[squirel77]

Hi

Hope someone could help.

I am an (unfortunately) an accidental American, who never lived or worked in the US. Got my US citizenship by birth because my parents spent a few years in the US studying. I am also a Malaysian citizen, left the US when I was a year old. I have no SSN. Recently, I needed to go to the US for a work trip but was denied a visitor visa at the US embassy. Instead I was told I could get a US passport which I did. During the time there was no mention of US tax filing obligations (I should have asked).

Here is what I have done:

1. Spoke to a tax attorney. He suggested I am low risk and should file 6 years of past tax returns and 6 years of FBARs. (US$800/hr)
2. I've engaged in a large tax preparer in the US to do this - should be completed in the next 2 weeks. Tax preparer estimates that I will probably not owe little or no taxes. (US$3500/flat fee)
3. I've submitted an application for a SSN - will take 4-6 weeks.

The tax attorney recommended that I consider logging out of the tax system by renouncing US citizenship and he can help with the process. He said it should be fairly straightforward since I should not have high income tax liabilities the past 5 years and my net worth is less than US$2million. He is recommending a flat fee of US$8000 for his services though I still have to pay separately on my own the renunciation fee (USD450) and 8854+2013 tax returns.

I am trying to do it in the right way but will also want to try and minimise the already high costs.

1. Should I undertake with the renunciation process on my own? I was thinking of booking the appointment at the US embassy directly and hire the tax preparer to do the Form 8854.
2. Or should I just engage in the tax attorney? Am I missing any other steps that will require a tax attorney?
3. Does anyone have any other reasonable fees for a tax attorney specialising in expatriation?

I am new to this forum. If there is already a separate discussion on this issue, please let me know.

Thanks in advance.

 

[BBCWatcher]

Those strike me as comparatively high fees for those services. Why not take a look at the IRS's streamlined compliance offer and see if you can navigate it on your own? Provided you can follow written English instructions it's not too difficult. You can also use free online tax preparation Web sites such as TaxAct.com to generate the most recent year's tax form (in printable PDF) then use that as a model for the other past tax years.

Renunciation of U.S. citizenship is a separate process. My recommendation would be to go through the streamlined process and get your tax and FBAR forms done. Then (after a while) reflect on whether you find doing TaxAct.com (or similar) once per year and (probably) paying zero a low or high price to pay for maintaining U.S. citizenship. Yes, it would be a burden to pay hundreds or thousands of dollars per year to fill in some forms. But the vast majority of Americans don't do that.

By the way, if you're a young (under 26 years of age) American male you have one more reporting requirement: Selective Service registration. You can do that online at sss.gov, and it takes probably 5 minutes. You'll need a U.S. Social Security number to complete the online form.

 

[Bevdeforges]

I really question whether or not you need a tax attorney to help you renounce, if that's what you want to do. As BBCWatcher says, doing your back tax forms shouldn't be that difficult. And what you need an attorney of any type for for renouncing is completely beyond me.

Maybe you should talk to the local US consulate first. You're hardly the first accidental American to consider this approach - and I can't imagine that they would actually want to have you apply for a SS number and all that good stuff just so you could renounce. (Yeah, I know - the government works in strange and mysterious ways...) But at least ask the question and see what they can tell you.
Cheers,
Bev

 

[squirel77]

BBCWatcher,

Thank you for your reply.

I see you are currently in Singapore. I live in Singapore too.

1. Well I thought US$3500 for 6 years returns / FBARs was a pretty good deal for a person who knows nothing of US tax filing (I thought). Yes, I have never ever filed a single tax return though I pay without fail all my local Singapore income taxes. This includes a life insurance policy that is linked to several mutual funds (i.e. PFIC) so even though I do not have any realised gains I have to file an equal number of 8621s - I am actually quite clueless as to why things are the way they are. I just regurgitated what the tax preparer said and that I will be best filing the returns through him. Basically, my returns are not straightforward even though I am not a high income earner.

