To bring the subject of one of Eric’s posts back to the forefront, State Department to hike renunciation fees to US$2,350; says “no public benefit” in respecting human right to change nationality, I add another article, today, from the U.S. — Wall Street Journal, Laura Saunders, August 30th: U.S. Fee to Drop Citizenship Is Raised Fivefold. Commenting is open and comments have started.
Advocates for U.S. expatriates reacted angrily to news of the increase. “I’m so disappointed and insulted by the continuing punitive actions of the U.S. in trying to prevent persons and companies from leaving,”
Also from the U.S., which complements the articles on higher fees for renunciation, one from the U.S. Chamber of Commerce, highlighted this morning by badger: Exit Strategy: FATCA Tax Law Keeps Pushing Americans To Give Up Citizenship. Growth opportunity — the HIRE Act continues to give.
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.
Some firms have already figured this out!
American Citizens Services at the US Embassy in Seoul tweeted about the fee hike
Their Facebook post on the same topic got 20 shares
So I guess they’re still using the BS two-interviews-on-two-separate-days system. On the bright side, most people in Korea would be relinquishing rather than renouncing (people who naturalise/restore citizenship can submit their proof of loss of foreign citizenship up to one year later, though I think people who want to become officers in the military have to submit the proof of loss beforehand).
“#EconomicPatriotism” is the #BerlinWall—Rebuilt #fbar #FATCA http://bit.ly/1w1baDi
Probably will do no good at all, but I just filed the following comment on the fee increase:
I object to the raising of the consular fee for administration of a renunciation of United States citizenship from $450 to $2,350. I am a lawyer who has dealt with many renunciations in London over the years. My reasons for objecting are:
1. I find it hard to believe that the provision of this service actually costs $2,350 per renunciant. That represents some 17 hours of attention at the $135 hourly rate. The right approach to the problem of having to administer so many more renunciations than previously must be to reduce the paperwork and bureaucracy involved, rather than increase the fee. These days, renunciants generally know what they want to do and what the consequences are; all this consular attention could be better directed to young or potentially mentally unstable applicants.
2. A fee as disproportionately high as this one is actually a deterrent to expatriation. It is a recognized human right to leave one’s country. The United States is the only country other than Eritrea which imposes its taxes on citizens who reside outside the United States on the same worldwide basis as on those who reside within it; hence, it is only US citizens who are forced to renounce citizenship in order to ensure that they are subject to worldwide tax only by the countries where they live and work and from which they receive government services. The stated objective of Congress in the expatriation tax arena was to make expatriation tax neutral. Congress clearly has not done so and the rhetoric coming from Congressional leaders on renunciation is simply hostile. This State Department increase can be perceived (reasonably, I believe) as an attempt to stem a rising tide of expatriations. Why cannot State ask Congress to address the question of why so many people now wish to expatriate, rather than just blindly raise barriers to it happening? If the objective is actually to deter expatriation, the fee increase may well be counterproductive. It is not unreasonable to expect people to adopt the attitude that, if the fee is now four times what it was when it was first set, it is better to expatriate now, before the fee is 8 times what it was when it was first set.
3. There is an unjustified perception that people who renounce citizenship are rich tax dodgers living lives of luxury in tax havens. In fact, they generally are not. This fee will be a burden for two particular groups of Americans who live outside the United States. The first are young people, who are beginning to learn through the publicity surrounding FATCA and the Swiss banks that their American citizenship will subject them to lifelong tax obligations to the United States, a country with which most of them have had little or no contact other than because of their birth citizenship. These young people are increasingly aware that they cannot choose freely where they wish to live and what they wish to do if they start out already tainted by burdens placed on them, their employers, their bankers and their partners based solely on their United States citizenship. The second group of people who will find the new fees a burden are the large numbers of ordinary people who are reaching retirement. They are not living in tax havens, but in ordinary high-tax countries like Canada, the United Kingdom, and Australia. Again, the publicity surrounding FATCA and the Swiss banks has made them aware that they may not have been completely compliant with their US tax obligations over the sometimes 40 or 50 years they have been living outside the United States. Their retirement savings are vulnerable to draconian penalties imposed by the United States because of these older people’s failure to report their very existence (not failure to pay tax owed). They want to renounce citizenship to simplify their lives and take advantage, if they can, of the legal retirement planning they have already put in place in the countries where they reside. For an elderly couple in this situation, a “price” of $4,700 for giving up US citizenship in their retirement years is very high indeed. Not many of them have that kind of nest egg.
@qm: thank you for doing that. Sadly, the State Department does not like anyone questioning their authority to run their little renunciation fiefdom however they want. For example, in 2010 an immigration lawyer (one of the partners of WA/BC-based Preshaw & Zisman) made the following very-reasonable comment about DS-4079:
They dismissed it in precisely two BS sentences without any evidence:
The courts are the only way to force them to act reasonably.
Great comment. Just one slight correction:
” It is not unreasonable to expect people to adopt the attitude that, if the fee is now four times what it was when it was first set, it is better to expatriate now, before the fee is 8 times what it was when it was first set.”
The fee is actually now five times what it was (5.222.. to be exact). Thie increase was by 422%, but the fee itself has quintupled.
Sorry to be nitpicky, but we shouldn’t make things look any less severe than they actuallly are.
@Eric. I know in my heart you are correct. It’s just that I can’t justify to myself not making the effort….
@notamused. My partner is a financial type who has told me many times that I am mathematically challenged and who would thank you for the independent confirmation. 😉
Eric, I doubt that the consulates using the one meeting method are going to go back to two but they can’t very well acknowledge that in Canada it’s a one stop shopping thing as they are using the two meetings as part of their justification for the sticker shock.
