Cook v. Tait 10: Opinion – Those born outside the US, to US citizens, are NOT automatically US citizens

“In order to receive a “CRBA” (Consular Report of a Birth Abroad) the birth of a child must be reported before the child’s 18th birthday.”

Question: Does that mean the child is not a citizen until the birth is reported?

212 AD – Rome bestows citizenship

In 212 A.D., Roman Emperor Caracalla issued a declaration named – wait for it – the Edict of Caracalla (imagine that). The Edict granted citizenship to all free men within the Roman Empire. …

He would bestow citizenship on provincial folks. Things then worked somewhat the way they do now in that governments tend to treat tourists and part-time residents better than full-time citizens. As a result, those living in the far-flung areas of the Roman Empire were aliens and exempt from paying tax.

Caracalla’s seemingly outstretched hand was a farce. His lavish spending required more tax revenue that only extending the tax base by force could do. Only, like many politicians today, Caracalla knew that it would be easier and more expedient to pretend his power grab was all about giving people more rights. In reality, he just needed more tax revenues and more military recruits.

Excerpted from “The ancient citizenship no one asked for” by Steven Henderson of Nomad Capitalist – June 27, 2013

History demonstrated that expanding the number of citizens tax payers in  Rome could not save Rome from its irresponsible spending.

Sir John Templeton, was fond of saying that the most dangerous words in the investment word are:

“This time it’s different”.

He would be appalled to watch the United States repeat the folly of Caracalla.

2011 AD – United States sends IRS after U.S. citizens abroad

The following comment recently appeared at the Isaac Brock Society:

This is what is so disappointing and disturbing about this posting and string: My late friend, Andy Sundberg, founder of American Citizens Abroad, worked tirelessly during the 70s and 80s to change US law to be much more inclusive than it had been. One of the reasons was his daughters were born effectively “stateless”; he, an American, his wife, a Frenchwoman, gave birth to their daughters while living in Switzerland.
He found that there were quite literally tens of thousands of people in similar circumstances.

Of course, the Cold War was still on, and many accidental Americans – and their parents – were rightly concerned about being able to be protected by America should anything happen. Andy felt that they should be granted a much broader interpretation to widen the blanket.

Andy always felt that USA should also mean “the universal spirit of America”. Little did he realize that our own government, through the spiteful acts of narrow-minded members of Congress and a vindictive little s**t of an IRS Commissioner would turn all of this into a nightmare for so many he spent years and thousands of dollars of his own money doing.

When I spoke to him two weeks before his fatal heart attack, this is what weighed heaviest on his mind. Indeed, it is my contention that he died of a broken heart because we’ve come to a point where American nationality is seen as a curse rather than the blessings of everything we grew up admiring about being American. I share his broken heart about this issue – even I have advised my godson, an accidental American born of British parents in NYC, that he should consider giving it up because of the gestapo harassment of the IRS.

As someone whose family traces its roots back to 1630, and whose ancestor was a martyr during the Revolution to establish our great country, I simply can’t believe I would EVER come to this point in the life of our nation and it physically pains me.

2012 AD – U.S. Citizenship becomes a toxic liability

Once upon a time  U.S. citizenship was considered to be priceless.  There WAS a time when a U.S. passport was the most “sought after” passport on the planet. When campaigning in 2008, Barack Obama promised:

“Change you can believe in.”

For U.S. citizens abroad and their families, the election of Barack Obama resulted in “change that many would never have believed possible“.

The Obama administration has turned U.S. citizenship into a toxic, life changing liability.  Many  U.S. citizens are willing to pay money to get rid of it. The reasons include FATCA, the FBAR Fundraiser, OVDI/OVDP, FBAR penalty abuse, IRS abuse of U.S. citizens abroad, the attempt to confiscate retirement assets by classifying them to be PFICs, Obama NSA spying on U.S. citizens, Obama’s use of the IRS for political purposes, and more.

This was eloquently summarized by ACA’s Jackie Bugnion in her submission to the House Ways and Means Committee as follows:

“A revolution among long-term overseas residents is now underway. Five years ago, Americans abroad never talked about renunciation of citizenship. Today, it is a common topic in the press and among the community abroad. For more and more individuals, renunciation is the only solution to an intolerable situation created by the U.S. imposing its laws beyond its borders. The United States is literally destroying the community of Americans abroad, which plays an essential role in representing U.S. interests and goodwill overseas.”