2. I did take a look at TaxAct. I tried the free version, got stuck at the part for form W2. I do not have a form W2.

3. I am close to 40 years old now so I am feeling relieved about the Selective Service registration. Did not know about that. I guess that will be similar to Singapore's National Service?

I will like very much to learn more about the benefits of citizenship, but right now the feeling is not too good. I mean no offence to other Americans in this forum, but right now I just want this issue to just go away. I have been a law abiding citizen all my life .. until now. I want to come into compliance quick and then move on with life. But the cost of coming into compliance is just so .. aarghhh!!

I could not change the cost for filing past tax returns BUT..

if there is anyone who have suggestions on steps to take to renounce without having such a high cost associated with it, please let me know your thoughts.

 

[squirel77]

I really question whether or not you need a tax attorney to help you renounce, if that's what you want to do. As BBCWatcher says, doing your back tax forms shouldn't be that difficult. And what you need an attorney of any type for for renouncing is completely beyond me.

Maybe you should talk to the local US consulate first. You're hardly the first accidental American to consider this approach - and I can't imagine that they would actually want to have you apply for a SS number and all that good stuff just so you could renounce. (Yeah, I know - the government works in strange and mysterious ways...) But at least ask the question and see what they can tell you.
Cheers,
Bev

Bev,

Thank you. The people at the embassy, the people who said I needed to get a US passport were the same people who subsequently alerted me that I should have been filing US tax returns my adult working life. Now that you mentioned it, I can imagine having to face hostility the day I step in to renounce when I was just applying for an SSN a while back. I will take your advice and speak with them about renunciation.

The things I am most concerned about renunciation are:

1. Queries from the IRS after renouncing.

I was explained to very thoroughly about the consequences of being a "covered" expat and this can happen if the application is done with mistakes. I was told the IRS can seize bank accounts not only in the US but now overseas as well - apparently that is the job of the upcoming FATCA. Could they send the police after me?

So I thought it would be best to engage in this same "tax attorney" to be at my side should this situated arise. Though I am a low income earner, I am quite a low risk taker. Should there be any queries from the IRS, I will not know the first thing to do.

2. The duration.

I was told by the attorney that he can speed up the process for me. If I did not engage in him and attempted to do this myself, the process can take a VERY LONG time.

3. The high cost.

The tax preparer quoted me just under US$1000 to prepare the form 8854. Another USD450 to the embassy. A total of US$1450 plus 2013 tax return fee. If I can do this all without the additional US$8000 legal fee, I will be most relieved.

I was telling my wife - I probably owe no taxes but I will have been more than willing to just give the money spent on accountant/attorney fees directly to the IRS. At least the money could be used to help a nation instead rather than benefit just a few individuals.

Sorry this is turning out to be a sharing session. I'm in Singapore, probably the only one in this country facing this problem right now.

 

[Pacifica]

@ Squirel77,

I can imagine having to face hostility the day I step in to renounce
...

I was told by the attorney that he can speed up the process for me. If I did not engage in him and attempted to do this myself, the process can take a VERY LONG time.

The embassy/consulate staff seem overall to be quite pleasant and mainly interested in making sure you’re aware of the consequences of renouncing. If you google consulate report directory, you can read people’s experiences at different consulates/embassies.

You can see the required forms at these links. Some embassies require form 4079, Questionnaire, for renunciation, some don’t -- your local embassy will let you know. It’s definitely good to familiarise yourself with form 4081, Statement of Understanding of Consequences, ahead of time.

Form 4079 http://www.state.gov/documents/organization/97025.pdf
Form 4081 http://www.state.gov/documents/organization/81607.pdf
Form 4080 http://www.state.gov/documents/organization/81606.pdf
Form 4083 http://www.state.gov/documents/organization/81609.pdf

Renunciation takes one visit at some embassies, two visits at other embassies. In any event, the meeting/s tend to be short and, as mentioned above, focused on nuts and bolts, not hostile. One is not required to give a reason for renouncing – if it does happen to come up, just mention you’re an accidental with no connection to the US.

You should not need a lawyer at all for the Dept of State side of things, which is very simple and straightforward. As for the IRS side, some people use an accountant and/or lawyer, and I can see that a pro can be useful with it.

