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.
@Queenston People have repeatedly asked Mr. Sanders and his campaign staff his stance on this issue with no response. AARO wrote to all of the presidential candidates asking their stance on CBT/FATCA over a month ago and NO ONE has responded.
America, the land of the free and the home of the tax slaves. This new fee for relinquishing sadly doesn’t surprise me at all. Likely the fee for exiting the US tax system will continue to increase. Unfortunately, I agree that the banks will insist on a CLN if they suspect US personhood. The 30% financial sanctions are threatening and the banks are all about the money.
If Donald Trump becomes USA president, he would like to build a wall not just between US and Mexico, but between US and Canada.
@George: A lot turns on the wording of the rejection letters. I suspect that, for now, they have a template rejection letter for these cases that hasn’t been updated since the 80s or even the 70s back when State still did “involuntary expatriations”, and it might be useful for the purpose you suggest.
But the State Department will figure it out sooner or later (sooner, if too many people apply through consulates in front of FSOs who know about all relinquishments, rather than at a US post office where the mailman taking applications hasn’t the slightest clue about nationality issues and will just rubber-stamp the application and forward it to the passport agency subcontractors who will send the standard rejection letter). Then State will reword the rejection letters to make them as useless as possible for banking purposes, e.g. “We have rejected your passport application due to conflicting information provided in your supplementary statement to the application. You are welcome to apply for a U.S. passport again. This letter does not constitute a determination of loss of U.S. nationality and has no effect on your U.S. tax obligations.”
Similarly I’d expect IRS will start issuing regulations or revenue rulings or whatever that a rejected passport explanation cannot be a “reasonable explanation” for purposes of the IGA. They will never give any guidance on what does qualify as a “reasonable explanation”, they’ll just keep narrowing the guidelines further and further until basically there’s no such thing as a reasonable explanation anymore.
So we can now officially add a new term to the FATCA lexicon: Undocumented Relinquishant. That’s exactly the term I’ll use if my bank ever gives me a hard time, after which I will advise them to shove my non-existant CLN you-know-where. I will NEVER pay my hard-earned money to the US government to prove I have not even been a god-damned US citizen since my 25th birthday in 1984 – ACCORDING TO THEIR OWN RULES – and did not need to inform them, or obtain a CLN – ACCORDING TO THEIR OWN RULES.
Immoral fuckers.
“Undocumented Relinquishant”
I like it and plan to use it.
@UScitizenabroad
What if we are wrong about that? I too want to believe Americans are good people and those who I know personally I would like to believe ARE good people. Then I hear some of them saying the damnedest things. Some are just plain stupid as if they spent their lives smoking joints and couldn’t give a shit. Most people in Germany or France could answer similar questions to the ones Jay Leno posed to people on the streets. These people vote while being totally uninformed and disinterested in government. I watch american TV or documentaries and I ask myself “Who ARE these people?” The film “Inside Job” was eye-opening. The very professors I would have worshipped once upon a time were bought by companies to do research in their favour. Health insurance is run for a profit and we maybe also know people who work for them and consider them nice people too. If anything, they will tell us they are just doing their job- but nobody there said that what they were doing might be morally wrong. Or what about those nice banker friends one had who had to do very crooked things or else lose their jobs? What is going on here? Maybe ALL of this is some sort of an “Inside job”? Is this the America of my childhood which was so into morality and doing the right thing? Or was that all an illusion? Or have things changed drastically? I am honestly not sure that the majority of them are not as close-minded, narcissistic and predatory as the government they have implemented, and those people I know and like are a minority. But even so, it seems very difficult to implement change, and that is worrisome in itself. More so when one sees things get worse- like in this thread alone. At any rate- it doesn’t look like anybody will be coming to their senses anytime soon. I just hope the judges in the two lawsuits cannot be so easily swayed by big bucks so as to forego the Constitution or the Charter of Rights. But the fact alone that we have to have such lawsuits shows a lot of things have changed.
As canoe noted, the State Department claims that 559 relinquishments in FY 2015 represent “significant increase” in relinquishments from earlier years.
There were at least 161 relinquishments in South Korea alone in 2009 (the last full year in which South Korea strongly forbade dual citizenship; after that year they broadened the categories of people who could have dual citizenship): five U.S. citizens were approved for naturalisation as S.K. citizens, and 156 former S.K. citizens who’d become U.S. citizens or who’d been duals-at-birth and chose U.S. citizenship upon adulthood were approved for restoration of S.K. citizenship. In both cases they had one year’s time in which to submit proof of loss of U.S. citizenship.
(See Korea Immigration Service Yearbook 2009 at p. 717 and 2008 at p. 697. Figures listed in the yearbooks are cumulative, i.e. subtract the second from the first to get the annual increase. The individual names are all in the Official Gazette. At some point for giggles I might try matching them up with the Federal Register.)
US citizenship is the Roach Motel of citizenships. “Easy to get, hard and costly to get rid of”
Let’s hope someone listens to Donald Trump and gets the US Constitution changed regarding citizenship rules.
@Pat, “Unfortunately, I agree that the banks will insist on a CLN if they suspect US personhood. The 30% financial sanctions are threatening and the banks are all about the money.”
I do not care about what the US Courts may think or even what the banks will think.
This is a matter that will be determined locally in local Courts in all kinds of jurisdictions.
I have just seen UK banks raked over the coals for tens of billions of pounds paid to individuals for loan insurance protection that was mis-sold.
It is no longer reasonable to expect a relinquisher to go and get a CLN at this clearly punative fee that is in violation of a persons human rights.
Based on minimum wage, a person would have to work over two months to pay this fee.
As I said before, an undocumented relinquisher is in a better position today than they were yesterday.
The higher the fee goes, the better position an undocumented relinquisher will be in.
At some point a non-USA FI is going to get sued in a local court and they are going to lose.
One other fun point about South Korean statistics: elsewhere in the 2009 yearbook (pp. 404 and 732) they said that there were 31,903 U.S. citizens holding F-4 visas (former S.K. citizens or their descendants, the most likely category of people to apply for citizenship) and 31,379 U.S. citizens registered under other residence statuses. That’s about 1% of the global U.S. diaspora population at the time, or a bit more.
So if 559 relinquishments in 2015 was “increased significantly” from earlier years, that means State’s implying there were something like half that many relinquishments six years earlier? And one country with 1% of the diaspora produced nearly 60% of those relinquishments? Hey, I can sell you some shares in a company that owns a bridge with great views of London. (Unfortunately it’s a PFIC, since bridges are a passive asset.)
They really are a vindictive lot.
I’m wondering why they chose to make it the same price as a renunciation. I had understood that part of the rationale for the enormous increase from $450 to $2,350 was because they were, in effect, subsidising relinquishments. They were increasing the charge on renunciations in order to cover the cost of both renunciations and relinquishments. Now they both cost the same even though, in theory, renunciations should cost significantly less than a relinquishment. I wonder if this is foreshadowing a further enormous increase in the cost of a relinquishment? You could also see this as part of a concerted effort to push people into a renunciation (don’t worry, the end effect is the same, it costs the same, you get your CLN faster, and you have certainty) which could have tragic consequences for some.
I would also hope that the banks are noticing the trend here. It’s very important because of their discretion to accept a “reasonable explanation” in the absence of a CLN. Perhaps ADCS might wish to write to the CBA advising them of the increase and urging them to advise their member banks to use appropriately more discretion when no CLN is available.
Is it fair to assume that if a relinquishment claim for a CLN is denied, that you will NOT get a refund for your US$2350?
Relinquishment attempts are bound to plummet.
@Edelweiss: You could also see this as part of a concerted effort to push people into a renunciation (don’t worry, the end effect is the same, it costs the same, you get your CLN faster, and you have certainty) which could have tragic consequences for some.
I suspect this too, but I’ll try to temper my cynicism and reserve my judgment until State tells us whether the fee is refundable. I.e. if unapproved relinquishers want to renounce, will they be allowed to credit their previously-paid $2,350 for the renunciation fee, or will State will hit them again for a total of $4,700? (FWIW, renunciation fees are already non-refundable, per 7 FAM 1262.4(a).)
@Edelweiss
“A CLN is priceless. For everything else there is Mastercard!”
or perhaps:
“Your CLN, don’t leave home without it!”
The simple fact of the matter is that the CLN documenting “Non-USness” is one of the most valuable documents in the world today. At $2350 (whether people can afford it or not) it is grossly grossly undervalued. I am completely confident that the price will go up and up and up!