A summary of other submissions to the Ways and Means Committee may be found here. They are well worth the read.

Americans abroad renounce citizenship as a defensive measure

As Ms. Bugnion states, the policies of the Obama administration have made it  difficult to survive as a U.S. citizen abroad. Hence, people are anxious to find ways to purge themselves of the toxic taint of U.S. citizenship. Those who know they are U.S. citizens are anxious to relinquish. Many are openly renouncing their U.S. citizenship as a defensive measureThose who are not sure whether they are U.S. citizens are anxious to confirm that they are not.

Before taking steps to remove the stain of U.S. citizenship, it behooves you to ask:

Why do you think you are a U.S. citizen? Maybe you aren’t!

From the narcissistic perspective of the United States:

The world is composed of two kinds of people. Those born in the USA and those born outside the USA.

Born in the USA? – Have you ever relinquished U.S. citizenship?

Those who were born – and therefore automatically became U.S. citizens at birth –  must begin by looking at the grounds for relinquishment (INA S. 349). A surprisingly large number of people born in the U.S. who lived most of their lives abroad may have grounds for arguing they have lost their citizenship. Much has been written on the issue of “relinquishing U.S. citizenship“. So, I will not focus on relinquishments in this particular post.

Born outside the USA? – Did you ever claim U.S. citizenship?

The fascinating and topical issue is:

“Can the US deem somebody born outside the U.S. to be a U.S. citizen?

Is a person born outside the U.S., to a U.S. citizen parent, automatically a U.S. citizen?

2013 – Can the U.S. deem those born outside the U.S. to be U.S. citizens?

Let’s begin our analysis with the most basic scenario. Let’s imagine the Smith family who resides in London, England. Neither Mr nor Mrs Smith is a U.S. citizen. President Obama realizes that he needs to increase the U.S. tax base in order to pay for his spending. The President has learned that the U.S. imposes tax based on citizenship.

U.S. citizens are members of a unique tax, form and penalty club.

The President recognizes that if he can increase the number of U.S. citizens, then he can increase:

– the number of people he can tax and the amount of tax revenue he can generate;

– the number of people who he can require (and hope they do not) to file forms:

– the amount of penalty revenue he can generate for failure to file forms.

Obama admired the way that the IRS was able to increase penalties under OVDI by including more assets in the OVDI penalty base.

As a result Obama wanted to increase the number of U.S. citizens to increase his tax, form and penalty base.

Step 1 – Increasing the tax and penalty base

He goes to his friend Senator Levin (of FATCA fame) who wants to retire with one more meaningful legislative achievement. Together they agree to propose a law which would deem all persons born in the UK to be U.S. citizens. The President also notes that the U.S. has a low fertility rate. He therefore instructs his Secretary of State to identify countries with the highest fertility rates. He notes that 2/3 of the population of India is under 35. Therefore he expects that lots of babies will be born in India. He therefore decides to deem all babies born in India to be U.S. citizens.  He does with the full realization that the law of India prohibits dual citizenship. Mr. Obama really doesn’t care because, as is the attitude expressed in FATCA, the president simply assumes that India must change its law to accommodate U.S. concerns.

Step 2 – Making sure that all “U.S. persons” owe U.S. tax

The President then consults his Secretary of the Treasury to ensure that U.S. tax laws are such that all U.S. citizens abroad will owe tax to the U.S. over and above any tax they have paid to their countries of residence. This is easy to do because U.S. tax laws punish instruments of tax deferral and the laws of most other countries base their retirement plans on tax deferral. Hence, by taxing U.S. citizens abroad, and using the PFIC rules, Mr. Obama is able to confiscate the contents of the retirement plans of residents and citizens of other countries. In the old days, the British extracted the assets of countries by colonizing those countries. In this century, by sending U.S. citizens into other countries, the U.S. is able to confiscate assets that properly belong to the people and governments of other countries. It’s really:

Colonization by stealth!

