Closely following on the heels of their previous announcement that the $2,350 fee for renunciation — twenty times as high as in other developed countries — “protects” the human right to change nationality, the folks at the State Department have announced that they’ll be extending that “protection” to people who relinquished U.S. citizenship under 8 USC § 1481(a)(1) through (4) and seek to obtain Certificates of Loss of Nationality documenting that fact as well.
In the latest Schedule of Fees for Consular Services to be published in the Federal Register on Tuesday (80 FR 53704, 53707), Under Secretary of State for Management Patrick F. Kennedy or one of his ghostwriter minions proclaims:
Currently, nationals who renounce nationality pay a fee of $2,350, while nationals who apply for documentation of relinquishment of nationality by the voluntary commission of an expatriating act with the intention to lose nationality, do not pay a fee. However the services performed in both situations are similar, requiring close and detailed case-by-case review of the factors involved in a request for a Certificate of Loss of Nationality, and both result in similar costs to the Department.
In the past, individuals seldom requested Certificates of Loss of Nationality from the Department to document relinquishment. Although the Department was aware that an individual relinquishment service was among the most time consuming of consular services, it was rarely performed so the overall cost to the Department was low and the Department did not establish a fee. Requests for a Certificate of Loss of Nationality on the basis of a non-renunciatory relinquishment have increased significantly in recent years, and the Department expects the number to grow in the future, causing the total cost of this service to increase. At the same time, the Department funds consular services completely from user fees. The Cost of Service Model continues to demonstrate that such costs are incurred by the Department when accepting, processing, and adjudicating relinquishment of nationality cases; therefore, the Department will collect a fee from all individuals seeking a Certificate of Loss of Nationality. Taking into account the costs of both renunciation and non-renunciation relinquishment processes, the fee will be $2,350.
If you do not need a CLN in the first place, nothing in the Immigration and Nationality Act requires you to obtain one to document your loss of US citizenship, and people who relinquished before 4 June 2004 did not have to report their relinquishment to the State Department in order to end their status as U.S. tax subjects either. However, FATCA regulations and IGAs require people with U.S. indicia to show their banks a CLN or provide a “reasonable explanation” of why they do not have U.S. citizenship.
See this earlier post for discussion of what banks might accept as a “reasonable explanation”, and let us know if you find a bank which will accept the absurd price-tag as an explanation of why you don’t have a CLN.
Andrew Mitchel writes on the underreporting of US citizen expatriations and gives credit to the Isaac Brock Society for tracking FBI renunciations: “We credit the Isaac Brock Society for beginning to track the FBI data in 2013.”:
Today’s Wall Street Journal Expats blog also has a short article on this topic “Is the IRS Undercounting Americans Renouncing U.S. Citizenship?”:
A hat tip to Eric for his research and hard work on this topic.
In some jurisdictions, the laws forbid a bank to have more than a certain percentage of all the bank deposits. I remember one bank here in New Hampshire having to sell off some of her branches because she was getting over the limit.
Now, why should a bank like that offer free chequing with no minimum balance? Nay, the smaller banks have something to gain, because they can increase their deposit base, but the at-limit banks cannot.
Likewise, I think, with banks allowing some persons to self-certify or whatever, but at-limit banks don’t want to increase their deposit base, they want to milk the customers.
Interesting tidbit from Phil Hodgen’s latest post on expatriations;
(Usual disclaimer that this is not an endorsement)…..
“I received an interesting question from reader HM. He wondered whether the $2,350 fee for renouncing citizenship is tax deductible.
Department of One Word Answers
Expatriation Fee Not Deductible
Conclusion: no tax deduction for this fee. Sorry.” ……………..
“I’ve Noticed Something . . .
I’m noticing an interesting trend in expatriations. I am seeing more and more “regular people” interested in renouncing their U.S. citizenship.
Now remember — this is anecdata. This is not scientific.
The primary driver of their decisions is not tax cost, as such. It’s the paperwork cost of dealing with the U.S. government. The tax return cost every year becomes increasingly irksome and unacceptable.
Other factors affecting “regular people” are the difficulties of retirement savings because of U.S. tax laws, and the difficulties they have with their financial institutions in their home countries when they truthfully and sheepishly admit that yes, indeed, they have a U.S. passport.
Yes, there are people with significant wealth who want to renounce their U.S. citizenship. But the regular folk far outnumber them.
The problem, as usual, is citizenship-based taxation. If we had residence-based taxation, these people might well keep their citizenship. (Well, except for that FATCA thing, which is the 21st Century’s equivalent of “There’s a commie hiding behind every tree” paranoia. “Every man a tax evader!” is the government’s cheery slogan. Sigh.)
I’ve Notice Something Else . . .
More and more people with green cards are making the move to terminate their visa status before the magic eight years is achieved.
With eight years of green card status, they become subject to the exit tax. It is far, far better to cancel your green card in year 7, if you are concerned about the future exit tax.
Our fine expatriation rules encourage productive and successful immigrants to treat the USA as a one-night stand rather than a steady relationship.
If only our government would listen to the sage words of wisdom imparted to us by The Ramones. (Warning: YouTube).
Until Next Time”
I understand the fee will be implemented on November 9th. I called the Toronto US Consulate in February of this year (2015) and I have an appointment for December 16th of this year, just a little over a month after the fee increase. Because of the new exorbitant fee introduction to document relinquishments, I’m seriously wondering if anyone knows of any consulates anywhere that I can get into before November 9th, saving myself a whole lotta $$. The way I see it, paying the money to fly to a consulte anywhere prior to November 9th is preferable and cheaper than handing over the money to the US. In the meantime, I have written to the consulate in Toronto to see if they can re-schedule me sooner, or waive the fee considering how long ago I made the appointment.
Which consulate (any country) might have the shortest appointment scheduling?
Try Tijuana, Mexico.
Here is the comment I made for a similar query as yours: