With David Lesperance
A contrarian expert on contingency plans for the wealthy delivers uncomfortable truths.
US Senator Daniel Patrick Moynihan said it best:
“You are entitled to your opinion. But you are not entitled to your own facts”.
It is with this motto in mind that I now turn to the assertions made by Mr. Edwin Morgan in his September 24, 2021 article, Don’t Believe Rumors of US Consulates Not Taking Renunciation Appointments.
Note: As Mr. Morgan has asked for “validated facts”, I have linked confirmation as necessary.
Now, let’s deal with the facts!
Fact 1: Hong Kong is making renunciation appointments
To give Mr. Morgan his richly deserved credit, I have independently verified that the US Consulate to Hong Kong and Macau is in fact now scheduling renunciation appointments for the end of October 2021.
Fact 2: Most other US Missions (Consulates and Embassies) are not scheduling renunciation appointments.
The general lack of appointments at other US missions abroad is confirmed
2) by the Association of Accidental Americans’ survey of US missions (the AAA, incidentally, is filing a lawsuit against State on the issue).
3) by even the IRS, which has acknowledged this fact.
Therefore, while correct regarding Hong Kong, Mr. Morgan has engaged in the logical fallacy of a Faulty Generalization. In short, he has incorrectly used one single example to make a sweeping, factually incorrect general assertion that “backlog misinformation is 100% debunked”.
Fact 3: There has been delays and backlogs in granting renunciation appointments for years.
Mr. Morgan again used his own 2014 quick expatriation example to make another faulty generalization. In this case, it is a fact that there have been long delays in scheduling renunciation appointments for years. Unfortunately, this was already a major issue at several US missions since even before Mr. Morgan self-reports he became interested in the area.
Fact 4: One does not automatically lose their existing Social Security entitlements upon expatriation:
Social Security is dependent on having paid in the requisite 40 quarters, not immigration or citizenship status. Therefore, loss of US citizenship through expatriation does not have any impact on one’s ability to continue to receive Social Security Benefits. However, that eligibility may be in question if the individual (current or former US citizen) establishes residence in certain countries.
Fact 5: One does not automatically lose Medicare eligibility as a result of expatriation:
On-going eligibility for Medicare benefits is not dependent on retaining US citizenship. Rather it is a question of whether or not one is resident in the US under any US immigration or citizenship status. Generally speaking, non-residents (whether current or former US citizens) are not eligible for Medicare benefits except in certain narrow circumstances.
Fact 6: One does not automatically lose the ability to get a free COVID vaccine in the US as a result of expatriation:
The ability to get a free COVID vaccine does not depend upon possessing US citizenship. It is completely dependent upon one’s ability to appear at a US vaccination site. Given that COVID vaccines are available for free or for minor charges in many countries, it is hardly worth continuing unlimited future US tax liability just for the benefit of getting that free vaccine in the US.
As for student loans, free public education, and the other “benefits” that Mr. Morgan cites in his article, these are readily available in many countries. Furthermore, even if one needs to pay for them, then this cost is minor compared to the future US tax savings. They also require one to be physically in the US in order to enjoy the benefit.
Fact 7: The “friendliness” of the country where the US mission is located is completely irrelevant to the renunciation appointment experience:
The renunciation is done with a US Citizen Consular officer. In fact, the entire mission is manned by US citizens, some of whom are locally engaged and some are career officials posted abroad. The political environment outside the office of US Citizen Services or even the gates of the US mission has absolutely zero impact upon the experience that the individual renouncing their US citizenship will have that day.
FACT 8: Renouncing US Citizenship is the exercise of a right of US Citizens.
The US Supreme Court has confirmed that Renouncing US citizenship is a right. It is not something that requires the “permission” of the US government. The State Department official in Washington is simply reviewing the notes and paperwork prepared by the Consular Officer at the US mission where the individual exercised that right. Their review is to ensure that the individual exercised that right properly, with capacity, and without duress by third parties.
FACT 9: One does not need to be current on their US tax obligations or filings in order to exercise their right to renounce US Citizenship:
Since the US government’s “permission” is not required, outstanding tax issues, criminal records, and court summons are not an impediment to renouncing citizenship. However, if at the time the individual exercises this right they are not caught up in their US tax position, then they may be considered a “Covered Expatriate”. This designation will be placed on them whether or not they chose to live up to their obligation to file the IRS 8854 form they are obligated to file the year after their expatriation. If someone tries to be cute and fails to file or lies on their IRS 8854, they can be charged with tax evasion. Russian Billionaire Oleg Tinkov Is Fighting for His Life—and Freedom
However, one must also note that renouncing citizenship does not make existing tax obligations, or civil or criminal charges, disappear.
Fact 10: Renouncing US citizenship is more complicated than simply filing a few forms and confirming their contents at an appointment:
The process of completing a renunciation appointment is straightforward. It is the ramifications that are often misunderstood. For example, the tax ramifications and travel to the US after renunciation and before and after a CLN is issued.
With these facts established and “validated”, I will leave others to weigh the value of Mr. Morgan’s opinions regarding the rest of the world being “scary” and the possibility that an adult who can afford the US$2,350 renunciation should be concerned that “their mother change the locks on the basement door”.
David Lesperance is a global leader of international tax and immigration advisors.
A published author in the field, his personal interest in these areas of law grew from his experience working as Canadian immigration and customs officer while studying law. Since being called to the bar in 1990, he has established his expertise with major law firms, his own law firm and as a private consultant. David has successfully advised scores of high and ultra high net-worth individuals and their families, many of whom continue to seek his counsel today. In addition he has provided pro bono advice to many governments on how to improve their Citizenship by Investment, Residence by Investment or Golden Visa type programs to better meet the needs of his global clients. David is supported by a team of professionals, some of whom have worked with him since the early 1990s.