Step 3 – Formalizing these policies into job creation in the Homeland

Mr. Obama wants to formalize the creation of this  new U.S. industry described as follows:

This is an industry for the IRS and Treasury. Harvesting the non-US assets of those around the globe – living legally outside the US and paying taxes in full in their non-US home country, where they are often also citizens by birth or naturalization. If they can’t confiscate our already once taxed assets one way, the US will try another way.

It’s the FBAR ‘n FATCA Fundraiser.

Of course he has also created a derivative industry for the accountants and lawyers to assist the U.S. Treasury with its immoral purpose.

In summary …

No matter. All of these laws are passed. From a U.S. perspective all babies born in the UK and India are now U.S. citizens and subject to all tax, asset reporting, and confiscation requirements.

Worldwide reaction …

The outrage is predictable! England and India point out (correctly) that the U.S. is attempting to legislate in an extra-territorial manner. The U.S. may have the right to make laws for conduct in its territorial jurisdiction. IT does not have the right to make laws that apply to people and conduct outside its jurisdiction. It does NOT have the right to prescribe or deny citizenship to people born outside its jurisdiction.

To put it simply: the U.S. has no right to deem persons born outside the U.S. to be citizens. To have a U.S. citizen living in another country is to create a liability for that country. The “FATCA of the matter” is that U.S. citizens are, by virtue of their citizenship, spies for the U.S. in that country. How would the U.S. respond if Russia deemed certain people born in the U.S. to be Russian citizens? You know the answer.  They would not allow it. To demonstrate the absurdity of this, imagine if all countries taxed in this way. This issue was explored in Don Whitely’s “The Accidental Kenyan“.

The most the U.S. could do is invite persons born in England and India to become U.S. citizens. The President could invite residents of England and India to join the President on an annual “tax chattel appreciation day” where people could accept a U.S. invitation to become U.S. citizens “tax chattels”. Some would accept the invitation some would not.

As a general principle,  the U.S. has no right to deem persons born outside the U.S. to be U.S. citizens. On the other hand, the U.S. is free to invite those born outside the U.S. to become U.S. citizens.

Does it make a difference if the child is born to a U.S. citizen parent?

The short answer is: No it does not. Why would it?

Regardless of parentage, the person was born outside the U.S. and therefore outside its jurisdiction. The citizenship of the parent does not change the fact of being born outside the U.S. How can the fact that the parent is a U.S. citizen be used to deem the child to be a U.S. citizen? Shouldn’t citizenship be a matter of choice? One would think so.

U.S. Citizens Abroad and the Worldwide FATCA Hunt

The worldwide “FATCA Hunt” for U.S. citizens is beginning. The goal is to find U.S. citizens living abroad, identify their assets, and turn them over to the IRS!

I had a dream. In this dream the Obama administration, as part of its “Hunt for U.S. citizens FATCA Hunt”, were thinking about  selling “FATCA Hunt” franchises. Information was available under the general “Whistle Blower” provisions. In general, owners of a “FATCA Hunt” franchise would  receive a reward for identifying “U.S. citizens abroad” and notifying  the IRS. This was a great business opportunity for those who hate Americans. Upon request, Treasury would provide prospective franchisees with a “FATCA Hunt Franchise Brochure”. The cover would  read:

“Your U.S. citizen neighbor could be YOUR retirement plan!”

Then I woke up with the feeling that I had seen the future.

U.S. citizens abroad: They can run, but they can’t hide!

People are understandably anxious to NOT be defined as  a U.S. citizen. But, what’s a U.S. citizen? For the moment at least, the IRS definition of U.S. citizens follows the definition in S. 301 of the INA. See:

irs.gov/Individuals/International-Taxpayers/U.S.-Citizens-by-Birth-or-through-a-U.S.-Citizen-Parent

Born in the USA – U.S. citizens who are born in the U.S. are finished. They will be found. They will be turned over to the IRS. They will be processed. Their assets will be confiscated. They have no future.

Born outside the USA – But what about people born outside the U.S. to U.S. parents? These people are understandably anxious because S. 301 of the INA (Immigration and Nationality Act) appears to define certain children, born outside the United States, to U.S. citizen parents, to be U.S. citizens. Can this be true?

