Renunciation or Relinquishment? Giving up or losing U.S. Citizenship

Thousands of US citizens give up their citizenship each year. Often the reason is the tax burden the individual is under while living abroad but more recently other reasons motive US citizens such as the difficulty of opening and maintain foreign bank accounts or the inability to make certain investments.

Giving up citizenship is a momentous decision for many US citizens and not one to be taken lightly. This article explains the ways in which you can lose US citizenship and the consequences this loss may have.

Renunciation or Relinquishment? Giving up or losing U.S. Citizenship

Thousands of US citizens give up their citizenship each year. Often the reason is the tax burden the individual is under while living abroad but more recently other reasons motive US citizens such as the difficulty of opening and maintain foreign bank accounts or the inability to make certain investments.

Giving up citizenship is a momentous decision for many US citizens and not one to be taken lightly. This article explains the ways in which you can lose US citizenship and the consequences this loss may have.

Renunciation or Relinquishment?

US nationals* may lose their citizenship by performing a so-called expatriating act with the acts are performed voluntarily and with the intent to relinquish US citizenship as defined in Section 349 of the Immigration and Nationality Act.

An individual may formally renounce their US citizenship in one of two ways: either before a US diplomatic or consular officer outside the United States or within the United States (this is administered by the Department of Homeland Security). The procedure to formally renounce US citizenship is described in detail below.

Alternatively, a US citizen may relinquish their citizenship by voluntarily performing one of the following acts while intending to relinquish their US citizenship:

• Naturalize in a foreign state;
• Take an oath of allegiance in a foreign state;
• Serve in the armed forces of a foreign state as a commissioned or non-commissioned officer of a foreign state, not engaged in hostilities against the United States; or
• Accepts a nonpolicy level employment with a foreign government.

Note: if you have committed one of these potentially expatriating acts there is a presumption that you did not want to relinquish your US citizenship at the time of the act. The burden of proof is on you to prove that you did wish to relinquish your US citizenship at that time if that is indeed what you wanted. There is no presumption that a US citizen intended to maintain US citizenship if they:

• Formally renounce their US citizenship;
• Serve or has served in the armed forces of a foreign state engaged hostilities with the United States;
• Takes a policy-level position in a foreign state and is either a dual national of the state of employment of has taken an oath of affirmation of allegiance in connection with the position; or
• Is convicted of treason.

How to relinquish or renounce US citizenship

It is possible to relinquish US by notifying an Embassy of Consulate in the country the US citizen carries out the expatriating act. The consular officer will want to see:

• Proof of US citizenship;
• Evidence that the act was expatriating; and
• Evidence that the act was carried out voluntarily.

The US citizen will need to complete a form which will be sent by the Embassy or Consulate and later be interviewed by a consular officer.

To renounce US citizenship the US citizen must:

• Gather all evidence of US citizenship;
• Attend a first interview with a Consular officer; and
• After a period to reflect, attend a second interview and complete several forms.

The exact procedure varies between each US Embassy and Consulate.

After the second appointment, the US citizen remains a US citizen until a decision has been made on their renunciation case. The Embassy or Consulate may keep hold of the US citizen’s US passport until the decision has been made. The individual may not travel to the United States on any foreign passport and so may have to request the (temporary) return of their US passport in order to visit.

Note: it may be preferable to relinquish rather than formally renounce US citizenship. This is because the moment of losing US citizenship will be taken as the time of the expatriating act. When a US citizen formally renounces their citizenship the expatriating act is considered to be the time of the interview. Relinquishment could have potentially happened many years before the act to formalize the loss of citizenship. This may have consequences for tax liability as the individual may not have been a US citizen in the immediate past. Coordination with a US tax professional and US immigration attorney is essential under these circumstances.

Consequences

There are many consequences of relinquishing or renouncing US citizenship. These include:

• Former US citizen will no longer have the automatic right to travel to or reside in the United States. This means they will be required to obtain a visa/use the Visa Waiver Program (if applicable) to visit the United States. WARNING: while US citizens who have been arrested or convicted have the right to enter the United States, those who no longer have US citizenship do not have this right and may have additional impediments hindering their visiting the United States. Read more about possible ways to deal with this here.
• Potentially becoming stateless. If the individual does not hold dual nationality, they may be rendered stateless. This could cause many problems such as difficulty of travel and lack of any government protection.
• No relief from tax and military obligations. Renouncing US citizenship has no effect on any US tax or military obligations. Note: it is illegal to renounce US citizenship for the purpose of tax avoidance.
• No escape from prosecution. Giving up US citizenship does not protect an individual for prosecution of crimes they have committed or may commit in the future nor does it allow them to escape repayment of financial obligations such as child support.
• It is extremely difficult to reverse a renunciation of US citizenship and only really possible in a small number of circumstances.

Conclusion

Giving up US citizenship is quite an undertaking and has many consequences. It is strongly recommended to consult with both a US tax and immigration professional to avoid any pitfalls.

If you would like assistance with renouncing or relinquishing US citizenship, please do not hesitate to contact George Lake at george@bluelakelaw.com . While we cannot provide tax advice, we do work with tax professionals who will be able to advise on the financial impact of renunciation or relinquishment of US citizenship.

*The term ‘US National’ includes citizens of the United States and those who are not citizens of the United States but owe permanent allegiance to it. In practice this second group includes only individuals born in American Samoa or on Swains Island to parents who are not citizens of the United States.