the soon-to-be former U.S. citizen signs an oath or affirmation of renunciation of nationality and a statement of understanding of the consequences and ramifications of relinquishment or renunciation of U.S. nationality. After the oath, the officer prepares a Certificate of the Loss of Nationality that is filed with the U.S. Department of State for final approval. Once approved, the Certificate is mailed to the U.S. Citizenship and Immigration Services (USCIS), as well as the now officially former U.S. citizen.
Former U.S. citizens should be aware that, at this point, unless they already possess a foreign nationality, they may be rendered stateless and lack the protection of any government. Statelessness can present severe hardships: the ability to own or rent property, work, marry, receive medical or other benefits, and attend school may be affected.
Parents Can Not Relinquish on Behalf of Children
Relinquishment of U.S. citizenship has profound and irreversible consequences. Therefore, it is required that the candidate has a voluntary intent to undergo the process – another party cannot express such intent. A minor child requesting relinquishment would likely be doing so due to parental influence, and it is impossible to ascertain whether the child’s intent is completely voluntary.
In fact, consular officers are instructed in the Foreign Affairs Manual that “children under 16 are presumed not to have the requisite maturity and knowing intent” to relinquish citizenship. It is important to note that parents cannot renounce citizenship on behalf of a child once the child has U.S. citizenship. The regulations generally require that a child wait until age 18 to renounce his or her own citizenship if that is the path the child chooses to take.
After relinquishing U.S. citizenship, the former citizen immediately begins to be treated as any other foreign national. For example, in order to enter the U.S. to travel or visit family and friends, the person would need to apply for a visa or a visa waiver. Similarly, in order to work in the U.S., the individual would need to apply for work-authorized status such as H-1B or L-1, or receive an Employment Authorization Document (“EAD”), if eligible. It is important to note that former citizens do not receive preferential treatment when applying for admission to the U.S.
For those with minor children, a U.S. passport or green card may open up opportunities for the child in the future. It is important to note that if a U.S. citizen renounces citizenship, he or she no longer has the legal right to transmit citizenship to minor children.
Moreover, relinquishment of U.S. citizenship is irreversible. Once citizenship is relinquished, any individual wishing to become a U.S. citizen again will need to follow standard immigration procedures: become a legal permanent resident first and apply for naturalization later.
Relinquishment of citizenship may also have unintended consequences affecting taxes, such as an exit tax levied on the person’s global assets. Therefore, it is crucial that anyone contemplating citizenship renunciation should seek advice from an experienced tax professional.
In addition, the act of renouncing U.S. citizenship does not allow persons to avoid possible prosecution for crimes which they may have committed in the United States, or escape the repayment of financial obligations, including child support payments previously incurred in the United States or incurred as U.S. citizens abroad.
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The contents of this Immigration Alert are general in nature, for informational purposes only, and do not constitute legal advice.