Posted on January 7, 2023 by USCitizenAbroad Posted in Issues regarding US persons abroad 14 Comments In a time of high inflation the US Government is reducing the cost of renouncing US citizenship from $2350 back to the 2010 fee of $450: "BREAKING: U.S. gov't announces intent to slash citizenship renunciation fee by four-fifths, ahead of Monday hearing" https://t.co/X1LpUkRr3y— U.S. Citizen Abroad (@USCitizenAbroad) January 7, 2023 Declaration of R. Bitter Notice of Intent to Pursue Rulemaking to Reduce Fee Amount Share this:TwitterFacebookEmailLike this:Like Loading...
Any chance they will retroactively refund fees that were payed at the higher rate?
Congratulations are definitely in order! In the 12 years since FATCA became (bad) law in 2010, I believe this is the first modest step forward that has been achieved through court action. Am I correct in that or have there been earlier successes that I’ve missed?
However I would caution that this is only a very modest success for at least two reasons:
1. It doesn’t really address the fundamental constitutionality of FATCA or CBT itself, only the fee that people have to pay to get out of CBT–and of course that fee (although astronomical compared to other nations) is only a drop in the bucket compared to some of the costs expats have to face.
2. The $450 fee, although a significant reduction from $2,350, is still too high. As such I strongly agree with the response filed by Mr. Zell and Mr. Schreiber right after the government made its filing. Mr. Zell and Mr. Schreiber, attorneys for plaintiffs, noted both that even a $450 amount is still being challenged, and we don’t have enough detail yet on how committed the government is to such a reduction. As such, Mr. Zell and Mr. Schreiber appear to want to still move full speed ahead with the litigation, and I agree with that perspective.
I do have a couple of questions:
1. Is there a modest fee level that would be acceptable to the plaintiffs? Clearly $2,350 is astronomical compared to what other countries charge, and $450 still seems out of the ballpark charged by other countries. However many countries do charge a modest fee. If State were to offer to reduce the fee to, say, $100 (similar to what Canada charges) would plaintiffs accept this?
2. Speaking of Canada, I notice that this litigation has no Canadian plaintiffs, although Australia, Belgium, France, Germany, Hungary, Italy, Luxembourg, Netherlands, Spain, and the United Kingdom are all represented. Ordinarily one might expect to see Canada listed in such a group of countries–is there a reason Canada chose to sit this one out?
3. Israel is another country where one might expect to find American expatriates angry about CBT and the renunciation fee. I’m curious how it came about that Israel is “represented” in this case by an Israeli attorney (Mr. Schreiber, appearing pro hac vice), but not by any Israeli plaintiffs. Does anyone have any colour on this?
Anyways–an important milestone, and one worthy of congratulations–but I agree with Mr. Zell and Mr. Schreiber that it would be way premature to declare any sort of victory.
Their “fee” for a rubber stamp is criminal and YES, they should apply this retroactively to the day they increased it to $2350. My daughter just renounced and that “fee” is 1/10 her YEARLY income right now! She went in one day, and they stamped it the next day. She received the CLN and her paperwork back TWO days later. $2,350??? BS.
Dang, should’ve waited…
A step in the right direction, now take the “citizenship based taxation” issue where a “resident” has taxable income for >183 day stay regardless of status, Residency in the US, Residency outside the US! “US Person” deemed taxable anywhere in the World!
My relinquishment was free in 2011. But that was when the charge was $450 for renunciation; and eventually they changed the fee to $2350 and stated that it was for the 8.5×11 standard copy paper ((maybe worth 5 cents) on which the CLN was printed, with the seal of the government, dated, etc. It probably takes about 5 mins to produce it. So a fee of about $25 for administrative costs might be fairer.
The importance of the CLN is challengeable in court. To my knowledge, an expatriating act doesn’t require a CLN as a sine qua non, but it requires only the intent of the person committing the act. Suppose the IRS says you owe them money after your expatriating act. It seems to me that it is up to the US government to prove that you are still a citizen. That can only be proved by various behaviours on your part, such as taking up residence in the USA, continuing to submit tax returns to the IRS (though if under coercion and bad advice, this could be challenged), travelling on a USA passport–these are acts the may imply the intent to keep USA citizenship. But the CLN isn’t the sine qua non. And indeed the extortionate fee for obtaining one, that would potentially take away the right to expatriate, would be an legal argument against the requirement of CLN to prove expatriation.
Well, this is a small bit of progress, but I’d like to see people actually getting their CLNs at the reduced rate before I get too excited. Based on past behavior, the US government might well decide its going to “run out the clock” at the existing $2350 rate for existing booked appointments, and only start charging the reduced rate for appointments booked after the date of the ruling. I don’t trust ’em.
This does nothing to address the ridiculously long appointment wait time or the considerable additional expense for travel if a US Consulate isn’t nearby.
US expatriation law itself states that if a relinquishing act has occurred (with intent), there is no obligation to inform the US government or obtain a CLN. I can’t find it right now, but I seem to remember that Congress also once stated that if an expatriating act has been committed (with intent), loss of US citizenship occurs regardless of whether or not one applies for a CLN.
1. I don’t know what the plaintiffs would consider acceptable, and of course there is future inflation to consider, but a level set at two or three times the passport renewal fee seems acceptable.
How about a class action lawsuit asking the court to compel the USG to refund $1900 to every renunciant since the excessive $2350 fee came into effect in September of 2014? If its determined to be robbery now, then logically it has been robbery for the last eight years.
Many a bank or credit card company has been forced to pay for excessive practices; why not the US government?
PS. Just looked it up: US passport renewal fee is currently $130. (I honestly thought it was lower, maybe $50.) So…$390? That’s not very far removed from $450.
(This is why I hate bargaining!)
Any mechanisim for the people who paid $2350.00 to get a refund?
It’s not even clear that the fee reduction will actually happen. If it does, don’t hold your breath expecting a refund.
This is clearly a great thing, to up the abuse on US citizens and then slam the door to renunciation to many of those who could not afford complaince was disgusting. For a nation like the USA to charge a fee this high was and is scandalous. It could never be justified, not in a million years.
Of course, as others have said and as we all know – the root of evil here is taxing other nations residents and citizens, that is what needs to end.