Confirming reports passed on by commenters at the Isaac Brock Society, DiploPundit points to a State Department interim rule just placed on public inspection for printing in tomorrow’s Federal Register, which raises the fee for renunciation of U.S. citizenship (but apparently not relinquishment) to US$2,350, more than twenty times the average level in other high-income countries. As they state:
[D]emand for the service has increased dramatically, consuming far more consular officer time and resources, as reflected in the 2012 Overseas Time Survey and increased workload data. Because the Department believes there is no public benefit or other reason for setting this fee below cost, the Department is increasing this fee to reflect the full cost of providing the service. Therefore the increased fee reflects both the increased cost of the provision of service as well as the determination to now charge the full cost.
The Universal Declaration of Human Rights states that “No one shall be arbitrarily deprived of his nationality nor denied the right to change his nationality”, while the Expatriation Act of 1868 says that renunciation of citizenship is “a natural and inherent right of all people” and that “any declaration, instruction, opinion, order, or decision of any officers of this government which restricts, impairs, or questions the right of expatriation, is hereby declared inconsistent with the fundamental principles of this government”.
As of press time, the State Department has not yet commented on whether it sees “public benefit” in other human rights such as freedom of election or freedom of marriage, or whether anyone seriously believes that charging people a month’s salary to get a ballot paper or a marriage certificate would not restrict or impair those rights.
Practical effects
Because this fee hike apparently does not apply to relinquishments, ex-Americans who naturalise in most other countries will still be able to obtain a Certificate of Loss of Nationality from the U.S. government for no more than the cost of taking a day off work and driving or flying halfway across the country to the nearest consulate which isn’t backed up for months with renunciation appointments. (“Most other countries” means those which allow dual citizenship, like Canada and France, or those which forbid dual citizenship but allow new citizens to submit proof of loss of their former citizenship after the naturalisation ceremony, like Japan.)
However, Americans seeking to naturalise in countries which require new citizens to give up their former citizenship before the naturalisation ceremony, like Taiwan, or those who have been foreign citizens for decades or all their lives and never exercised any benefits of U.S. citizenship but now need to acquire a formal CLN (for example because their bank will discriminate against them if they don’t have one), will feel the full impact of the new fee hike, and also have to wait for months or even longer than a year for the State Department to give them a CLN before they can get on with their lives.
What changed?
The State Department has always claimed that processing renunciations has a high cost, but four years ago when they first introduced the renunciation fee, they at least pretended to take a very different attitude to the cost:
The CoSS demonstrated that documenting a U.S. citizen’s renunciation of citizenship is extremely costly, requiring American consular officers overseas to spend substantial amounts of time to accept, process, and adjudicate cases. A new fee of $450 will be established to help defray a portion of the total cost to the U.S. Government of documenting the renunciation of citizenship. While the Department decided to set the fee at $450, this fee represents less than 25 percent of the cost to the U.S. Government. The Department has determined that it must recoup at least a portion of its costs of providing this very costly service but set the fee lower than the cost of service in order to lessen the impact on those who need this service and not discourage the utilization of the service, a development the Department feels would be detrimental to national interests. See 31 U.S.C. 9701(b)(2).
They also note the per-hour cost they use to calculate the new fee:
The Department previously charged a consular time fee of $231 per hour, per employee. This fee is charged when indicated on the Schedule of Fees or when services are performed away from the office or outside regular business hours. The CoSM estimated that the hourly consular time charge is now lower. Accordingly, the Department is lowering this fee to $135 per hour.
This implies that they take about seventeen employee-hours to process each renunciation (assuming that none of the fee goes to other expenses such as travel or printing). Oddly enough, in their 2012 Paperwork Reduction Act filings on Form DS-4079 (which is filled out by both renunciants and relinquishers), the State Department indicated that the cost for processing the form was just $33 per hour. I don’t understand how these two estimates relate to each other.
To explain the new fee hike, the State Department point to procedures (such as the pointless and repetitive double in-person appointment system) which are required neither by the Immigration and Nationality Act nor the Foreign Affairs Manual, nor used by any other countries:
For example, consular officers must confirm that the potential renunciant fully understands the consequences of renunciation, including losing the right to reside in the United States without documentation as an alien. Other steps include verifying that the renunciant is a U.S. citizen, conducting a minimum of two intensive interviews with the potential renunciant, and reviewing at least three consular systems before administering the oath of renunciation. The final approval of the loss of nationality must be done by law within the Directorate of Overseas Citizens Services in Washington, D.C., after which the case is returned to the consular officer overseas for final delivery of the Certificate of Loss of Nationality to the renunciant. These steps further add to the time and labor that must be involved in the process.
As demonstrated by the experience of other countries, the State Department could greatly lower their costs by simplifying their procedures, but apparently such a common-sense step has not occurred to them.
But look on the bright side! 31 USC § 9701 says that “[e]ach charge shall be … based on … (A) the costs to the Government; (B) the value of the service or thing to the recipient; (C) public policy or interest served; and (D) other relevant facts.” Given how valuable a CLN has become these days, imagine how high a fee they could charge for it if they set the price based on its value.
