The Expatriation Chronicles of an Accidental American, Episode 4

Note from Phil:  this is the fourth episode of The Expatriation Chronicles, in which we follow the renunciation process from start to finish with a 17-year old Irish girl who is an Accidental American.

  • Episode 1 (Phil’s introduction)
  • Episode 2 (A’s introduction – why she wants to renounce her U.S. citizenship)
  • Episode 3 (What to do when you don’t have a Social Security Number)

Our Accidental American discovered that she has a Social Security Number (see Episode 2). She does not need to go through the process of applying for a Social Security Number to comply with the tax filing requirements.

For younger Accidental Americans, this is usually the case — as part of the “get yourself born” process in U.S. hospitals the newborn is routinely assigned an identification number on the spot. This is likely what happened to A.

The Embassy in London is helping her to retrieve the number from the system.

This means that she does not need to go through the strategic thinking I laid out in Episode 3 (renounce first, then get an Individual Taxpayer Identification Number and file your tax stuff? or get a Social Social number, file your tax stuff, then renounce?).  She can proceed straight to renunciation:

  • She is 17, and has never worked. This means she has never had enough income to trigger a U.S. tax return filing requirement. And this, in turn, means that she can happily check the “Yes” box and pass the certification test for her U.S. tax obligations up to now.

  • Her 2015 tax return filing requirements (probably just a Form 8854) have a 15 June 2016 deadline. She has plenty of time to retrieve her Social Security Number from the U.S. government, so she can file the final tax paperwork to de-assimilate herself from the U.S. Tax Borg.

And here we come to the question of bureaucratic discretion. Will the London Embassy process her renunciation before she is age 18? Someone over the age of 18 has the absolute right to renounce U.S. nationality. A minor (under age 18) may or may not be able to renounce U.S. nationality — this is a judgment call for the State Department.

The Procedure in London

A has already done the footwork (she is prompt!). Here is what she discovered about the London Embassy’s procedures:

Fill in all the requested forms, scan and e-mail them to the Embassy. At the same time, in same said e-mail, request an appointment, which will then be allocated to me. I will have no control of when the appointment is, but have to turn up when told! And I am not permitted to take anybody with me, i.e. I will have to go by myself.

At this stage we also do not yet know how to pay the fee (cheque, credit/debit card, cash), but I am sure all will be revealed in due course. (My mum is mentally begging for a credit card payment :) and is hoping that the credit card provider will not refuse on the day thinking it might be a fraudulent deduction, which would be rather embarrassing.)

Criteria for a Minor’s Renunciation

The reason for “no other people in the room” is because the consular official wants to determine whether A is renouncing her U.S. nationality of her own free will, and knows exactly what she is doing.

The Foreign Affairs Manual tells the consular official how to interview a minor:

(3) Interviewing a minor: When conducting the initial interview with a minor and during the renunciation procedure, you should have at least one other person present. The parents and guardians should not be present. As noted, the interview should take place in the presence of the consular officer and a witness, preferably another consular officer, another Foreign Service officer (nonconsular) or locally employed staff (LE staff). You should also explain that upon reaching the age of 18, the minor has a six month opportunity to reclaim U.S. nationality. See 7 FAM Exhibit 1292, A Sample Letter to Accompany CLN for Minor Renunciants, which should be provided to minor renunciants together with an approved CLN[.]

7 FAM 1292(i)(3). (warning: PDF)

The consular official is looking for voluntariness and intent:

  • Is the minor renouncing her U.S. citizenship voluntarily? Or is she being pressured into the action by other people? (Lawyers call this “acting under duress” and courts will frequently reverse an action taken if you are being forced by outside pressure).

  • Does the minor have the necessary mental capacity to do what she intends to do? Does she understand what is happening? Does she understand the implications of the decision? If not, then the action can be reversed.

Again, here is the language of the Foreign Affairs Manual, at 7 FAM 1292(i)(2):

(2) Voluntariness and intent: Minors who seek to renounce citizenship often do so at the behest of or under pressure from one or more parent. If such pressure is so overwhelming as to negate the free will of the minor, it cannot be said that the statutory act of expatriation was committed voluntarily. The younger the minor is at the time of renunciation, the more influence the parent is assumed to have. Even in the absence of any evidence of parental inducements or pressure, you and CA must make a judgment whether the individual minor manifested the requisite maturity to appreciate the irrevocable nature of expatriation. Absent that maturity, it cannot be said that the individual acted voluntarily. Moreover, it must be determined if the minor lacked intent, because he or she did fully understand what he or she was doing. Children under 16 are presumed not to have the requisite maturity and knowing intent[.]

Discretion

What this means in the real world is that the London Embassy staff will schedule an appointment for A, and go through the procedures that I have just described. They will be looking for coercion and insanity. LOL. If they can find a hint of either factor, they can (according to their own internal procedures) turn down A’s application to renounce U.S. citizenship and tell her to come back when she is 18.

I exaggerate, of course. I do not expect the consular officials to be looking under every rock for an excuse to refuse A’s application. I expect them to be straightforward and impartial — because why not be sane, methodical, and compassionate?

Thus, I expect the people at the London Embassy to go through the process with A, and decide that she knows exactly what she is doing, and that she knows the consequences of her decision.

The consular officials may or may not feel a twinge of unease while contemplating the ridiculousness that forces A into this decision, but undoubtedly they will blame the U.K. system for the jackpot that A has landed in.

It sure ain’t Uncle Sam’s fault. Our tax laws were written by sober, intelligent men and women thinking only of the greater good of the country and never of their own personal careers, and our diplomats are all MENSA members with the temperament of The Buddha and the perceptiveness of Machiavelli, so it’s them dad-gummed other countries that are to blame. Let’s go get a beer after work.

I expect A to get an appointment and in due course be allowed to renounce her U.S. citizenship.

Keeping your startup from being treated as a PFIC

Good morning from Haoshen Zhong. You are receiving this message because you are signed up for our PFICs Only newsletter, sent to you every other Thursday morning at 06:00 US Pacific time. To end your subscription, scroll down to the bottom of this message and click “unsubscribe”. If you would like to check our other […]

Continue reading...

Expatriation with no Social Security Number – another report from the trenches

A friend (Virginia Jeker, a U.S. tax lawyer practicing in Dubai) sent me this email with her ideas for how to deal with the problem of a would-be expatriate who has no Social Security Number. This was in response to the third episode of the Expatriation Chronicles. Hi Phil – this was a great piece. […]

Continue reading...

Expatriation with no Social Security Number – report from the trenches

A CPA friend of mine send me this email — about the whole “how can you expatriate easily when you do not have a Social Security Number?” question. I have dealt with 2 different clients that surrendered their passports at US Embassy, one in Madrid and another in Paris.  In both cases, no SS# and […]

Continue reading...

The Expatriation Chronicles of an Accidental American, Episode 3

Note from Phil:  this is the third episode of The Expatriation Chronicles, in which we follow the renunciation process from start to finish with a 17-year old Irish girl who is an Accidental American. Episode 1 (Phil’s introduction) Episode 2 (A’s introduction – why she wants to renounce her U.S. citizenship) This episode went out on […]

Continue reading...