Vancouver Consulate Backlog for Expatriation


Posted by:
Phil Hodgen

Written on:
November 8, 2011

Posted in:
Expatriation

A client has a pending application to cancel his U.S. citizenship at the Vancouver Consulate.  Today he received the following email from the Consulate:

From: “Vancouver, ACS Department” <vancouveracs@state.gov>
Date: November 8, 2011 7:47:00 AM PST
To: FirstName LastName
Subject: RE: CLN forms – FirstName LastName

There is currently a back-log in respect of Loss of Nationality cases.  Cases are responded to by turn.  We request your patience.

U.S. Consulate General
American Citizen Services
Vancouver, BC, CANADA

Privacy/PII|
This email is UNCLASSIFIED.

Do not expatriate by mail

If you want to terminate your U.S. citizenship before the end of the year:

Make an in-person appointment at an Embassy or Consulate.

Do not mail in your application to terminate citizenship.  Do it in person.

If I could put twinkle stars surrounded by rainbows to draw your attention to those two sentences, I would.  I’m just not that good at HTML.

You can go to any Consulate or Embassy in the world.  It is worth buying a cheap ticket to fly somewhere to do this.  Make it a vacation — go to Singapore or Bangkok or Frankfurt or somewhere else.

There is no guarantee that you will have your application processed before year-end.  When you mail the documents to the Embassy or Consulate you do not know whether they arrived in good shape.  By setting an in-person appointment, you will know for a fact that you terminated your citizenship on a particular day.

Even if your documents arrive by mail, and the Consulate acknowledges receipt, you face a second risk.  If your documents were mailed and were incomplete, they will be rejected and you will have to start over.   If you made a mistake on your paperwork, you can fix it on the spot if you are sitting in front of the Consular official.

Commentary — keep an open mind

I get the feeling that the number of people terminating U.S. citizenship has jumped dramatically.  I wonder whether the U.S. government publishes statistics on this.  Yes, I know that there are quarterly statistics for people expatriating under Section 877A, but I question whether those are complete and accurate.

Regular people who do not live in my world (international taxation) are flabbergasted when I tell them that U.S. citizens are turning in their passports right and left.  It is simply inconceivable that someone would do such a thing.  Sometimes the reaction turns to an implicit character assassination of the person relinquishing citizenship:  they must be a bad person in some way.  Tax dodger.  Non-patriot.  Someone unwilling to support his country.

Meh.

It is more interesting to me to watch the outbound flow of intellectual (and financial) capital in a semi-scientific way and formulate a hypothesis.  Why are these people choosing to terminate citizenship of the most powerful country in the world?  Keep an open mind.  Formulate a testable hypothesis.  Adjust it when the data indicate the hypothesis fails.

Me?  I know what they tell me.  Multiple anecdotes don’t create a data set.  But I hear them again and again report:

  • The current jack-boot tax enforcement attitude of the IRS scares them.  Many of the people we help expatriate settle in countries with higher tax rates than the U.S.  It is not the rate of tax that matters.  It is something else.  Can you guess, Mr. Shulman?
  • The estate tax.  The funny (as in “it is a monument to towering stupidity”) thing about expatriation is that people who do so cannot allow their capital to return to the United States after death because of the exit tax rules — Section 2801.  So the U.S. government drives capital out of the United States and then creates economic disincentives for that capital to return.  Makes sense.  We don’t need investment capital in the United States.  We have too much real estate already.  We don’t need investors.  Or jobs.  We have plenty of jobs already in the United States.  Go away with your silly investment capital.  Our banks are fine.
  • The hassle of pointless paperwork.  Unlike other countries, the United States imposes income tax on its citizens no matter where they live.  Even if there is no tax imposed (because, for instance, the host country has a higher tax rate than the USA) there is a paperwork burden and the opportunity for screwing things up accidentally.  And then, please cross-reference my first point re:  jack-boots.  Oh.  And look at the constant threat that Congress will do away with the foreign earned income exclusion.  Yet more Towers of Stupidity from our friends in Congress.
  • They’ve put down roots (or have roots) in another country.  Non-tax reasons exist.  After living abroad for decades, people finally decide that the United States is no longer home.  Or they came to the United States from another country and find the United States no longer hospitable, and prefer the home country to the USA.  My parents are immigrants, and they decided that their home countries are no longer home–the United States is home.  The reverse happens, too.  Especially with Canada, in my experience.

