The U.S. Department of State has published a change to their Consular Fees: they are now charging the same amount of money for relinquishing U.S. nationality as they are for renouncing it:
Documentation for Loss of Nationality
The Department is expanding the application of and renaming item 8 in the Schedule of Fees to “Administrative Processing of Request for Certificate of Loss of Nationality.” The fee will be applied to cover not only services to U.S. nationals (i.e., U.S. citizens and non-citizen nationals) who relinquish nationality by taking the oath of renunciation under 8 U.S.C. 1481(a)(5), but also to cover services to U.S. nationals who relinquish nationality under 8 U.S.C. 1481(a)(1) to 1481(a)(4) or any earlier-in-time relinquishment statutes administered by the Department of State and request a Certificate of Loss of Nationality. Currently, the fee is paid by those taking the oath of renunciation under 8 U.S.C. 1481(a)(5) at the time the oath is sworn. The fee would be collected from an individual claiming to have relinquished nationality at the time that person requests the Certificate of Loss of Nationality (that is, after completing Form DS-4079 and signing before a consular officer Part II of Form DS-4079 entitled “Statement of Voluntary Relinquishment of U.S. Citizenship”). The Fiscal Year 2012 Cost of Service Model update demonstrated that documenting a U.S. national’s relinquishment of nationality is extremely costly whether the service is for a relinquishment under 8 U.S.C. 1481(a)(1) to 1481(a)(4) or a relinquishment by renunciation under 8 U.S.C. 1481(a)(5). Both require American consular officers overseas to spend substantial amounts of time to accept, process, and adjudicate cases. The cost of the service is not limited to the time consular officers spend with individuals prior to and at appointments. The application is reviewed both overseas and domestically to ensure full compliance with the law. The consular officer must determine that the individual is indeed a U.S. national, advise the individual on the consequences of loss of nationality, and ensure that the individual fully understands the consequences of loss, including the inability to reside in the United States unless properly documented as an alien. Through documentary review, consideration of the individual’s circumstances, and careful interviewing, the consular officer also must determine whether the individual is seeking loss of nationality voluntarily and with the requisite intent, as required by U.S. Supreme Court case law and by statute (8 U.S.C. 1481). This determination can be especially demanding in the case of minors or individuals with a developmental disability or mental illness.
The consular officer must also ensure that the commission of an expatriating act was as prescribed by statute, which is often an issue in non-renunciation relinquishment cases. The loss of nationality service must be documented on several forms and in consular systems as well as in a memorandum from the consular officer to the Department’s Directorate of Overseas Citizens Services in Washington, DC (“OCS”), in the Bureau of Consular Affairs. All forms and memoranda are closely reviewed in OCS by a country officer and a senior approving officer, and may include consultation with legal advisers. This review entails close examination of whether the requirements of voluntariness and intent are satisfied in the individual case. Some applications require multiple rounds of correspondence between post and the Department. The final approval of the loss of nationality must be done by law within the Department (8 U.S.C. 1501), by OCS, after which the case is returned to the consular officer overseas for final delivery of the Certificate of Loss of Nationality to the individual. In addition, every individual issued a Certificate of Loss of Nationality is advised of the possibility of seeking a future Administrative Review of the loss of nationality, a time-consuming process that is conducted by OCS’s Office of Legal Affairs.
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.
This means that it costs ALL American nationals thousands of dollars to change their nationality. Of course, this affects primarily the middle class and less wealthy. However, even if you make the assumption that this is an exit tax for the wealthy expat trying to avoid U.S. duties, this fee doesn’t discourage or hurt them. A tax dodger that the U.S. IRS is interested in most likely wealthy, and even if they qualified for the relinquishment instead of renunciation, a $2,350 fee is nothing for them. Accidental Americans, referring to people who don’t live in America yet acquired U.S. nationality involuntarily (such as through birth) and never use it (or weren’t even aware they possessed it until recently), give up their U.S. nationality not because they don’t wish to pay U.S. taxes, but rather because they fear the fines and/or legal hassles associated with making a mistake when constantly filing the annual (or more frequent) paperwork to the IRS. Making a mistake is easy to do, because living overseas with foreign income and assets (possibly mixed with domestic assets) makes error-less filing much more difficult.
The prose above gives a lot of reasons for the price increase, claiming that the processes for the consular officers is time and cost consuming. I, however, having relinquished my U.S. nationality (for the purpose of naturalizing to another country — that doesn’t allow dual nationality — where my family, career, and home have been for decades) at the Tokyo Embassy, have experienced the process first hand. My experience? I was less than impressed with the amount of work it entailed. In particular, I did a lot of the work (proving my U.S. nationality) myself, not the consular staff. And a lot of the other work was done by the State Department in the U.S., not the local Embassy staff. You can read about my personal relinquishment experience here:
- Relinquishing U.S. citizenship in Tokyo (part 1 of 4)
- Relinquishing U.S. citizenship in Tokyo (part 2 of 4)
- Relinquishing U.S. citizenship in Tokyo (part 3 of 4)
- Relinquishing U.S. citizenship in Tokyo (part 4 of 4)
I am willing to bet that a lot of other procedures that the state department performs, such as registering a U.S. birth or marriage overseas, require many of the same procedural checks (such as verifying U.S. nationality) that losing one’s nationality requires, yet the fees for other services are nowhere as near as high.
I also wonder, if by charging an exorbitant fee, America isn’t running afoul of the spirit of the U.N. Human Rights agreements that it agreed to and signed off on. The United Nations’ Universal Declaration of Human Rights, Article 15 states:
- Everyone has the right to a nationality.
- No one shall be arbitrarily deprived of his nationality nor denied the right to change his nationality.
One could possibly argue that by charging an exorbitant amount to “change” one’s nationality (change meaning not just acquiring a nationality, but losing one’s nationality voluntarily as well), America is attempting to prevent most Americans in the situation where they need to change their nationality (most who do so do it for family and personal reasons, not exclusively for tax avoidance reasons) from doing so.
The document about this change is asking for comments. I recommend posting your (polite and civil) comments to the document if you think that the fee is excessive.
Great advice, Duke of Devon.
For what it. IGA’s be worth to you, Prof Allson Christians thinks the fee could be successfully challenged in court. I don’t know of anyone who’s tried yet though.
‘Cost of Giving Up Nationality Around the World’
“A lot of news has been made recently about the United States’ decision to not only massively increase the price for its renunciation (by a whopping 422%), but to also charge the same amount of money for either renouncing or relinquishing American nationality — a process that used to be free.”
Thought I’d put this here because now the US State Dept is making a real killing on the backs of relinquishers too:
‘422% Fee Increase To Renounce Citizenship Yields Millions’