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Help! I Want to Expatriate, but They Won’t Let Me…..Part I

Lately, renouncing US citizenship has become more and more fashionable with the full implementation of the “Foreign Account Tax Compliance Act (also known as “FATCA”), looming on the horizon. If you wish to read more about the US tax consequences of expatriation or the latest legislative proposals heaping additional sanctions on certain expatriates, read my other blog postings here ,  here ,  here and here 

I am now more often receiving inquiries about expatriation from the foreign parents of a child born in the United States while the parents were studying there or were there on some other temporary basis.  Increasing inquiries are also coming from parents of a child who was born overseas but to parents, only one of whom was a US citizen and who resided in the US for a certain time period before the child was born. In both of these cases, the children have acquired US citizenship “at birth”. In these sometimes frantic phone calls, the parents are protesting the child’s “involuntary” acquisition of US citizenship and want to know how soon it can be renounced.  Lest everyone panic who is reading this post, it is important to note that children born in the United States to diplomats accredited to the United States are not subject to US jurisdiction and do not acquire US citizenship. 

Brave New World — Assisted Reproduction (Sperm Donors and Egg Donor Can Transmit US Citizenship)!!  What About Same-sex Marriages?

These issues are gaining prominence in the modern times in which we live and are very critical topics for Americans who are living abroad.  According to Karl Jauch of the American Citizens Abroad Inc., based in Geneva, who has assisted many Americans with citizenship issues for several decades, the US Department of State applies a basic rule for recognizing US citizenship of children born abroad.  Under this rule,  what counts is the actual blood relationship and nothing else. In other words, if the donor is a US citizen, the donated ova or sperm can transmit the donor’s US citizenship to the future child. According to Mr. Jauch, “US citizenship is not automatically conferred by an American surrogate mother or a same-sex American partner. This situation can cause delight or anguish, depending on the circumstances, especially if the parent(s) were unclear about the legal situation beforehand.”  So, before accepting that donated egg or sperm you had better check whether the child will be carrying the desirable? undesirable? US citizenship trait as well other traits!  Mr. Jauch has prepared a very helpful set of FAQs regarding transmission of US citizenship. Access it here. 

The Department of State information on the critical topic of an American’s use of assisted reproductive technology abroad can be found here.

Planning Will Help In Difficult Expatriation Cases

There are certain situations when giving up one’s US citizenship becomes extremely difficult, sometimes even impossible.   In cases when a minor or mentally challenged individual wishes to renounce US citizenship special and very sensitive considerations come into play.  In these cases, the individual should seek appropriate counsel as to what the US Consulate or Embassy will be looking for during an interview with the would-be renunciant and what factors are most important to the Department of State in approving the renunciation by issuance of that critical document called a Certificate of Loss of US Nationality (CLN) .

US tax planning in these cases is even more important. If the individual cannot expatriate currently, it is very important to structure his affairs to minimize any US tax bite during the time he remains a US citizen and in planning for a future expatriation.  It the individual is under a permanent mental incapacity such that renunciation will never be possible, then proper planning of US tax matters becomes even more critical.

Next week’s blog post will cover the details and hurdles for expatriating minors and mentally challenged individuals.

Follow me on Twitter: @VLJeker

 

 


4 thoughts on “Help! I Want to Expatriate, but They Won’t Let Me…..Part I

  1. As a comment to me at isaacbrock some time ago: (http://isaacbrocksociety.ca/2013/06/29/accidental-americans-born-abroad-to-us-parents-and-not-registered-with-the-us-are-they-automatic-us-citizens-or-do-they-have-a-right-to-claim-us-citizenship-when-they-can-make-that-decision-as-an/comment-page-2/#comment-412753)
    quote:
    This is what is so disappointing and disturbing about this posting and string: My late friend, Andy Sundberg, founder of American Citizens Abroad, worked tirelessly during the 70s and 80s to change US law to be much more inclusive than it had been. One of the reasons was his daughters were born effectively “stateless”; he, an American, his wife, a Frenchwoman, gave birth to their daughters while living in Switzerland. He found that there were quite literally tens of thousands of people in similar circumstances.