Canary, meet coal mine

At the moment the number of people leaving might be small, and their actions dismissed in a hand-wavy fashion.  But they should not be dismissed.  Their actions are an indicator of something gone awry.

The United States has been built on immigration.  Out-migration tells us something isn’t working.  (Hah.  Tell that to the State of California. “Oh, no. Everything is fine!”  Same thought.)  When people vote with their feet — and are willing to pay a staggering tax to do so — they are sending a message.

I don’t think anyone is listening.  And this, unfortunately, is to the greater harm of the United States.

Vancouver Consulate Backlog for Expatriation by
  • Concerned Canuck

    FYI, the Calgary consulate has a enough of a backlog that appointments are being booked in January of 2012 now. What was a one-month backlog in Sept/Oct has now become two months. Still much better than many other consulates.

  • Sally

    Um, before you make a long trip to a consulate far from home, make sure that the consulate actually takes walk-ins. The one in Frankfurt Germany does not. Visits only by appointment and they want info from you first, so they can prepare the paperwork.

  • Poser

    I used a Toronto consulate to announce my relinquishment. It was 5 week waiting time. That was in the Spring. It is helpful to be ahead of the bandwagon. Thanks for this post Phil.

    For me it is (1) Hassle of paperwork. (2) Estate issues; but then there was the Heroes Earnings Assistance and Relief Tax Act of 2008, and I decided to get out before I would become a covered expatriate. The IRS scares me to be sure. I think you hit all the reasons exactly right. People don’t realize it yet, but we’re going to start viewing the escapees from the USA like we did the Viet Nam boat people or East Germans who jumped the Berlin Wall.

  • Don

    Phil….It’s good to have you back on the blog after FATCA-Fatigue.

    Don

  • http://www.theglobeandmail.com/news/world/americans-in-canada-driven-to-divorce-from-their-country/article2229969/ Dave

    the tired, poor, huddled masses are yearning to breathe free….

  • Poser
  • Ruth

    BBC World contacted me today wanting to speak with ex pat Americans who have renounced over this FATCA and FBAR legislation. Toronto has a SECOND group renouncing meeting planned for later this fall or early winter. I know two people on the list to renounce at that meeting. People I talked to in Hong Kong and London both said they are backed up too. The United States have shot themselves in the foot here. They may think this is not a big deal yet but, some of us have completely divested out of any U.S. holdings as a reaction to feeling forced to renounce.

    • Don

      Please please let me speak to the BBC – I’ve got over 20 years under my belt in the UK and going back very soon…..I’m a dual EU / US citizen and would like to bring the awareness of this issue up to Canada’s.

      Also let’s get Boris Johnson, Zoe Warnamaker, Ruby Wax, Barbara Cassini, and other well know dual US citizens on-board with this non-sense.

      Don

  • Pet

    Please add FBARs to the list of issues with the US government!

    In October, my wait for an appointment at the Calgary consulate was 5 weeks.

  • Just Me

    I have just recently noticed this call in blog talk show on FBAR and FATCA issues that is being hosted by an expat in Canada. You might want to check them out. They have had three shows so far, which you can download. It is a small effort, which we should try to support. If more begin to know it is around, it might gather a following… Here is the link..

    http://www.blogtalkradio.com/cafreeb

    • Poser

      Just me: thanks for this effort to publicize the efforts of Cafreeb. She’s doing a great job.

  • Just Me

    I just posted this over at Jack’s blog, but will do so here for the broadest exposure possible..
    ………………………………………

    Ok, here is your chance, if you are not too timid, to tell your stories to a reporter that has an interest. Finding one, has been hard to do, but now we do have one.