This is, in my opinion, a knee jerk reaction to two credible lawsuits, increased negative media attention and the UN human rights complaint.
It is probably also due a bit to the steady thumping the White House has taken since spring on a host of foreign policy issues that are increasingly calling to question whether anyone there has any idea of what they are doing and finally, they have an election coming up in November. The Senate is at stake.
It is only a matter of time until the real expatriation numbers come out and clearly their efforts to stem the tide via clogging haven’t worked. But as someone else pointed out, when people want out – they will do anything to make it happen.
I am not sure if you have read all comments at WSJ, but I highlight this one from Steve…
On another note, Phil Hodgen has an Ask your expatriation question email he sends out from time to time. It, of course, is a tool to generate business, and I am not a shill for him, but….. he does provide some pretty good information for those that care to subscribe. (you can go to his website to sign up if you have an interest.)
Here is his latest on the increase of fees but for brevity of time, I will leave out all the link references and bold type in his original.
@YogaGirl, an article the other day said that three-quarters of the renunciations were coming from Canada, UK and Switzerland which was causing the backlog. Both Canada and Switzerland use the one visit method so if the UK does too (I don’t know if it’s one or two) then the whole two visits causes extra expense scenario is out of the window.
@Medea Fleecestealer. The London Embassy issues a preliminary “informal” paper on which the expatriate signs off that, among other things, he or she does not need a pre-expatriation appointment. The appointment is made by submitting the documents by email. There is only one actual physical meeting which is apparently quite short and to the point. The alleged costs can’t really be justified on the basis of the London procedure. There is no appreciable backlog in London–the delay in getting an appointment is about 4-6 weeks at the moment.
There will be some new delays, for sure, going forward when students and retired people don’t have a big enough credit limit on their credit cards or overdraft facility to pay the new $2,350 charge…but we’ll have to see what happens when some poor (literally and figuratively) person says he can’t pay.
@qm, don’t even need that here in Switzerland. They send you copies of the Oath and Statement of Understanding plus some other info about how serious giving up your citizenship would be, but you just fill in the Oath and Statement and send them back to the embassy. On the day they go over the two forms with you to make sure there are no mistakes, if not you pay your fee and then finally do the oath-taking. Out of the hour and 40 minutes it took me I reckon only half an hour was actually dealing with the embassy staff, the rest was just waiting time.
Last heard though the waiting time at Bern was up to around a year. I don’t know if that’s come down at all lately. If it hasn’t then the fee hike is really unfair on those people, some of whom have been waiting months to renounce.
Many of these articles do NOT note that the fee was ZERO up until July of 2010. So, between July 2010 and September 2014, the fee went from ZERO to 2350. US.
To me it is no coincidence that 2010 was also the year the HIRE Act which contained FATCA was passed.
The State Department is asking, and you can reply…
https://twitter.com/StateDept/statuses/505437067581874176 A real knee slapper!!
How can we do a better job of serving the American people & improving the world? Learn how to submit your thoughts: http://go.usa.gov/ycDR
@ Medea Fleecestealer,
I heard some news from Bern about 2 weeks ago (they didn’t post on the site, but sent a report in to the directory). “Another Lost Ambassador,” initial contact with the embassy was June 2014, meeting July 2014 and CLN arrived in August. I hope this is typical of Bern at this current time, but I don’t know.
@Pacifica777, that does sound like good news then. Hopefully it’s not just because everyone’s on holiday here in July and August.
I fully agree with Phil Hodgens:
“Prediction: More Renunciations
The increase in the user fee is a wake-up call. The government is slowly and steadily making it more painful to terminate their U.S. citizenship. For those people who are conscious and aware, the new user fee is another indicator that getting out now is better than waiting. I expect people to see this and favor renunciation now rather than later. Perversely, by making it more expensive to expatriate, the government has increased the incentive to renounce citizenship.”
Medea Fleecestealer, no surprise there. But eventually someone in the media is going to point out the inconvenient truths – like forcing 18 year olds to pay a huge fee that is on par with a semester of university tuition to dump a citizenship that they probably inherited is punitive and clearly old-school totalitarian. Or that forcing senior citizens to choose between bankruptcy and not eating for a few months is an over top reaction.
Why no one in the US media has picked up on the fact that Canadians (aren’t we like the little step-brother they always wanted?) are willing to do anything to shed American citizenship, baffles me.
They can crow all they want to about how people are fleeing civil worn torn countries and poverty to walk barefoot across the desert to be Americans but when people they wouldn’t mind sharing citizenship with don’t want to? That’s huge.
Or maybe that is why the media in the US are ignoring this (because I am sure more than a few know about it). Canadians. Brits. Swiss. We don’t invoke (too many) American stereotypes about non-Americans. Our shunning them and their citizenship brings up too many questions about their values, government, class system, racism, sexism, militarism, hyper-religiousity – to name a few things. And it also brings up that pesky fact that the US is no longer the best place on earth to live (if it ever really was). Americans enjoy navel gazing but not this kind.
From Barrie McKenna, The Globe and Mail today: http://www.theglobeandmail.com/report-on-business/international-business/us-hits-citizenship-renouncers-with-hefty-fee-hike/article20308580/
Calgary411, I like Barrie’s use of air quotes. It was almost like he was rolling his eyes at the State Department and mouthing, “drama queen much?”
The day will come when you can’t even buy it anymore.
pacifica777, is there a way to post images? My kid trashed his burned abroad thing because he knows now that he owes 2300 to a country he never lived in. It is on my facebook but it be would nice to post images for all to see.
“….because he knows now that he owes 2300 to a country he never lived in.”
Well said. My kids, too.