Those who have been identified as “U.S. Property” and are in a position to do so, need to buy their freedom (renounce) immediately. It won’t too long before you will see that $2350 was the bargain of the century. Also, the 2 million USD net worth test to become a “covered expatriate” and trigger the Exit Tax is NOT indexed to inflation. Sooner or later everybody will be a “covered expatriate”.
There are currently no regulations on the S. 877A rules and the U.S. dollar has been rising (making the cost of renouncing for those subject to the Exit Tax lower). Put it this way:
2015 is a very good year to renounce U.S. citizenship.
I wouldn’t put it past the USA to deem those born in the USA property for life!
@WhatamI @Eric
It’s about “Protecting the Children”. If a “back dated relinquishment” is accepted and the children were born after the “relinquishing act” then the cancerous tumor of “U.S.ness” cannot be passed on to the children.
Every single person on the planet should first attempt the back-dated relinquishment route.
Somehow, I sense that the “modern day equivalent” of the Boston Tea Party coming.
@George RE: ” It is no longer reasonable to expect a relinquisher to go and get a CLN at this clearly punative fee that is in violation of a persons human rights.”
I certainly agree and when I said:
“Unfortunately, I agree that the banks will insist on a CLN if they suspect US personhood. The 30% financial sanctions are threatening and the banks are all about the money.”
I think this will likely be the initial response by the banks if left unchallenged. One would hope this action by the banks would be overruled by local courts in many jurisdictions.
I sure am even more happy and relieved that my CLN came in the mail just a couple of days ago after doing the relinquishment two-step in February. I am just so disgusted with the whole system…
@George
I’d be too scared that State would find some way to dispute my case for relinquishment upon passport application, and do it retroactively once they get wind that people are ‘abusing’ the application process in order to get a lower priced proof of expatriation. It would appear that they aren’t above using entrapment, our friends at the State Department – as surely it is if our banks don’t allow the cost of a CLN as a reasonable explanation as to why we don’t have one.
They can do what they want, when they want… who the heck is going to listen… how do u fight this? Its basically shooting fish in a barrel…. Even if u can get an official to listen, they understand the situation, they say all the right things, things will get worse & they will just stand there…. do nothing because we have nothing to give them to help them in their position. We are all held captive… at the whims of a gov’t who knows they have pushed us all into a corner… fighting for our lives… but we have no weapons to fight back… People could sue but no one has that kind of money to fight on their own… we can all be long gone by the time there is a resolution of fairness…
@Edelweiss
*I would also hope that the banks are noticing the trend here*
Banks do not care… they will do whatever they can to protect themselves… there is no compassion for any of us in this situation. Even if u can explain your situation… they will err on the side of safety by sending the info to the US…. the IRS has world wide offices now that operate for free…. cost other countries $$ but cost the US nothing for all this info…. then the kicker to all this… we have no privacy nor protection on the info sent… Bascially we are a book in the library that everyone who has a library card can read about
Remember the late Senator William Proxmire’s Golden Fleece Awards?
https://en.m.wikipedia.org/wiki/Golden_Fleece_Award#Award_winners
The DOS is selling a $2,350 gold-plated toilette seat.
@PatCanadian,
I don’t understand why you say that Canadian banks are insisting on a CLN because they are afraid of the 30% sanction. The IGA protects the banks from the 30% regardless, and all the bank has to do is treat the account as a reportable account if they don’t get a CLN. There is no fear or danger to the bank itself; certainly not any exposure to the 30% sanction. That will only happen when the ADCS wins its court case.
And I predict that the next logical step will be this: the US government will compile lists of names of suspected or known US persons and provide them to FATCA signatories to help them “cure” their US indicia databases. Watch for it in FATCA 2.0.
“As canoe noted, the State Department claims that 559 relinquishments in FY 2015 represent “significant increase” in relinquishments from earlier years.”
For 2014, 112 US citizens naturalized in Germany without retaining their existing citizenship. This would normally mean relinquishment of US citizenship.
Source: Table 12511-0005 at https://www.destatis.de/DE/ZahlenFakten/Datenbanken/Datenbanken.html
@US Foreign person
Amen.
@Deckard1138
“Watch for it in FATCA 2.0.”
After Fatca 2.0, Fatca 3.0 will be implemented by enforcing capital punishment against all “U.S. Persons” who are in violation of CBT-FBAR-FATCA. Isis would then appear more merciful compared to the bastardised American Government…