    As you may know, or I have commented previously, I have been writing reporters regularly in response to their stories that miss a Bigger story when they just repeat IRS VD success claims about their amnesty programs without question or followup.

    Last night I wrote the reporter Amy Feldmen, after seeing her most recent article in Reuters titled “Undisclosed foreign accounts? The IRS is coming.” http://reut.rs/rJGaJC

    As it turned out, ACA had also written Amy a couple days ago. They asked her to do a broader expose’ on the impacts of the IRS actions, and they got this response from:

    “Thanks for writing. I actually mentioned in the piece that the law affects “Americans living overseas, including retirees, and immigrants in the United States who have maintained financial lives overseas.” In an earlier piece, while the amnesty window was open, I wrote about how many people were going to be surprised and caught off guard by this. If any of your members who’ve been snared by the recent enforcement would be interested in telling their story, I’d very much like to talk with them. It would bring a real human face to what can seem a rather abstract issue. Please let me know. Thanks again for writing.

    best regards,
    Amy

    Amy Feldman
    212-787-2794
    amy@amyfeldman.com

    ACA, in turn, just emailed the following to the 100s of testimonials that they have on record to encourage them to contact her:

    “Recently ACA wrote to Amy Feldman, a Reuter’s journalist who wrote and published an article on November 9th entitled, “Undisclosed Foreign Accounts, The IRS is Coming.” ACA suggested that Amy do more to expose the personal, financial and economic damage that the current U.S. tax legislation, in particular on FBAR, is having and will have on individuals and families. She has written us a response and is interested in publishing a follow up article (see her email response to ACA below).

    If any of who who sent us testimonials on these issues are interested in contacting Amy you may reach her at the phone number and email address listed below. We urge you to speak with the media about these issues as this is our best tool for bringing to light the destructive nature of current U.S. tax policy and FBAR filing requirements for overseas Americans.”

    So now, we have the ear of a reporter, who has an interest, and can help shape a narrative that is counter to the IRS success stories we have endured. I encourage you to do so, even if you fear that this might bring IRS retribution. I am sure she can keep you as a confidential background information source if you don’t want your name exposed. If nothing else, you can help her put a human face on what the IRS is doing.

    Go for it

  • Moby

    @ Just Me

    Thanks for your diligent efforts putting the record straight with various journalists. I’ve emailed Amy with my story.

    Keep up the good work.

  • M

    I don’t really have a place to ask this question so apologize that it doesn’t fit. but expatriation is out of the question due to all the new rules. since most countries don’t require you to file a tax return if you don’t live there more than 183 days, 1) is it possible for a U.S. citizen to claim fiscal residency in the U.S. with a legitimate address but not spend any time there? and 2) live less than 183 days a year in other countries without having to file tax returns in those countries?

    • anon

      Not all countries have the 183 day rule, some allow you to stay less (sometimes 90 days) before you’re considered a tax resident. Sorry I don’t have a list or examples.

      Some countries consider not days of physical presnece but the more subjective criteria of “center of economic interest” which includes whereyour primary residence is, investments, social ties, driver’s license etc.

  • Ruth *cafreeb*

    I just left a message for Amy Feldman. I am not sure if she will get back to me as it is long distance but, hopefully she will.

    • Just Me

      Ruth… Everyone has toll free calls in the US today, even to Canada, so hopefully she will call back. I have had some email correspondence back and forth with her, and have also called and left a message. Frankly, if she were just to read the Globe and Mail and reproduce those reports the American Press, she would have a good story. Barrie McKenna, especially has been doing some good work, and I really should drop him a note in appreciation. Too bad his stories don’t get picked up in the Washington Post or the NY Times.

  • British Wanker

    Does this apply only to renounciation, or also to relinquishment (due to “expatriable acts)?

  • Just Me

    A followup on the suggestion (plea) that some of you contact Amy Feldman (see above for contact details) to tell your stories from the OVDP and OVDI programs…

    I will calling her from Australia on Saturday for a scheduled chat. Her latest email comments to me were:

    “There’s been quite an outpouring of emails and phone calls from the ACA message, and I’ve been trying to sort through them all………I do think this is very important story, and am quite grateful for those who are willing to tell their stories.”