INA: ACT 301 – NATIONALS AND CITIZENS OF THE UNITED STATES AT BIRTH

Sec. 301. [8 U.S.C. 1401] The following shall be nationals and citizens of the United States at birth:

(a) a person born in the United States, and subject to the jurisdiction thereof;

(b) a person born in the United States to a member of an Indian, Eskimo, Aleutian, or other aboriginal tribe: Provided, That the granting of citizenship under this subsection shall not in any manner impair or otherwise affect the right of such person to tribal or other property;

(c) a person born outside of the United States and its outlying possessions of parents both of whom are citizens of the United States and one of whom has had a residence in the United States or one of its outlying possessions, prior to the birth of such person;

(d) a person born outside of the United States and its outlying possessions of parents one of whom is a citizen of the United States who has been physically present in the United States or one of its outlying possessions for a continuous period of one year prior to the birth of such person, and the other of whom is a national, but not a citizen of the United States;

(e) a person born in an outlying possession of the United States of parents one of whom is a citizen of the United States who has been physically present in the United States or one of its outlying possessions for a continuous period of one year at any time prior to the birth of such person;

(g) a person born outside the geographical limits of the United States and its outlying possessions of parents one of whom is an alien, and the other a citizen of the United States who, prior to the birth of such person, was physically present in the United States or its outlying possessions for a period or periods totaling not less than five years, at least two of which were after attaining the age of fourteen years: Provided, That any periods of honorable service in the Armed Forces of the United States, or periods of employment with the United States Government or with an international organization as that term is defined in section 1 of the International Organizations Immunities Act (59 Stat. 669; 22 U.S.C. 288) by such citizen parent, or any periods during which such citizen parent is physically present abroad as the dependent unmarried son or daughter and a member of the household of a person (A) honorably serving with the Armed Forces of the United States, or (B) employed by the United States Government or an international organization as defined in section 1 of the International Organizations Immunities Act, may be included in order to satisfy the physical-presence requirement of this paragraph. This proviso shall be applicable to persons born on or after December 24, 1952, to the same extent as if it had become effective in its present form on that date;

This is what the relevant U.S. law says. There are two questions:

1. Can that law be legally applied outside the jurisdiction of the United States?

For the reasons given earlier, I maintain the U.S. has no right to apply its law in an extraterritorial manner and deem people born outside the United States to be U.S. citizens. The presumption against the extra-territorial application of the law was confirmed and discussed in this article.

2. If the law, can be applied outside the jurisdiction of the United States, how should the law be interpreted?

This second question has received lots of recent attention.

Context: Even without FATCA, U.S. citizens are subject to numerous disabilities throughout the world. Citizens of the “Land of the Free” have becoming hopelessly enslaved by numerous U.S. laws and regulations.

A recent bombshell from the Toronto Consulate:

The Isaac Brock Society recently reported the following:

“I wanted to share my brother’s and my experience today of applying for US citizenship at the Toronto Consulate. We are both Canadian born children of a US parent who is now deceased. Given the information we have taken from the internet, IRS and US citizenship sites, we came to believe that we had to obtain US citizenship (we were never registered as born abroad by our US parent). We completed all the paper work, obtained the documents and booked the appointment and attended for that today. We were to be granted US citizenship, however when we advised them that we actually did not wish to obtain the citizenship and in fact the only reason we had come was because we believed the US required it of us they were dismayed. We were told by the consulate officer and her direct superior that they cannot force anyone who is born outside of the US to acquire citizenship – it is a choice. When we pressed her further stating that this is not the information we are getting she advised clearly that we are not US citizens unless we willingly apply for and accept the citizenship. She stated we can say unequivocally that we are not US citizens unless we wish to be. We respectfully declined the offer of citizenship (to their amazement) and left with our refund and documents in hand. I will certainly sleep better and breathe easier! I hope this helps other Canadian born who are concerned about this.”

The comments to this post are of great interest and value.

A recent article – from Steven Flott – a Canadian lawyer practising law in the US: 

Mr. Y was born in Canada to a Canadian father and a US citizen mother who resided in the US long enough to give her the right to pass on US citizenship to him. However, his mother takes no steps to register his birth abroad or otherwise assert US citizenship and he has not done so either. Mr. Y is not a US citizen automatically, that is, his citizenship is not self-executing. The language in the Section 301(a) states: “The following shall be nationals and citizens of the United States at birth:” [at which point the section lists seven subcategories, including subsection 7 dealing with children born outside the United States “of parents one of whom is an alien, and the other a citizen”]. Most people, including virtually all US lawyers interpret the “shall” to be mean Mr. Y automatically became a US citizen at birth.

