Introduction: A record number of US Citizens are renouncing their citizenship. As of
today’s date over 4,400 people have already decided to let go of
their US citizenship in 2017 alone. Experts say that more people are going
to do so each year. This release addresses several issues: (1) why would
someone want to let go of the most precious citizenship in the world;
(2) how do you do relinquish your citizenship; (3) what consequences are
there once you do; and (4) Will relinquishment help you avoid taxes and
other offense against the United States.
Why would someone want to relinquish their citizenship?
In the United States there is a common phrase. You cannot avoid death and
taxes. Most people release their rights because they want to avoid the
tax consequences upon death. The phrase "death tax" is commonly
used by the media to refer to an estate tax or an inheritance tax - in
other words, it is a tax imposed on the transfer of property due to someone's
death, be it based on the total value of the decedent's property or
who is inheriting the property. In the United States, the death tax can
be huge, with approximately 40% being taxed to an estate when someone dies.
Relatively speaking, the United States has few taxes while you are alive.
This is unlike in other countries in Asia and Europe that can rise as
high as 30-40% on your income and property. The belief is that if you
are taxed while you are alive, your estate should be passed with little
or no taxation.
This creates a situation where many citizens can amass a large amount of
wealth during one’s lifetime, leaving a common problem – how
do I avoid taxes against my estate so I can pass on the greatest wealth
to one’s children.
As such, our research shows that the majority of people that give up their
rights to citizenship is to allow their United States property to pass
onto their children without taxes.
How do you do relinquish your citizenship?
Section 349(a)(5) of the Immigration and Nationality Act (INA) (8 U.S.C. 1481(a)(5)) is the section of law governing the right of a United States citizen
to renounce abroad his or her U.S. citizenship. That section of law provides
for the loss of nationality by voluntarily and with the intention of relinquishing
"(5) making a formal renunciation of nationality before a diplomatic
or consular officer of the United States in a foreign state, in such form
as may be prescribed by the Secretary of State" (emphasis added.
If it is done incorrectly, you will not be allowed to claim (whether alive
or dead) that you are no longer a US Citizen. A person seeking to renounce
U.S. citizenship must renounce all the rights and privileges associated
with such citizenship. In the case of
Colon v. U.S. Department of State, 2 F.Supp.2d 43 (1998), the U.S. District Court for the District of Columbia
rejected Colon’s petition for a writ of mandamus directing the Secretary
of State to approve a Certificate of Loss of Nationality in the case because,
despite his oath of renunciation, he wanted to retain the right to live
in the United States while claiming he was not a U.S. citizen.
Therefore, the elements of renunciation are the following: (1) appear in
person before a US consular or diplomatic officer; (2) in a foreign country
at a US embassy or consulate; and (3) sign an oath of renunciation. Because
of the provisions of Section 349(a)(5), U.S. citizens can only renounce
their citizenship in person, and therefore cannot do so by mail, electronically,
or through agents. In fact, U.S. courts have held certain attempts to
renounce U.S. citizenship to be ineffective.
Consequences of relinquishing your citizenship.
Persons intending to renounce U.S. citizenship should be aware that, unless
they already possess a foreign nationality, they may be rendered stateless
and, thus, lack the protection of any government. They may also have difficulty
traveling as they may not be entitled to a passport from any country.
Statelessness can present severe hardships: the ability to own or rent
property, work, marry, receive medical or other benefits, and attend school
can be affected. Former U.S. citizens would be required to obtain a visa
to travel to the United States or show that they are eligible for admission
pursuant to the terms of the Visa Waiver Program. If unable to qualify
for a visa, the person could be permanently barred from entering the United
States. If the
Department of Homeland Security determines that the renunciation is motivated by tax avoidance purposes,
the individual will be found inadmissible to the United States under Section
212(a)(10)(E) of the Immigration and Nationality Act (8 U.S.C. 1182(a)(10)(E)), as amended. Renunciation of U.S. citizenship may not prevent a foreign
country from deporting that individual to the United States in some non-citizen status.
Relinquishment does not mean you can avoid taxes and possible prosecution.
Persons who wish to renounce U.S. citizenship should be aware of the fact
that renunciation of U.S. citizenship may have no effect on their U.S.
tax obligations. In addition, the act of renouncing U.S. citizenship does
not allow persons to avoid possible prosecution for crimes which they
may have committed in the United States, or escape the repayment of financial
obligations, including child support payments, previously incurred in
the United States or incurred as United States citizens abroad.
Before you decide to let go of the most precious citizenship on earth to
avoid taxes, you should consider the severe consequences of doing so.
The rules are very strict and may create more problems than solutions.
Please contact an attorney, a certified public accountant, and the United
States Citizenship and Immigration Services (USCIS) of the Department
of Homeland Security before you make a decision that could affect you,
your children, and your estate.
Law Offices of Paul P. Cheng.
Paul P. Cheng has been named as “Pasadena’s Best” attorney
for over five years by Pasadena Magazine. Mr. Cheng is also a “Super
Lawyer” in the United States, which is a designation given to only
a select group of attorneys each year. Paul Cheng is a trial attorney
and senior partner of a team of distinguished attorneys in Pasadena, California.
He has extensive legal experience in small to large business operations
and commercial realty transactions. Mr. Cheng has counseled individuals
and businesses at all levels in a variety of transactional and litigation
matters, including contract, land use, employment, franchise law, fraud,
internet law, products liability, intellectual property, construction
defect and general torts. He has also been featured on NBC, ABC, CBS,
and Fox affiliates regarding legal issues.
Prior to entering private practice, Paul Cheng was a Deputy City Attorney
with the City of Hesperia, California and a Mediator with the Los Angeles
Mr. Cheng is also an author of two books, the Success Blueprint co-authored
with Brian Tracy, and the Legal Guide for New Immigrants in the United States.
He can be reached at
The information provided is not legal advice. It is being sent out to quickly
address issues that are current and relevant. Due to the quick turnaround
of the article, please excuse the brevity and any grammar errors.