However this statement sounds odd to me:

“I was told by the attorney that he can speed up the process for me. If I did not engage in him and attempted to do this myself, the process can take a VERY LONG time. “

I’m not aware of how any lawyer can speed things up (nor that it’s particularly lengthy process anyway). Sounds like he may be promising something he can’t deliver, with a scare tactic re the “otherwise, a very long time.” Sounds rather like a sales pitch.

Some general info -- the loss of citizenship is effective the date of renunciation. Officially it’s retroactively effective to that day once the certificate of loss of nationality is approved. The certificate is approved in Washington – however if there’s a problem with your file, your local embassy will tell you on the spot, rather than send Washington an incomplete application. It takes a few weeks to a few months to receive the certificate of loss of nationality. One’s final tax returns and the exit tax return, 8854, must be filed by June 15th of the year following the renunciation.

 

[Nononymous]

Lawyers and tax accountants have an interest in making this look more complex than it really is. The line about renunciation taking longer without a lawyer is utter bollocks, I imagine.

I can't see why you'd need assistance with renunciation, assuming that you're not wealthy on the scale of a Saverin. It's very straightforward. There's no reason for the consulate to be hostile - you need the bloody SSN to file your taxes before you renounce, so of course you had to apply for it. And if they are, so what? They don't make any decisions, they just send the application back to Washington for processing.

I began renunciation in Canada, had my appointment, all very pleasant (if a bit earnest and hurt-looking on their part). I decided not to proceed because, basically, I was too lazy to become tax compliant, and currently there's no risk to me remaining non-compliant as I'm a Canadian citizen in Canada without US assets (passport issues are another matter, but they are being dealt with cleverly). So I'm continuing to ignore the whole matter, though I persist in lurking on this forum, mostly telling people to chill out and relax.

I can't speak for Singapore (though someone on this forum can) but in Canada, the US has zero means of touching any Canadian assets held by dual citizens. They most certainly cannot touch overseas accounts without some degree of local cooperation, which I presume was the case with the Swiss banks.

There appears to be no reported instances at this time (according to the forum) of travelers being asked about their tax status when entering the US.

 

[Pacifica]

@Nononymous,

I agree with you. I also feel that most people, especially “average Joes," have no need for a lawyer when dealing with IRS. I do think an accountant can be very useful if one feels overwhelmed by the US tax forms, though – though, of course, some people do their own US tax, sharing pointers on boards like this. I know some people who did their own tax forms upon expatriating and so far no problems from IRS

@Squirel77,
From what you've written, you sound like an an "average Joe."

 

[BBCWatcher]

IRS Form W-2 is the form that U.S.-based employers issue which lists your total compensation from that employer. Non-U.S. employers don't issue W-2 forms, so if a tax form asks for a W-2 and you don't have one then you don't have one. If a tax form asks for information about wages, salaries, and tips (for example), and further elaborates that normally that's found in a particular box on your W-2 form(s), the latter advice is not relevant to your situation but you can still report the information requested.

That's why I say that U.S. tax compliance is mostly an exercise in English reading comprehension. Just read everything carefully, follow the instructions, and you'll generally do just fine.

Now, that said, I agree the PFIC rules are complicated, and I deliberately avoid running afoul of PFIC rules for that reason.

Singapore has agreed to FATCA cooperation with the U.S. IRS, so the IRS can reach assets in Singapore if sufficiently motivated.

No, U.S. Selective Service is not like Singapore's National Service. Selective Service is draft registration only. The U.S. has not had an actual military draft for half a century, and the prospects of having another one are remote. Singapore's National Service is actual compulsory military service.

Selective Service registration only facilitates more rapid mobilization of manpower, but even that is arguable given the widespread availability of so many databases (which Selective Service accesses to keep its files up to date). It's possible the U.S. Congress will curtail funding for Selective Service even further than it already has.

 

[Nononymous]

Singapore has agreed to FATCA cooperation with the U.S. IRS, so the IRS can reach assets in Singapore if sufficiently motivated.