    And…

    “I’m glad you’ve encouraged more people to contact me; it’s been pretty amazing to hear the stories.”

    If you are one of those that got paralyzed by indecision on what was or is the best course for you now that the OVDP and OVDI programs are closed, or you just found out about it too late, and the future looks bleak,( especially for some of those long term or accidental expats in Canada) those perspectives might be helpful for her to hear also.

    • Anon5%

      I’ve given her my story. Thanks a lot for your persistent efforts. I am starting the ball rolling in my country of residence as well. Efforts with my Congressperson had moderate success for some policies related to FEIE for Overseas Americans, but when it came to discussing the heavy handed policies of the IRS with respect to minnows, the response I got was similar to what you received from your Senator. I was referred to the Taxpayer Advocate Service. Even worse, I was told, “There is no evidence that OVDI did not bring in anything other than tax cheats.” I was thought of as the exception rather than the rule. My Congressperson would have been interested if I could show that I was specifically unfairly targeted, but I was viewed as unfortunate collateral damage (my words)that TAS could help. I probably should bombard them with posts that are available all over the Internet. ACA has sent testimonials and I will follow up.

    • Don

      The lack of responsibility from Congress on this issue leaves ex-pats (especially ones with dual citizenship), to put in legal roadblocks for the IRS from abroad.

      It stills leaves my original question unanswered. How can a Canada, Australia, or the EU allow its dual US-citizens be discriminated against by the financial system, while allowing its foreign-born US dual citizens go scot-free?

      I thought all citizens are suppose to be treated equally?

      It seems to me that governments around the world are going to have to protect its dual resident citizens and tell the US hands off. Therefore it will be left to the dual citizens to comply / report to the IRS leaving the IRS data hungry.

    • Don

      One other thought…..the US thinks citizenship-based taxation is a good idea. Well when an individual has dual citizenship it works the other way as well – protecting citizens from foreign tax authorities.

      The US would never allow China to get their hands on US banking records – why should China allow the US the same pleasure?

    • Don

      Perhaps someone from Congress should introduce a bill giving the IRS boundaries like the Fed “dual mandate – controlling inflation and keeping full employment” for the IRS…”to collect taxes using the most cost efficient means.” In other words, FATCA would probably fail the efficiency test and be abandoned. It limit an over-zealous Congress or Commissioner persuing ineffective policies to satisfy political demands or flawed ideologies.

    • Just Me

      Don, I am not so sure that the US would never allow China to get their hands on US Banking records. The IRS has proposed just that type of rules on US banks holding deposits for non US residents. IE, they are supposed to report these interest payments back to foreign governments.

      Read this letter http://waysandmeans.house.gov/UploadedFiles/Letter_on_NRA_taxation_final.pdf

      I haven’t heard what the response was, or at least it has not been reported. Maybe I will have to call the Congressman’s office to find out.

    • Just Me

      Thnks Anon5% for contacting Amy and telling her your story. I hope others are not so timid as not to share what is happening to them. I am sure it can be provided as background information if anonymity is desired.

      The problem we all have in discovering the categories or classes of tax payers who have joined the VD programs, is that the IRS has not released any stats, so all we have is their word of 30,000 successes, and unfortunately, so far, no Reporter asks any question.

      It might interest you to know, that there is a ACA FOIA request to the IRS right now, for that type of information. So, maybe in time they or an aggressive reporter will be able to ferret out some real statistical data.

      One thing we do know, is the focus was on UBS and Switzerland, and VDs have come from 140 countries, so that should tell you something!

      The program results are certainly different than the initial targets, and how many that came in during the disclosures that actually fit the profile of the USB type TAX evader is unknown.

      I would point you to one other comment that you can reference back to your Congressman, and that comes from Mark Mathew’s and Scott Michel Special Report article posted over at Jacks Blog titled “Article on OVDI and Beyond – Highly Recommended (10/24/11)” I am pretty sure you have seen it.

