New relinquishment fee

I wonder what Eritrea charges its citizens for renouncing/relinquishing citizenship?!

Eritrea doesn't allow its citizens to renounce!

http://renouncecitizenship.ca/citizenship-taxation-and-expatriation-background-and-history/citizenship-based-taxation-international-comparison/

@Charmaine

Not sure about that. This site indicates that Eritrean citizenship can be renounced: http://www.multiplecitizenship.com/wscl/ws_ERITREA.html

@stars, I stand corrected - perhaps voluntarily acquiring another citizenship may be a cost-free route?

@Charmaine If only Americans who wanted to renounce/relinquish citizenship had it as easy as Eritreans!! 

Eritrea’s dismal human rights situation, exacerbated by indefinite military conscription, has led thousands of Eritreans to flee their country every month. Eritrea has had no functioning legislature, independent press, or any semblance of civil society organizations since 2001.  In early 2014, President Isaias Afwerki confirmed his lack of interest in an open society, stating: “(If) there is anyone who thinks there will be democracy or [a] multiparty system in this country ... then that person can think of such things in another world.” Common patterns of abuse include forced labor during conscription, arbitrary arrests, detentions, and enforced disappearances. Other abuses include torture, degrading treatment in detention, restrictions on freedoms of expression and movement, and repression of religious freedom.

https://www.hrw.org/africa/eritrea

After thinking deeper on this subject I have some more thoughts on these problems for USCs living abroad and possible remedies.

Basically there are three "layers" at stake here:
1. The root of the problem - citizenship-based taxation.
2. FATCA
3. The high fee for getting a CLN.

Now what are the chances if someone wants to challenge these in the US courts that one or more of the above would be struck down? The CBT layer probably doesn't stand a chance, since that itself has already been upheld. FATCA? Some argue that it violates the 4th Amendment because it has the government seeking private information without other cause and the 8th Amendment with the draconian penalties for example for not filing a timely FBAR. The $2,350 fee? Decent hope there given what I've said upthread.

What about under international law or another country's courts? Unless the US agrees to the treaties then all that could be done is put a damper on the ability for the US's policies to be enforced across borders (in other words the obligations would remain in the eyes of the US government although they couldn't readily enforce them as long as the person was not physically present in the US). A person who asserts their claim as such would thus still face a perilous situation if he/she ever traveled back to the US even to visit (much like the Vietnam-era draft dodgers until they were pardoned).

Maybe we could try Congressional action, but by design that makes it hard for expat issues to be addressed since although technically having the right to vote they've been de facto "gerrymandered" out by having the vote dispersed across all the states and districts rather than have their own representation to voice their issues.

IMPORTANT FATCA NEWS: The IRS has just announced that all countries with a Model 1 IGA (this includes the UK) can delay transferring bank account data on US citizens in the UK until Sept 2016. In other words, countries can wait another year to start ratting on US citizens and US/UK dual citizens and UK citizens that the US feels like identifying as "US persons". However, governments must request this one year delay. http://taxcontroversywatch.com/2015/09/18/fatca-update-treasury-relaxes-september-30-deadline-for-model-1-iga-jurisdictions-to-exchange-tax-information/

http://isaacbrocksociety.ca/2015/09/19/the-stopfatca-press-release-and-social-media-page/

Maybe I'm reading it wrong but it doesn't seem to me this notice does anything, in the case of the UK, except hold off on punishing FFIs who aren't ready by 30 Sept 2015.

The IRS Notice can be seen at http://www.irs.gov/pub/irs-drop/n-15-66.pdf. For countries where a Model 1 IGA is already in effect, the Notice says:

Consistent with treating 2014 and 2015 as a transition period, Treasury and the IRS will treat FFIs covered by an IGA as complying with, and not subject to withholding under, FATCA even if the relevant partner jurisdiction has not exchanged 2014 information by September 30, 2015, as long as the partner jurisdiction notifies the U.S. competent authority before September 30, 2015, of the delay and provides assurance that the jurisdiction is making good faith efforts to exchange the information as soon as possible. This notice does not affect the timing of when FFIs should report information to a partner jurisdiction, which remains governed by local law.

UK FIs are due to start providing the information to HMRC by 30/09/2015.  Presumably the UK will protect any UK FI that's not ready, by notifying the delay to the IRS, as specified in this notice.  But they surely won't be telling the banks they can take another year.