Is that "reach" as in "view", or "reach" as in "take"?

Significant difference.

 

[BBCWatcher]

Is that "reach" as in "view", or "reach" as in "take"?

Both reportedly. Some measure of due process in Singapore is required -- more for the latter than the former -- but U.S. and Singapore tax authorities have agreed to cooperate.

 

[Nononymous]

Both reportedly. Some measure of due process in Singapore is required -- more for the latter than the former -- but U.S. and Singapore tax authorities have agreed to cooperate.

Interesting. Would this apply to dual citizens, or merely US citizens resident in Singapore?

In contrast, a heartwarming lack of cooperation from our ostensibly pro-US conservative government here in Canada.

 

[BBCWatcher]

Dual citizens of the U.S. and Singapore? Singapore doesn't think they exist because the Singaporean government doesn't tolerate dual citizenship. If a Singaporean citizen is pursued by the U.S. IRS, and that citizen has not "operated" his/her U.S. citizenship (e.g. obtained a U.S. passport), chances are excellent the Singaporean government would treat that individual as a Singaporean.

Any other type of dual citizen (U.S. and other) would be treated as a U.S. citizen if the IRS requests assistance from its counterpart in Singapore, presumably.

 

[Nononymous]

Dual citizens of the U.S. and Singapore? Singapore doesn't think they exist because the Singaporean government doesn't tolerate dual citizenship. If a Singaporean citizen is pursued by the U.S. IRS, and that citizen has not "operated" his/her U.S. citizenship (e.g. obtained a U.S. passport), chances are excellent the Singaporean government would treat that individual as a Singaporean.

Any other type of dual citizen (U.S. and other) would be treated as a U.S. citizen if the IRS requests assistance from its counterpart in Singapore, presumably.

Thanks for the clarification. Not so different from Canada, where the country protects its own citizens, even those who are dual. (Ditto Canadian willingness to aid in collecting judgements against US citizens in Canada who are NOT also Canadian citizens.)

 

[BBCWatcher]

It's at least a bit different. If a Singaporean is found to be "operating" as a U.S. citizen then the Singaporean government is probably going to bail on him/her with extreme prejudice. Canada on the other hand tolerates dual citizenship.

 

[squirel77]

@ Squirel77,



The embassy/consulate staff seem overall to be quite pleasant and mainly interested in making sure you’re aware of the consequences of renouncing. If you google consulate report directory, you can read people’s experiences at different consulates/embassies.

You can see the required forms at these links. Some embassies require form 4079, Questionnaire, for renunciation, some don’t -- your local embassy will let you know. It’s definitely good to familiarise yourself with form 4081, Statement of Understanding of Consequences, ahead of time.
------
------

Renunciation takes one visit at some embassies, two visits at other embassies. In any event, the meeting/s tend to be short and, as mentioned above, focused on nuts and bolts, not hostile. One is not required to give a reason for renouncing – if it does happen to come up, just mention you’re an accidental with no connection to the US.

You should not need a lawyer at all for the Dept of State side of things, which is very simple and straightforward. As for the IRS side, some people use an accountant and/or lawyer, and I can see that a pro can be useful with it.

However this statement sounds odd to me:

“I was told by the attorney that he can speed up the process for me. If I did not engage in him and attempted to do this myself, the process can take a VERY LONG time. “

I’m not aware of how any lawyer can speed things up (nor that it’s particularly lengthy process anyway). Sounds like he may be promising something he can’t deliver, with a scare tactic re the “otherwise, a very long time.” Sounds rather like a sales pitch.

Some general info -- the loss of citizenship is effective the date of renunciation. Officially it’s retroactively effective to that day once the certificate of loss of nationality is approved. The certificate is approved in Washington – however if there’s a problem with your file, your local embassy will tell you on the spot, rather than send Washington an incomplete application. It takes a few weeks to a few months to receive the certificate of loss of nationality. One’s final tax returns and the exit tax return, 8854, must be filed by June 15th of the year following the renunciation.

Pacifica,

Thank you for your advice.