      I would just reference these comments that caught my eye… In this area they talk of the type of taxpayers they were actually processing, as compared to the type of taxpayer the IRS was looking for.

      Section D. One Size Does Not Fit All, page 373

      ~ “There were a few of the stereotypical offshore tax cheats — native-born U.S. citizens who, on their own accord, decided to evade taxes and developed plans to use offshore entities and accounts to shield from taxation funds earned in the United States. That is the media image of offshore tax evaders and an image promoted by IRS public statements. For that group, the penalty levels in the OVDI programs were, in our judgment, appropriate, perhaps even generous when combined with a criminal amnesty.”

      “It may surprise most observers, but we saw few cases like that. It is anyone’s guess why. It may be that this aggressive and risk-prone group was prepared to let it ride. Or perhaps there simply are not as many of them as anticipated.”

      The report then goes on to describe some of the categories of tax payers that did come forward, which do not at all fit, the media image,that your Congressman would naturally believe. Without the statistics, the IRS narrative and the media image is all that is available for him to consider.

      I don’t know how much energy or time Amy can put into a story, but hopefully, one day as a result of a FOIA, we will all know. If it is true, that the OVDP and OVDI was comprised of mostly Whales, then we will have to accept that we were just a few unfortunate collateral victims. However, I doubt that is what will be discovered.

      I will add one other bit of anecdotal evidence. When I asked my Examiner the composition of her case load, they were all in my category. That was 25 of them. Now, maybe they sent all the Minnows to her, and that was the entire population of OVDP marine life extracted from this fishing expedition, but how do we know?

  • Anon5%

    I got a laugh out of Just Me’s analogy at the end of his last reply. Thanks for that and thanks also for the referral made on Jack’s site to the PRI interview. It is appropriate to mention it here as it brings us back to the topic of expatriation. The interview describes a very sensible approach given what those in OVDI and OVDP are experiencing.

    For those who have not heard it, here’s the link:
    http://www.theworld.org/2011/11/why-taxes-are-prompting-some-americans-in-canada-to-renounce-their-us-citizenship/

    I wanted to post my comments on that site, but had some problem and since the comments are relevant here, I will post them here.

    All the power to Mark! He and CA Free are right. It’s not taxes. It is the FBAR reporting and associated life altering penalties that are forcing people to make this decision.

    In my case, in addition to the fact that I have to live under the threat of huge penalties for a possible minor mistake, FBAR is making my life a real pain when it comes to daily life.

    I can no longer live a normal life in the country where I reside and of which I am a citizen because I also have a US passport. It seems that many things which are a normal part of daily life in the electronic world we live in are considered “financial accounts” by the US Treasury and their highest balances must be reported. Among these things are a prepaid phone card, my supermarket card and a lunch card I buy from my company. All are debit cards because money can be put on them and used to pay for things in different places. In the case of my supermarket card, there is no way to find the highest balance out other than to buy something every day and check the balance in a reader in the supermarket. I gave mine up because of this and now probably pay 10-20% more than my fellow countrymen for my groceries. Yes, it is a small inconvenience, but the amount of these small inconveniences seems to grow as societies become more wired and the US Treasury does not take the time to differentiate reporting on what are essentially tax evasion vehicles and what are not.

    While it is not the intent of the FBAR regulation to report on cards like I mentioned above, technically they must be reported or bingo – a $10,000 fine for each one of them.

    FATCA is making it even worse. I just won a battle with my bank because they told me that Americans could no longer open investment accounts and I refused to accept it and was capitulated to, but the question is for how long?

    And then we get to Form 8938 which becomes a part of our tax returns in 2011 and will require reporting on loans, house, car, etc., just because one lives “offshore” and all under threat of $50,000 penalties if a mistake is made. The instructions are not very clear to me, so I am afraid. It also seems that since this type of reporting will now be part of a tax form, the US can force foreign countries to collect penalties for mistakes under tax treaties.

    The requirements, threats and invasiveness are exhausting. The only relief in sight appears to be to renounce.

