Expatriation: Relinquishing vs Renouncing U.S. Citizenship
Expatriation means giving up your US citizenship and passport. In other words, you give up your right to live and work in the United States.
There’s a lot of confusion about the distinction between relinquishment vs renunciation. The net effect is the same: You end US citizen status. But there are some important nuances distinguishing these two forms of expatriation.
One significant difference is that if you relinquish US citizenship, you must submit Form DS-4079.
This form asks some highly personal questions that you might prefer not to answer, including what ties you retain to the United States. Admitting to substantial US ties probably won’t lead State Department officials to question your intention to expatriate. But such ties, in the view of consular officials, increase the likelihood that a visitor to the United States will stay longer than their non-immigrant status allows. That in turn makes it more likely, once you expatriate, you’ll be denied a visa to reenter the United States or even turned away at the border.
Form 4079 is not required if you renounce. If a consular officer wants you to complete it, show that official the relevant section of the State Department’s Foreign Affairs Manual, which states that Form DS-4079 is optional in a renunciation case, although the official may still try to have you fill it out. (Follow the link to Section 7 FAM 1260 and scroll down to Section 7 FAM 1264.)
The Biggest Difference Between Relinquishing vs Renouncing U.S. Citizenship
The biggest practical difference between relinquishment and renunciation is that with a relinquishment, you must convince the State Department, absent an oath of renunciation, that you really want to give up US citizenship. The statements you make on Form DS-4079, and in your interview, will be carefully reviewed. In a renunciation, you’ll complete the oath of renunciation, which is an unequivocal statement of your intent.
Case Studies from Our Consulting Practice
The Nestmann Group has helped dozens of American clients expatriate. There have been only two who tried to relinquish, against our recommendation, but were turned down.
In one case, serious tax consequences resulted. This was because the expatriation date was pushed back into the following year, after the client received a substantial windfall. That means if you want to be 100% sure that your expatriation will be approved the first time, renounce – don’t relinquish.
Both rejections of the two relinquishments revolved around the clients’ use of their US passports after obtaining a second passport. If you want to relinquish US citizenship, try to avoid using your US passport after you get a second passport.
Sometimes Relinquishment is Preferred
But relinquishment in some circumstances is preferable. This is especially true when applying for a visa to visit the United States or dealing with US border officials. Let’s say you get citizenship in a country like Nicaragua. This country generally requires you to give up your current nationality to become a Nicaraguan citizen. You subsequently relinquish US citizenship.
When you apply for a visa to reenter the United States on your Nicaraguan passport, if a border official asks you why you gave up US citizenship, you can honestly say, “My current country of nationality – Nicaragua – forced me to give it up.”
The Reed Agreement: Visa Re-Entry Application May Be Denied
There’s another, more obscure reason for which some experts prefer relinquishment.
In 1996, Congress enacted the “Reed Amendment” to the Immigration and Nationality Act. The amendment gives the US Attorney General the discretion to deny entry into the United States to a former US citizen who renounced US citizenship in order to avoid US taxation.
Almost two decades after its original enactment, regulations under this provision have not been issued, nor has its power ever officially been invoked. But some US consular officials have denied visa applications from former US citizens who either renounced or relinquished, using the Reed Amendment as legal authority for doing so.
The plain language of the Reed Amendment appears to apply only to individuals who renounce US citizenship. But the State Department labels all US citizens who expatriate as “renunciants.” And in visa denials, we don’t know of any US consular officials that have distinguished between relinquishment and renunciation.
These facts may make the distinction between renunciation and relinquishment largely irrelevant. As the procedure for renunciation is simpler and removes any question of intent, there is ordinarily no reason to avoid this option. This is especially true if you have citizenship and a passport from a country that offers visa-free entry to the United States.
Is Expatriation Right for You?
The decision to give up US citizenship or long-term residence is a serious one. You should take this step only if you already have a suitable second passport and either live outside the United States already or are certain that you will adapt to living permanently in another country.
You may also be subject to a punitive tax regime (aka “exit tax”) at expatriation. Also consider the possibility that if you expatriate, you might not be able to return to the United States, even as a visitor.
Before making this decision, review several key factors to ensure it’s the right choice for you. You can find more information here: Are you a good candidate for expatriation?
The Importance of Getting a Second Citizenship Before You Expatriate
Although it’s not legally required, a second passport from another country is strongly recommended before you give up your US citizenship. This is true no matter if you renounce or relinquish.
Without a second citizenship, the act of expatriating will render you stateless. You won’t have the right to legally live anywhere. Stateless people who manage to stay out of detention camps and refugee centers live on the margins of society, since they lack official papers. In most cases, the only way they can qualify for legal residence is to make a successful claim for refugee status.
For an entertaining, but romanticized, view of statelessness, watch The Terminal. This movie is based on the true account of Mehran Karimi Nasseri. After being expelled from Iran, he spent 18 years living in a departure lounge of the Charles de Gaulle Airport in Paris until he finally qualified for refugee status in France.
What It’s Really Like to Expatriate
The actual process of expatriation isn’t as arduous as you might think.
You’re likely to encounter bureaucratic incompetence and unexplained delays. But giving up your US nationality is a legal right.
You can read a case study here: What it’s really like to expatriate.
Need Help?
We can assist in every phase of giving up your US citizenship or long-term residence. This includes helping you get a second passport before giving up US citizenship.
And if you’re not ready to expatriate, we can help you take advantage of tax breaks in the Tax Code that apply to U.S. citizens and permanent residents living overseas.
Schedule a free no-obligation consultation with a Nestmann Associate to see if expatriation is right for you.
