The Hsu Law Firm PLLC
Expatriation:
Relinquishing U.S. Citizenship or Green Card
U.S. Citizens
Some individuals are "accidental" Americans - they just happened to be born in the U.S. because their parents were in the U.S. pursuing a graduate degree or temporarily assigned to the U.S. office of the employer, or because of the more advanced healthcare available in the U.S. In many cases, these accidental Americans returned to their parents' home country with their parents while very young and do not have an on-going relationship with the U.S.
However, because they were born in the U.S., they became U.S. citizens automatically. As a result, they are also subject to the same IRS tax reporting and payment requirement on their worldwide income, just like all other Americans.
For some Americans, they moved to a different country for work or for love and have settled in a different country and made this other country their home, or they are naturalized citizens who have returned to their countries of origin.
Because the U.S. tax rules invariably differ from those of other countries, the additional cost of U.S. tax compliance and the tax payment becomes highly burdensome. In some cases, their bank accounts in their "home" country have been frozen or closed because they were not FATCA-compliant.
For these Americans, relinquishing the U.S. citizenship is a logical step.
Green Card Holders
Many green card holders move to another country for employment and some green card holders return to their home countries. For them, relinquishing the green card status is a logical step.
Complex Expatriation Rules
Draconian and complex expatriation tax rules may apply to individuals who are relinquishing their U.S. citizenship or their green card (if they have the green card status for at least 8 out of the past 15 calendar years). In addition, these individuals must have full tax compliance for 5 years before they can officially expatriate for tax purposes. (If the proper tax expatriation procedure is not followed, an individual continues to have IRS tax filing and tax payment obligations even though they have officially relinquished their U.S. citizenship or green card for immigration purposes.)
We can help you navigate the expatriation rules. If you are not currently compliant with your IRS tax filing and tax payment obligations, we can help you become compliant through either the OVDP program or the Streamlined programs (please see Tax Compliance & Controversy tab).