Timeline for fee hike and comments period
The State Department ends with an excuse for why they can’t be bothered to tell us about the fee hike more than two weeks in advance, while keeping renunciants waiting for dozens of times that long to get the CLNs in the first place:
The Department intends to implement this interim final rule, and initiate collection of the fees set forth herein, effective 15 days after publication of this rule in the Federal Register …. The Department is publishing this rule as an interim final rule, with a 60-day provision for post promulgation comments and with an effective date less than 30 days from the date of publication, based on the “good cause” exceptions set forth at 5 U.S.C. 553(b)(3)(B) and 553(d)(3). Delaying implementation of this rule would be contrary to the public interest because the fees in this rule fund consular services that are critical to national security, including screening visa applicants.
You have until 4 October to submit a written comment on this rule. I will update this post with a link to the docket page on Regulations.gov once the fee hike is officially published.
Update for all,
So I have learned a couple of things in this whole exercise. That I thought I would share with everyone.
First off, there is no continuity between consulates. I have contacted about 10-15 different consulates. The one in the Bahamas has been very helpful, the one is Bermuda has said that they do not allow for out of there service area to apply for renunciation and it takes two visits at least two weeks apart. The Mexico City had a tone that was very official stating the importance of understanding what you are doing.
The Tijuana one was much more friendly in tone and had a simple process in order to accomplish the renunciation.
Second, it seems as though there has been a breakdown in communication or at least not an acknowledgement of the new fees. A couple of the consouls have said that they are still going to be charging $450 for the renouncing fees. With no indication of the new fees mentioned. They are either ignorant of the fact or being very disingenuous by not telling people up front about the upcoming changes.
At this point I have an appointment booked in Nassau for 10am on September 11.
So just waiting to see if anyone else comes through with better options. But it looks like I will be flying to Nassau for the priviledge of losing my American Citizenship.
What a farce.
Good information, krackerjack. Glad you have been successful in your search. What a farce indeed.
Thanks Calgary411.
I also just heard back from the Hermosillo Embassy and they have openings on Tuesday morning if anyone is interested in making that commute. The Embassy has been fantastic about this as well. I am just emailing with them to see if this could be accomplished in one visit or if you would have to do two visits. But it looks like it could be one. Now I have to decide if I want to try and do this in Mexico as it is closer then the Bahamas.
Cheers.
There is a very valid reason for the companies leaving the USA, most recently Burger King?Tim Hortons merger. They all know the USA is going down and down fast. Fatca has done it! It has pushed them into eternal failure!
Maybe it is my imagination or wishful thinking but for this moment in time it seems the tide of homelander responses is changing. Check out the last page of comments in the recent Forbes article on the fee increase. So many comments are against the US government not, for once against us. In the entire comments section there is only one, so far, pro US policy. (Maybe Mr Hunter is on holiday).
You mean you and WhiteKat can now retire? 😉
@Bubble….ya, my paws are starting to hurt! Hope it all wasn’t just a big fat waste of time but it sure is purging to pound on the keyboard. (You just got to hope you are still sounding moderately sane. I was told you never press send when you are pounding on the keys…um, well there is so much to still learn in life).
@LivingToRenounce
I posted a comment re the renunciation fee hike on the US government site you provided here:
http://isaacbrocksociety.ca/2014/08/27/state-department-to-hike-renunciation-fees-to-us2350-says-no-public-benefit-in-respecting-human-right-to-change-nationality/comment-page-9/#comment-2809841
I wrote:
“Regardless of whatever costs the US claims it is not recovering, has anyone done a cost comparison to what other nations are charging for similar services, and has anyone considered streamlining the process? Canada charges it’s citizens (yes we are citizens until the moment we renounce) $100 and does it through the mail. This new fee is absolutely ridiculous and will put renouncing US citizenship out of the reach of the very people who need it the most, US emigrants who find it impossible to thrive as their fellow countrymen do while they are under US jurisdiction. Instead of trying to deter people from renouncing by charging an exorbitant price, why don’t you look at why your citizens are renouncing in record numbers in the first place. With these fee increases it appears to the entire planet that the US cares more about losing money than losing its citizens.”
It felt good. thanks.
“The CoSS demonstrated that documenting a U.S. citizen’s renunciation of citizenship is extremely costly, requiring American consular officers overseas to spend substantial amounts of time to accept, process, and adjudicate cases……”
and
“The final approval of the loss of nationality must be done by law within the Directorate of Overseas Citizens Services in Washington, D.C., after which the case is returned to the consular officer overseas for final delivery of the Certificate of Loss of Nationality to the renunciant. These steps further add to the time and labor that must be involved in the process.”
All that work and the State Department is unable to answer a simple FOIA request for the total number of CLNs issued on a yearly basis. Smells fishy to me.
You’ve hit nail squarely on the head, FromTheWilderness:
Absolutely spot-on story in the Telegraph: “Thousands of Americans surrendering their passports due to be hit by huge hike in government fees”
http://www.telegraph.co.uk/news/worldnews/northamerica/11064480/Thousands-of-Americans-surrendering-their-passports-due-to-be-hit-by-huge-hike-in-government-fees.html
Covers all the problems: accidentals who never lived in the US, piles of tax forms when you owe no tax, taxes when you sell your non-U.S. home purchased with money that has nothing to do with the U.S., people renouncing so they can get on with their lives, and the BS justification for the fee hike
@Eric
Good UK article by the telegraph.
