Relief Procedures for Certain Former Citizens
Renouncing your American citizenship is a huge decision. It is an irreversible step, but one that may be necessary for some. For example, if you do not have a Social Security Number and the Dutch bank wants you to provide that SSN, sometimes the only way to keep your bank accounts is to give up your American citizenship. This rununciation demonstrates that you are no longer a US citizen, so that the bank is no longer allowed to bar you as a customer or to have to report you to the US. All reporting obligations cease the day after the US nationality is terminated.
The US realizes that it is sometimes a burden to be a citizen due to the additional reporting obligations. That is why a relatively new procedure has been created: Relief Procedures for Certain Former Citizens. To be allowed to follow this procedure, you must meet a number of conditions, such as never having filed a US tax return before.
If you meet all of the conditions, your US nationality may be canceled immediately, the so-called renunciation. The renunciation must take place at an embassy or consulate, depending on the country.
After you have renounced your US citizenship, you still have the obligation to send a number of documents to the IRS and Fincen. First, 6 years of US tax returns from the 5 years prior to the renunciation and a closing tax return for the year in which the citizenship was renounced must be filed. This can only be sent to the IRS retroactively after the renunciation. Second, the status of all non-US bank accounts must be reported through the FBAR for 6 years. Third, you must make a closing statement, Form 8548. This states, along with other information, the value of all your assets on the day of renunciation, and what your US tax liability has been in the past 6 years.
The duration of the entire procedure can take 1.5 to 3 years, depending on when you receive your appointment at the embassy or consulate.
During our intake appointment, I will explain the conditions you must meet. We will then discuss whether the Relief Procedure is suitable for you, for which years we will prepare the tax return, and what the costs will be.