However, I believe that “shall” in the context of subsection 7, where one of the child’s parents is not a US citizen and the child has obtained citizenship by birth or heritage of a country other than the United States, to mean that the child has the absolute right to US citizenship upon providing adequate proof of his heritage AND that his US citizen parent meets the residence requirements of the section.

Unravelling this mess – Are children born to U.S. persons abroad automatically U.S. citizens or are they given a right to receive it?

The plain wording of S. 301:

The following shall be nationals and citizens of the United States at birth …

It is interesting that S. 301(a) and S. 301(b) describe people born in the United States. All Congressional legislation is subject to the 14th Amendment of the Constitution. The 14th Amendment makes it clear that anybody born in the U.S. is (not “becomes” or “acquires”) a U.S. citizen “at birth”. Therefore, S. 301 in general, and S. 301(A) and S. 301(B) in particular, do NOT add anything to U.S. law.  (It’s nice to see them there for clarification but they are simply a restatement of the 14th amendment.) Congress has, subject to the limits of its jurisdiction, the right to fix the terms of citizenship for those born outside the U.S. The issue is how to interpret the words “shall be nationals and citizens of the United States at birth” in relation  to S. 301(c) – (g). These are the sections describing those born outside the United States.

What is the intent of S. 301(c) – S. 301(g)

Let’s ignore the issue of extra-territorial application of U.S. laws. What if S. 301 can apply to the children born abroad to U.S. citizens? Let’s try to understand the intent of the law. Is the law intended to deem a person a U.S. citizen from birth or does it provide an option for U.S. citizenship?

I believe that Mr. Flott’s interpretation is correct. S. 301 of the INA is simply stating the conditions under which the U.S. will grant U.S. citizenship to those born abroad of U.S. citizens. S. 301 is simply stating the conditions under which the U.S.  grants an option of U.S. citizenship to a certain group of people.  It is an option available to the groups described in S. 301. The option need not be exercised.

Here are my reasons:

1. S. 301 appears as part of the Immigration and Nationality Act. The act as a whole assumes that everybody in the world wants to either be a U.S. citizen or have a Green Card.  The INA confirms the assumption that any person entering the United States does so with the intent to immigrate. In other words, the INA:

– adopts an operating presumption of keeping people out of the United States; and

– specifies the narrow terms under which the presumption will be rebutted and the people will be allowed either a Green Card or U.S. citizenship.

Congress cannot refuse those born in the United States. Congress can set the rules for everyone else.

Therefore, S. 301 should be understood to mean:

“In a world where we assume that everybody wants to to a U.S. citizen, these are the conditions under which we will ALLOW you to have U.S. citizenship, if you want it”.

2. The general assumptions with regard to citizenship are that citizenship is a status that belongs to the person and NOT to the government.

Examples Include:

A. Even for those born in the U.S., the Supreme Court has confirmed in Afroym v. Rusk that U.S. citizens born or naturalized in the U.S. have the right to relinquish their citizenship.

B. S. 15 of the Universal Declaration of Human Rights confirms the right to change nationality. Nobody should be forced to be a citizen of a country.

3. The general presumption (identified earlier) that laws are presumed to NOT have extra-territorial application.

The ambiguous position of the State Department – Is it clear on its own position?

The State Department has jurisdiction over and administers citizenship, passports, etc. The State Department is subject to S. 301 of the INA Act. Therefore, their conduct reflects their understanding of the meaning of S. 301. That does not make them correct. The way the State Department administers and interprets the law is important. It is NOT binding. How does the State Department interpret the words:

“The following shall be nationals and citizens of the United States at birth:”?

Practice as evidence of the understanding of the State Department

The position of various consulates does NOT appear to be consistent. For example, the experience at the Toronto, Consulate suggests that citizenship is a right but is not mandatory. American Citizens Abroad has reported instances where people after seeking a U.S. work permit were told they WERE U.S. citizens and were advised to seek a U.S. passport (suggesting that some Consulates are understanding citizenship to be mandatory). Interestingly the U.S. Embassy in London has a presentation titled “Reporting The Birth Abroad of a U.S. Citizen“. The presentation is interesting. It is silent on the question of whether someone born abroad to a U.S. citizen is automatically a U.S. citizen.