How will the US know those who are born outside of the USA to US parents and these children leave their birth country to another country and become a citizen of that country. I am guessing they will have no problem as long as they do not go visit the USA. Unless banks ask for their family history, which seems would not happen. You think?
Bubble bustin. I just reread your 2012 letter to Peter Dunn. It wouldn’t surprise me one bit to learn that we went to the same well respected US tax lawyer. The one we were sent to is well known and quite possibly the same one. She sent us to a well respected ,expensive and exhausted US tax accountant. With only days before the deadline we opted to not go forward. My entire family is happy that we made that decision.
The difference between your and my tax lawyer is that mine is a he, and your’s a she. I’m very happy for you that you’ve achieved results you are pleased with. Sincerely.
I emailed this to several MPs to alert them to this most recent deepening of the threat coming at us from the US – the rising barriers to expunging the involuntary US extraterritorial UStaxableperson burden being carried by over 1 million Canadian citizens and residents – exacerbating the implementation of FATCA inside Canada. Harper and his merry Conservatives chose to betray Canadian citizens and residents via signing the FATCA IGA and passing enabling legislation in Canada – but without overhaul of the gaping holes and pitfalls already not addressed by the existing faults in the Canada US tax treaty, and without ensuring that Canadians with unwanted US status could readily purge themselves of US citizenship.
AmCham members in Canada who’ve been thriving off the backs of Canadians grappling with US extraterritorial CBT and FATCA will be disappointed because it might interfere with their profits in a growth industry. As their site says; “……….Here’s a hot tip for accountants and tax attorneys: now is a good time to develop specialized expertise in advising clients who may be seeking to expatriate from the United States. That demographic looks more and more like a real growth opportunity.
That’s one potential lesson we can draw from recent years’ explosion of U.S. citizens living and working overseas who are now renouncing their citizenship……….”
See https://www.uschamber.com/blog/exit-strategy-fatca-tax-law-keeps-pushing-americans-give-citizenship.
Note: The previous AmCham position paper against FATCA is no longer to be found on their website as far as I can see.
Add sanctions to the list of jeopardies those deemed US taxable persons face in becoming compliant, or becoming compliant in order to renounce – extra jeopardy for Iranian-Americans:
http://blogs.angloinfo.com/us-tax/2014/08/25/iran-sanctions-becoming-us-tax-compliant-poses-a-hidden-problem-for-many-iranian-americans/
‘Iran Sanctions – Becoming US Tax Compliant Poses A Hidden Problem For Many Iranian-Americans’ V. La Torre Jeker JD
August 25, 2014
“Along with a host of others, many US-Iranian dual nationals are now becoming aware of their US tax and reporting obligations and trying to become US tax compliant. All fine and good. In advising these clients, however, the professional cannot forget that Iran is a sanctioned country and that the US has some very complicated sanction rules in place with Iran. Generally, the sanction rules prohibit US persons from engaging in most business activities with Iran unless a license is first obtained from the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC)………”
@Everyone-
This sums it up:
https://twitter.com/VA5LF/status/505557829944872960/photo/1
This makes me way more happy than it should. #@!% you #FATCA https://twitter.com/VA5LF/status/505557829944872960/photo/1
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badger,
Thanks for all of your good information for us to consider this morning. I’ve added your American Chamber of Commerce link to the post I just put up: http://isaacbrocksociety.ca/2014/08/30/wsj-more-on-u-s-department-of-state-huge-jump-in-fees-for-renunciation/.
This is really unsettling, if only for the banning part. I wasn’t eligible to relinquish and had to renounce, and I fear a day is coming when we will be banned for simply that. Most of the American public is clueless and on board with this (I yet again had the privilege the other day of being called a traitor). My mother constantly cries about it and talks about how much she wants to see me because she hasn’t seen me in several years, but there’s nothing I can do about it because I have no passport. She can’t come here because of her health, and she’s terrified (as well as I) that the day is coming when we just won’t be able to see each other again. The whole thing makes me so angry I wish I never had to have anything to do with the United States of Oppression again.
Laura Saunders at the WSJ has just added this on their blog…
http://blogs.wsj.com/totalreturn/2014/08/30/government-fee-to-give-up-u-s-citizenship-is-raised-fivefold/
Thanks. Here it is at Brock, Just Me: http://isaacbrocksociety.ca/2014/08/30/wsj-more-on-u-s-department-of-state-huge-jump-in-fees-for-renunciation/
@Krackerjack — They normally have you pay the fee at the second visit after you reflected…If you are going September 11 for the first visit, you could get stuck paying the higher fee on the second visit which goes into effect the next day after they make you reflect
@KalC
As I’ve said before, every decision has it’s cost. What’s your’s? I traded money for mobility and the ability to continue earning a living. As stressful as it’s been for me, my decision has already proven to be worth it for me and those who come behind me. Only time will tell whether your decision was worth it to you.