1. I am beginning to see that it is probably scare tactic on the tax attorney's part, Many in the thread have commented that there is no need for a tax attorney in the renunciation process. The tax attorney did mention that he knows certain "friendly" embassies that requires only 1 interview session instead of 2. Maybe (to be fair) that is what he meant by cutting short the time.

2. I am going to ask the people at the embassy on this matter. If I can do the renunciation on my own and save US$8000, that will be just awesome!

3. "One’s final tax returns and the exit tax return, 8854, must be filed by June 15th of the year following the renunciation" - thanks for this. This should give me a comfortable amount of time to prepare the documents required for 8854. Hope they are not too different from the yearly tax returns. Anyway, the tax preparer quoted a flat fee of US$1000 for the 8854 - will probably start saving up now. If anyone thinks I am being ripped off, please feel free to sound the alarm.

 

[squirel77]

@Nononymous,

I agree with you. I also feel that most people, especially “average Joes," have no need for a lawyer when dealing with IRS. I do think an accountant can be very useful if one feels overwhelmed by the US tax forms, though – though, of course, some people do their own US tax, sharing pointers on boards like this. I know some people who did their own tax forms upon expatriating and so far no problems from IRS

@Squirel77,
From what you've written, you sound like an an "average Joe."

@Pacifica
Yes, a very sad "average Joe" at this stage.

@Nonoymous
Thank you. It has been 2 months since discovering this pleasant suprise. There were countless of times when I was so tempted to just ignore the whole thing. I am close to 40 years old now, why did the IRS not come after me before? I am decided and will go ahead, by hook or by crook, to become compliant.

This forum is interesting and great! I honestly felt lonely and insecure the last 2 months, but after looking through some of the other posts I found there are many others like myself. So, a big THANK YOU to this forum and to the people who made this happen.

 

[squirel77]

Dual citizens of the U.S. and Singapore? Singapore doesn't think they exist because the Singaporean government doesn't tolerate dual citizenship. If a Singaporean citizen is pursued by the U.S. IRS, and that citizen has not "operated" his/her U.S. citizenship (e.g. obtained a U.S. passport), chances are excellent the Singaporean government would treat that individual as a Singaporean.

Any other type of dual citizen (U.S. and other) would be treated as a U.S. citizen if the IRS requests assistance from its counterpart in Singapore, presumably.

@BBCWatcher
I belong to the "US and other" category, and I never did expect to get any favours from Singapore. My bank account balance is probably very small for the IRS to take any interest in - the tax attorney said so. But I do not intend to wait and find out. I want to log out of the system as quickly as possible.

But thank you for your input .. very very informative.

 

[Nononymous]

@Nonoymous
Thank you. It has been 2 months since discovering this pleasant suprise. There were countless of times when I was so tempted to just ignore the whole thing. I am close to 40 years old now, why did the IRS not come after me before? I am decided and will go ahead, by hook or by crook, to become compliant.

I learned about it and then decided to continue ignoring it, unless something changes. Then again, I'm a Canadian citizen living in Canada where my assets are (for the moment) protected from the US government.

The IRS did not come after you because the IRS does not know that you exist.

The only way the IRS might learn of your existence is from your US passport application, which you needed to do in order to enter the US without grief, given your US birthplace. Otherwise, were it not for FATCA, you could've gone on ignoring this and living your life in peace.

End even if the IRS does learn of your existence, Americans are not obligated to file unless their income exceeds a certain amount, so the US and the rest of the world can be full of US citizens who, quite legally, never need to file anyway.

FATCA may change the playing field, but only if your bank in Singapore keeps record of your citizenship or birthplace. (In Canada, financial institutions do not collect this information, which is why they are all supremely pissed at the idea of asking 30 million people where they were born, so that up to a million of them can have their financial data reported to the US.)

 

[Jenisnolongerayank]

Hello, I renounced my US citizenship in May this year in London and it was very simple. Just contact London Renunciations at [email protected] and let them know you intentions and they will send you all the forms you need. Once the forms are submitted they make you an appointment at the embassy and tell you what to bring. I received my confirmation of renunciation in just 8 weeks.