by Mark Nestmann: Preparing
for a U.S. Border Crossing
a question I recently received from a reader. I’m posting it
because I think it illustrates some common misconceptions about
Q. I am
a middle-aged male with dual citizenship from the United States
and an EU country. I have been saddled with debt due to job loss.
If I relinquish my U.S. citizenship, and live and work in an EU
member country, can the U.S. government garnish my income or arrest
me due to outstanding debt? Would I be able to collect U.S. social
security and pensions in the EU?
A. The loss
of US citizenship will not affect existing financial obligations
in the United States. But, as a practical matter, if you’re
living outside the United States, and don’t have property in
the United States, it will be difficult for ordinary creditors to
collect on debts you owe.
If you have
tax debts, the IRS may have the right under tax treaties or tax
information exchange agreements to obtain financial records in that
country. Should the IRS discover evidence of tax evasion or other
crimes, it could then request the Department of Justice to institute
an asset freeze request. This could be done under a mutual legal
assistance treaty (MLAT), should one be in effect with that country.
DOJ could also seek to extradite you to the United States to stand
trial. However, MLAT and extradition requests are generally reserved
for serious crimes. Unless you owe the IRS a large sum of money,
you’re unlikely to be pursued once you expatriate.
doesn’t affect your eligibility for social security or pension
payments. Military pensions are an exception: they usually terminate
upon expatriation. Your IRA may be another exception: if you’re
a “covered expatriate” (click here for definition), it
terminates upon expatriation.
payments are subject to withholding up to 30% on the first 85% of
your monthly benefit. The payments are subject to levy for unpaid
taxes, student loans, and child support obligations, and other debts
due the U.S. government. An ordinary creditor, however, can’t
levy your social security payments.
Mark Nestmann is a journalist with more than 20
years of investigative experience and is a charter member of The
Sovereign Society's Council of Experts. He has authored over a dozen
books and many additional reports on wealth preservation, privacy
and offshore investing. Mark serves as president of his own international
consulting firm, The Nestmann Group, Ltd. The Nestmann Group provides
international wealth preservation services for high-net worth individuals.
Mark is an Associate Member of the American Bar Association (member
of subcommittee on Foreign Activities of U.S. Taxpayers, Committee
on Taxation) and member of the Society of Professional Journalists.
In 2005, he was awarded a Masters of Laws (LL.M) degree in international
tax law at the Vienna (Austria) University of Economics and Business