    I applaud the efforts of ACA that you mentioned. That was great to hear. I am one who does not want to renounce, but if things continue as they have, as Phil has said, US citizenship is a problem to be solved.

    • Just Me

      Annon 5%. Thnx. These are good comments, and I would encourage you to try posting them over on the PRI story again. I had to mess around for a while before I could get a User Name assigned and password confirmed. Had to change it to Just_Me_Also, for some reason, and then some of my spacing in the text box got screwed up, but at least Ca Free isn’t left alone in commenting.

      I think your comments may reach a less knowledgeable reader if there are any looking at it at this stage, so would be good to see them there.

      Also, they become a handy reference, as I often I direct reporters to more traditional media stories like this, and encourage them to read the comments if I think they are especially salient, and yours fit that category, so please consider trying again.

      Appreciate your efforts at sharing your story. Will be watching for your experience as you go through the process. I added some more comments over on the OVDI/OVDP experiences blog thread at Jacks, in response to questions about what to be doing now that you are in that nervous waiting period wondering when you will get the call or letter from the Examiner. That was an anxious time for me, as it was always haunting me in the back of my mind. So during this down time, it would be well spent on some proactive continuing education and preparation.
      cheers

    • Anon5%

      It seems my comment about Form 8938 requiring reporting on non-financial assets is no longer valid. New instructions were released on October 26. You can find them on ACA’s website under “Warning to Overseas Americans”
      http://www.aca.ch/joomla/index.php?option=com_content&task=view&id=492&Itemid=46

      The fact does not change that it still is a complicated form and seems to duplicate the FBAR, certainly in terms of penalties. The much loved number of $10,000 is thrown around again, increasing to $50,000.

      I am sure there is an entire blog post that could easily be devoted to the latest Form 8938.

    • Anon5%

      I know I am monologing a bit here, but apparently Form 8938 has to be filed for 2010 and submitted with your 2011 tax return in addition to a Form 8938 for 2011. If I am wrong, please advise.

      What does this mean for people who have expatriated in 2010 and thought they were done? Is this a way the IRS can come back from the grave and get more money from them via penalties if they don’t file 8938 for 2010?

    • Just Me

      Tax year 2010 filing is finished and Form 8938 isn’t required for 2010. It is required for 2011 filing (April 15, 2012 deadline).

    • Anon5%

      You are probably right because the instructions say it is a filing requirement for any tax year beginning after March 18, 2010. According to the definition on the IRS website, a tax year can be a calendar year so it seems you are right, but what do I know? I guess the OVDI experience and the penalties have me terrified of making any future errors. Sorry about my cautiousness, but that is what OVDI will do to you.

  • Just Me

    To any Minnows still reading this thread…

    I just had a long phone conversation to day with Amy Feldmen. I have mentioned her previously above.

    She is a reporter on contract to Reuters who has indicated an interest in our story.

    Purpose of the call, was to discuss the impacts of the OVDP and OVDI programs on the Minnows, and add some perspectives to counter the IRS success narratives which conveniently overlook the many unintended consequences on middle class expats and immigrants who were not the target of the program in the first place.

    I know she has already interviewed some others beside me, and I write again, to encourage you to consider contacting her. Unless someone puts a personal face, on this otherwise opaque story, we will never be able to counter the media impression that we are all Big Time Tax Evaders that are coming clean!

    She seems quite interested in writing something about our struggles to be compliant without being ground into fertilizer. Don’t expect a long expose’, as she does have article constraints, however she is willing to put time into writing something. It has been long time and a hard effort to get any reporter attention or interest, and we should not pass up this opportunity. She has more than just a causal interest. “Amazed” is how she describes the stories she has heard already.

    She will be continuing to interview many of the participants who have emailed or contracted her. She invites additional input. There is a learning curve here, as you can imagine. We have lived it, and it is all very simple and obvious to us now, but the story is complicated for someone first hearing about it. She does have a background in tax reporting, so is a quick study.

    If there are any Tax attorneys that could provide anecdotal experiences about the type of clients you dealt with without divulging any privileges, or just help her understand past IRS practices regarding QDs and VDs that would be helpful too.