    Of course, the Cold War was still on, and many accidental Americans – and their parents – were rightly concerned about being able to be protected by America should anything happen. Andy felt that they should be granted a much broader interpretation to widen the blanket.

    Andy always felt that USA should also mean “the universal spirit of America”. Little did he realize that our own government, through the spiteful acts of narrow-minded members of Congress and a vindictive little s**t of an IRS Commissioner would turn all of this into a nightmare for so many he spent years and thousands of dollars of his own money doing.

    When I spoke to him two weeks before his fatal heart attack, this is what weighed heaviest on his mind. Indeed, it is my contention that he died of a broken heart because we’ve come to a point where American nationality is seen as a curse rather than the blessings of everything we grew up admiring about being American. I share his broken heart about this issue – even I have advised my godson, an accidental American born of British parents in NYC, that he should consider giving it up because of the gestapo harassment of the IRS.

    As someone whose family traces its roots back to 1630, and whose ancestor was a martyr during the Revolution to establish our great country, I simply can’t believe I would EVER come to this point in the life of our nation and it physically pains me.
    unquote

    I gave my name to CBC Canada reporters and this is one result: http://isaacbrocksociety.ca/2013/06/29/accidental-americans-born-abroad-to-us-parents-and-not-registered-with-the-us-are-they-automatic-us-citizens-or-do-they-have-a-right-to-claim-us-citizenship-when-they-can-make-that-decision-as-an/comment-page-2/#comment-412753

    IMO, any law that ENTRAPS anyone into US citizenship (or any other citizenship), especially for a person never even registered with the US, is just BAD LAW. But, I know: the law is the law is the law. Too bad that often quoted phrase does not apply to EVERYONE.

    This concern we see from others as their parents with age-related dementia are also caught into this type of ENTRAPMENT into US citizenship for their loved family members.

    1. @Calgary411 Words escape me upon reading your heartfelt and very sad comment. Thank you for sharing this.

  2. Question at http://isaacbrocksociety.ca/2013/12/17/u-s-citizenship-based-taxation-unique-or-outrageous/comment-page-5/#comment-829522

    Has there ever been a case where the US government has forced any kind of US citizenship obligation on people born outside the US who’ve never claimed it?

    Who knows; I’ve been trying to get a straight answer on whether or not there is an option for a claim to US citizenship for children born to US citizen(s) outside the US for some time. Do you think the US is going to give me this information? I only know the information that I PAID FOR in Washington, DC is that my kids were US citizens from the moment of their births. And, straight from the Department of State, again:

    DOS persons he talked with on an informal basis have “sympathy” for such cases. However, the developmentally disabled person will have to have FULL understanding of what he’s doing; if any question of lack of comprehension and grasping meaning and importance of ramifications, they could NOT approve such a case. From DOS point of view, US citizenship is precious and they have therefore established fundamental requirements for “compelling reason”. Even though there is the risk that a person’s financial resources could run out before his/her life was over, they will never approve a renunciation for financial / economic reasons. DOS has NEVER had such a renunciation case approved due to “compelling circumstances”. Bottom line: “compelling reason” in their regulations is not helpful to my son’s case. I could sue – persons he talked with at DOS are SURE no one would ever win such a case as the courts view the discretionary action that DOS has would take precedence.

    It seems to me, though, with making other countries’ financial institutions arms of the IRS with FATCA this obligation will be forced on people born outside the US who have never claimed it. Shall I give my bank my situation and take the chance? I presume they would want something legal saying that if a US citizenship was not claimed there would be no problem.

    Asking that question is a little disingenuous. It doesn’t matter whether or not there ever been a case where the US government has forced any kind of US citizenship obligation on people born outside the US who’ve never claimed it. It is a US threat over the heads of these people, these families. Another fear instilled in people. The answer should be very clear. It is NOT very clear. And, I really don’t think the US wants it to BE clear.

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