Written evidence of the understanding of the State Department

Written clues of their position include:

1. The U.S. Citizenship and Immigration Site (Official Government site which is a “Gold Mine” of information) says:

“There are two general ways to obtain citizenship one at birth and one after birth …

If one is to “obtain” citizenship, one must start without it.

A relevant section of the Policy Manual of the USCIS (“United States Citizenship and Immigration Service”) Policy Manual includes:

– language in reference to those born in the U.S. that says a person born in the U.S. “is a citizen at birth”; and

– language in reference to those born outside the U.S., to a least one U.S. citizen parent that says “may acquire citizenship at birth”.

There is a clear distinction between the status of “is a citizen at birth” (born in the U.S.) and “may acquire citizenship at birth” (born outside the U.S).

2. The State Department uses the language  “acquires” or “may acquire”

Isn’t “acquire” a synonym for the word “obtain”. To “acquire” or “obtain” citizenship one must start without it. Hence, I interpret the written guidelines from the State Department to suggest that U.S. citizenship is NOT automatic for those born outside the United States.

Although it is NOT a model of clarity, the State Department does NOT appear to use language suggesting that one is automatically a citizen.

Conclusion …

Given the inconsistency in practice coupled with the ambiguous language in written directives from the State Department, and the USCIS policy manual, one can credibly argue that:

For those born outside the United States, citizenship is NOT automatic but must be claimed. At the present time, there is no acknowledgement from the State Department which specifically confirms this position.

The only  certainty is the uncertainty of the situation.

Practical options for those born outside the U.S. who have never claimed U.S. citizenship

1. Take the position that – regardless of U.S. law – you are NOT a U.S. citizen. This requires committing to the position that the U.S. cannot in an extra-territorial manner deem you to be a U.S. citizen.

2. If you accept that the U.S. has jurisdiction over people born abroad to U.S. citizens (you believe that U.S. extraterritorial laws are valid) then you need to decide whether S. 301 means that the U.S. has claimed you as their citizen or whether you have an option but not an obligation to become a U.S. citizen. This means that you must choose one of the following courses of action.

Options available if you interpret S. 301 to be an offer of citizenship

– take the position that you don’t accept their offer of citizenship no matter what;

– investigate whether you have met the legislative requirements (example parental residency, marital status or citizenship of parent(s)) to accept U.S. citizenship. If not then you can’t accept their offer of citizenship anyway.

– if you have met the legislative requirements then you can either accept their offer of citizenship or refuse their offer of citizenship;

Consequence of believing that persons born abroad to U.S. citizens are automatically U.S. citizens

– if you accept their jurisdiction over you and that you have met the factual prerequisites for U.S. citizenship then you accept that you are a U.S. citizen. You must then settle in for a life of tax servitude, threats of penalties, life restrictions and inconvenience. The truth is that you will not have a life.

Practical option for those who are definitely a U.S. citizen

If at the end of the day you decide you are a U.S. citizen and they know you are a U.S. citizen (you have been filing taxes, etc.) then you can use the relinquishment  provisions in S. 349 of the INA. If you are a U.S. citizen, remember the advice of one lawyer:

“Get out while the getting out is semi-good.”

So ….

If you were born outside the U.S. and have never considered yourself to be a U.S. citizen, you should take no affirmative steps to confirm (or not) U.S. citizenship until this issue has been resolved with certainty.

You should NOT apply for a U.S. passport, file U.S. taxes, obtain a U.S. Social Security Number, or do anything that could be construed as evidence that you believed you are a U.S. citizen.

Lie low!

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2 thoughts on “Cook v. Tait 10: Opinion – Those born outside the US, to US citizens, are NOT automatically US citizens

  1. Pingback: Cook v. Tait 15: Why did the Soviet Union, Bulgaria, Vietnam and Myanmar adopt CBT? To maintain control? | U.S. Persons Abroad – Members of a Unique Tax, Form and Penalty Club

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