Edit - correction: the date for UK FIs to pass the information to HMRC was 31 March 2015 for year 2013, and 31 May 2015 for year 2014.

@iota, the key wording is this:  "For those Model 1 IGA jurisdictions where the obligation to exchange is in effect now, Notice 2015-66 provides that FFIs in that country will be treated as FATCA compliant, and not subject to withholding, so long as the partner jurisdiction notifies the U.S. before September 30 that it requires more time, and “provides assurance that the jurisdiction is making good faith efforts to exchange the information as soon as possible.”"

If the UK notified the US that it needs more time it can delay transferring personal banking data to the US until Sept 2016.

It's the countries where the IGA isn't yet in effect who are being given another year.  Some of those countries are apparently still trying to implement FATCA - trying to get their IGA passed, fighting off local resistance, trying to get systems in place, etc.  They're being given another year.  (I should coco!)

Countries like the UK, where the IGA is already in effect, are simply being told that if they need more time they should notify the IRS and provide assurances that the information will be sent as soon as possible to avoid withholding being triggered.  It's really a warning, not a reprieve.

Who knows what goes on in the confabs between HMRC and UK banks but speaking purely speculatively I doubt very much that the UK will be telling the US that it's going to be late with its FATCA reporting.  Wouldn't look good.

Someone more cynical might ask if the IRS is truly being benevolent to those poor FFI's (whether Model 1A or 1B), or behind all the bustle and hubris lies the fact the IRS itself may not be ready for the massive amounts of data that will be arriving on 30 Sept. 2015? With ACA (Obamacare) and restricted budgets, will all that data simply be transposed to a back room storage drive and only be looked at in a years time, if then? There's also the fact most Parliaments (see David Gaukes' very brief speech to an almost empty House of Commons) around the world sold FATCA on 2 premises; 1) by being a Model 1 IGA, there would be no 30% withholding and therefore less expensive for the local FFI's, and 2) reciprocity. Since no small community bank in Iowa (or more importantly, Florida or Texas) will scouring their files searching for those with a 'foreign' indicia, it all becomes a bit embarrassing.

Of course, we'll never know. As a UK taxpayer, I'm far more interested in those UK residents with undeclared bank accounts (or even worse in Delaware) in the US who might be evading HMRC.   

Someone more cynical might ask if the IRS is truly being benevolent to those poor FFI's (whether Model 1A or 1B), or behind all the bustle and hubris lies the fact the IRS itself may not be ready for the massive amounts of data that will be arriving on 30 Sept. 2015? With ACA (Obamacare) and restricted budgets, will all that data simply be transposed to a back room storage drive and only be looked at in a years time, if then?

. Yes, sounds very likely.

 

There's also the fact most Parliaments (see David Gaukes' very brief speech to an almost empty House of Commons) around the world sold FATCA on 2 premises; 1) by being a Model 1 IGA, there would be no 30% withholding and therefore less expensive for the local FFI's, and 2) reciprocity. Since no small community bank in Iowa (or more importantly, Florida or Texas) will scouring their files searching for those with a 'foreign' indicia, it all becomes a bit embarrassing.

Of course, we'll never know. As a UK taxpayer, I'm far more interested in those UK residents with undeclared bank accounts (or even worse in Delaware) in the US who might be evading HMRC.

It will be interesting to see how the IRS deals with the increasing pressure on FATCA target countries to sign up for the CRS.  Another potent source of potential embarrassment.

Last night I was watching a documentary on TV about a certain well-known American "religious" cult and how they harrassed the IRS into granting their barmy outfit total exemption from all taxes.  They did it by getting their members to launch multiple unrelated legal actions against the IRS, generating numerous headlines and comments and general bad publicity.  Sort of a pre-internet DoS attack.  The IRS apparently didn't even realize it was a co-ordinated plan until the cult decided the prey was sufficiently weakened, at which point the cult offered to stop the cases in return for tax exemption.  Done.

The IRS really does seem to be in need of better guidance.

This is an interesting thread, I'm one of those non-compliant accidentals who this year realized that the IRS existed and that somehow they are under the impression that I owe them something.

iota, what are your plans in terms of relinquishing? You plan to just relinquish, ignore the IRS requirements and get the certificate?

What's the benefit of this vs let's say waiting for a new administration to see if they hate expats less?