A Sri Lankan presidential candidate whose name failed to appear on the U.S. government's quarterly list of individuals who have renounced their citizenship is inadvertently drawing attention to a question many Americans and former Americans have been asking for years – which is why it can take months for renunciants' names to appear on the list.
Some renunciants say they have been waiting more than a year, and believe they may never see their names on the Federal Register's official “Quarterly Publication of Individuals Who Have Chosen to Expatriate, as Required by Section 6039G”.
The Sri Lankan presidential candidate in question is Gotabaya Rajapaksa, a former Secretary to Sri Lanka's Defence Ministry and a retired Sri Lanka Army officer. He is said to have picked up his American citizenship while in the U.S. in 2003.
According to an article in the Sri Lanka Guardian last week, Rajapaksa's name did “not appear on the official U.S. government publication [of individuals who have chosen to expatriate]…in the second quarter of 2019,” even though he "claimed that he received official confirmation on 3 May from the U.S. government that he was not considered a U.S. citizen, effective 17 April”.
The article went on to say that the presidential hopeful "shared a document through media organisations that he said establishe[d]" the fact of his renunciation, as he sought to prove his full loyalty to Sri Lanka.
Article 91 of the Constitution of the Democratic Socialist Republic of Sri Lanka states that "no person can contest the presidency [of Sri Lanka] or serve as president if they are a citizen of any country other than Sri Lanka," the Sri Lanka Guardian concluded.
On Monday, Sri Lanka's Daily Mirror updated the story with a report that the U.S. ambassador to Sri Lanka, Alaina B. Teplitz, told a group of journalists at her residence in Colombo that the Federal Register could often be months behind in posting the names of those who had renounced their U.S. citizenships.
Her comments came in response to a question about whether Rajapaksa was telling the truth, the article said, adding that she stressed that she was only articulating the situation and not expressing an opinion on the subject.
"My obligation is to share the policies and decisions of the United States,” she was quoted as saying.
Asked on Thursday why the names of some Americans who go through the expatriation process don't appear straightaway on the Federal Register, a spokesperson for the Internal Revenue Service said that "we cannot publish the names in the Federal Register until we receive the information needed to make a determination of the expatriation. We do not publish names of former citizens until we receive a CLN from the State Department, and we do not publish names for former long-term permanent residents until we have both the information from USCIS and the 8854 from the individual expatriate."
The Federal Register list, he said, is compiled from information "provided by the State Department and the Department of Homeland Security, as well as the Forms 8854 filed with the IRS," which "many, but not all, affected individuals are required to file."
The fact that U.S. citizenship renunciants' names often take a long time to show up on the Federal Register has become one of the most often-asked questions among long-term Americans and former Americans in Expatland since the numbers of those renouncing first began to soar a few years ago – with few answers typically provided.
The obvious answer is that the U.S. government doesn't view getting the names of the latest group of citizenship renunciants onto the Federal Register in time to make the quarterly deadline as one of its top priorities. But some question whether there might be more to it: for example, a desire to keep the official numbers of those renouncing lower than they actually are, particularly given that the missing names issue has been going on for years.
Back in September 2015, for example, Forbes tax writer Robert W. Wood observed that "many people who have expatriated claim their names are never on the IRS list", that is, the one that appears on the Federal Register's website – the most recent of which, posted on Aug. 15, may be seen here.
Wood went on to point out that "consular expatriations where people do not file exit tax forms with the IRS are apparently not counted," and cited a then-just-published report that he said "backs up the claim that the IRS is undercounting Americans who are renouncing their citizenship".
An article on the Wall Street Journal's website around the same time cited research by Andrew Mitchel, an expert in U.S. citizenship renunciations that showed "State Department and FBI data show an estimate of about 6,000 Certificates of Loss of Nationality applied for or issued in the fiscal year ending Sept. 30."
Mitchel goes on to suggest that the discrepancy between the IRS's data and the State Department/FBI data was "roughly" around 2,000 names, in addition to failing to account for those who had relinquished their Green Cards – "18,000 between 2008 and 2012".
In March, as reported here, the U.S. government finally published the names of some 687 people who were said to have officially expatriated during the fourth quarter of 2018, more than a month late, amid observations from such organizations as Canada's Isaac Brock Society that the numbers seemed unexpectedly low, given anecdotal reports of high interest in renunciation around the world. The Isaac Brock Society has been active since 2011 in advocating on behalf of dual American/Canadian citizens and so-called "Accidental Americans" resident in Canada.
Why it matters
One of the reason many observers question the quarterly data is because it has been seen as a measure of the frustration American expats are experiencing as a result of the way the U.S. has begun to come after them for taxes since 2010, when the Foreign Account Tax Compliance Act was signed into law by President Obama.
Just 742 Americans renounced their citizenships in 2009 – the last year before the FATCA effect began to be noticed; in 2008, only 231 did.
By 2016, the annual number had soared to 5,411, which remains the largest number in a single year, based on the Federal Register's official “Quarterly Publication of Individuals Who Have Chosen to Expatriate, as Required by Section 6039G”.
Although a relatively small percentage of the 9 million Americans the U.S. State Department estimates live outside the U.S. – the American Citizens Abroad believes the number is closer to 5.1 million – the numbers are nevertheless seen as high given the significant cost and hassle required to give up one's American passport.
One former American who now has a British passport told the American Expat Financial News Journal that she had “renounced in December 2018, and my CLN [Certificate of Loss of Nationality] is dated January 2019, and yet I wasn't on the Q4 2018 list, the Q1 2019 list, or the latest list.
“So it is absolutely true that the lists are inaccurate; whether this is deliberate or not is anyone’s guess.”
This recently-renounced American, who requested anonymity, pointed to comprehensive renunciation data compiled by the Isaac Brock Society that she said suggested that "almost nobody's name is appearing in the data that is meant to represent the quarter in which they renounced.
"Here, it looks like there is a typical delay of anywhere from six months to two years after someone has renounced before their name appears on the register.
"So a question to ask the people who produce the list is, if they can only very rarely manage to report people for the quarter they renounced in, why even publish a quarterly list? What purpose does it serve?"
John Richardson, a Toronto-based lawyer and citizenship expert who specializes in American expat issues, says the missing names and numerical discrepancy "has been going on for years, whether by accident or design".
"And although the inaccuracy of the list is an acknowledged fact, its difficult to understand why this should be so.
"It could be as simple as the fact that the U.S. government doesn't take seriously its obligation to create an accurate 'Name and Shame List', as some people call it. It's also possible that the government is taking steps to hide the number of people who are renouncing U.S. citizenship.
"Either way, renunciations are common, the numbers are growing, and, in my opinion, they're necessary, as it has become almost impossible for Americans abroad to both be compliant with the laws that apply to them and remain U.S. citizens."
- Virginia La Torre Jeker, on whether you can (now) trust IRS FAQs: 'It still depends...'
- IRS to U.S. taxpayers: 'reasonable cause' defense in the event its own published guidance was to blame
- ACA calls on Congress to 'investigate' expats' exclusion from Child Tax Credit improvements, while taxed for unobtainable healthcare
- Uncle Sam Reminds YOU: Tax Day for expats who got extensions is Oct. 15
- Q2 renunciation numbers appear to rise, even as appointments to begin the process remain elusive