Liberty and justice for all United States persons abroad

WSJ: More on U.S. Department of State Huge Jump in Fees for Renunciation

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!

121 thoughts on “WSJ: More on U.S. Department of State Huge Jump in Fees for Renunciation

  1. Mona Lisa I understand where you are coming from. I hold little hope though as the same people that hate us are jumping through hoops to provide amnesty to millions of illegals.

  2. Obviously whoever pulled the trigger on this increase thinks we’re all Eduardo Savarin’s. I say that because there seems to be no recognition of the fact that renouncing US citizenship will be out of reach for a lot of people now. Does the US really want to have masses of trapped, resentful people living in other countries who can easily access the US?

    Many Americans living in the US know we aren’t Savarin’s or Turner’s (our families, friends and many journalists) and know that this creates a real barrier for people when they can’t even expatriate when they want to. It’s time for them to speak out against this threat to individual freedom too.

  3. @monalisa1776,

    Yes one of my worries is the IRS comes up with some reason why me and my wife should file 3520 for our foreign pensions. They didn’t want these in OVDP. They poked around looking for a way to tax them while auditing our submission but they gave up finding nothing there (except for a significant balance error in my favor). The pensions are trapped till I am 55 (5 years away). I will draw them down at that point to avoid all the hassles and political risk (yes that’s what it is).

  4. @Bubblebustin,
    >renouncing US citizenship will be out of reach for a lot of people now

    If they can’t afford to drop $2350 then the US government won’t do anything to them. Not I said ‘can’t afford’. That’s different from say ‘unpleasant having to come up with the dosh’. The US won’t find out about these peoples accounts. 300% of their account balances for failing to file is peanuts. It’s got to cost tens of thousands of dollars to start an audit. They won’t really have missed paying any tax.
    Sure they could really owe millions in informational fines but even the IRS can’t take what you don’t have.
    It would also look real bad. You see the less money you have the better a person people think you are.

  5. I agree, Neill, the US is shaking the bush for loose or low hanging fruit – or the really big fish that make it worth their while catching. But that’s not my entire point. There are going to be a lot of entrapped angry people with no real political means by which to make change. It’s blatantly clear that no one’s listening to us as the situation only gets worse.

  6. Sad comment….

    10:09 am August 31, 2014
    Steve wrote:
    I am a born and bred in the US American, who has served the US in uniform, and who for reasons of work ended up living in Asia and for reasons of love and work ended up staying. I have been in Asia now for almost 20 years and after a very long and entailed process, I managed to acquire citizenship in the country of my residence. My move to Asia had nothing to do with taxes or tax evasion, and for years I suffered with paying taxes in both the country of my residence as well as the USA, and filing FBAR forms. I am a good citizen, in both countries, and tried to stay in compliance at great personal cost to me. The complexity of US taxes meant I have always had to use a Big 5 accountancy firm, because I own a small professional business. But today, I have had enough. FATCA now makes it impossible to have any semblance of a ‘normal’ life financially living overseas, and Citizenship Based Taxation (CBT) and what can only be called idiotic tax rules means that I cannot run my business and be competitive with my competitors not burdened with the pain and cost and negative effects of FATCA and CBT.

    I resent how the US government treats me, and all overseas US citizens. No developed country in the world treats its expat citizens as poorly as the US. It is clear to me, sadly, that the only thing I am good for in the US government’s narrow mindset is a source of money – like a cow in a pasture with the brand ‘US Government Property’. I get absolutely nothing for the money I send the US from overseas . Sadly, and truthfully, I can say that while I love America and always will love America, I absolutely detest the Obama Administration for literally screwing Americans living abroad, and for the Democrats for throwing salt on the wounds by passing FATCA Instead of doing the moral and right thing and changing CBT to Residence Based Taxation, and making FATCA apply to only US Citizens and Residents LIVING IN THE USA, the Obama Administration and the Democrats just keep forcing a square peg in a round hole..

  7. Here’s another good comment at the WSJ:
    http://blogs.wsj.com/totalreturn/2014/08/30/government-fee-to-give-up-u-s-citizenship-is-raised-fivefold/tab/comments/?sort_order=desc

    12:17 pm August 30, 2014
    disgustedcitizen wrote:

    Here was my comment to the consulate:

    To Whom it may concern,

    I am appalled and angered that the US government paper pushers have decided to up the fees for people seeking to renounce their citizenship. I looked at the fee schedule posted on the website and no other fees were increased by so drastic a measure. These fees went up over 400 percent! Hundreds and maybe thousands of people in Canada alone are waiting for their appointments and now are faced with this unreasonable and shocking surprise. How does one budget for a 400 percent increase in less than a month? Even landlords must give their tenants more consideration when increasing their fees. If, as you suggest, the increase is to cover costs and reduce the backlog then A) you are imposing a monetary deterrent to stop people from exercising their right to determine their own citizenship and B) you are refusing to look at alternatives to your bureaucratic structure to make it simpler to renounce. You are hurting so many people who are caught in the citizenship web who can no longer afford to pay accountants thousands of dollars each year to prepare useless and complex tax forms when they OWE NO TAX. So people are caught in in an impossible situation. They cannot afford to prepare their tax, treasury and FATCA paperwork so they are forced to try to complete everything on their own and face draconian fines if they make a mistake. The US government has no idea of the fear it has instilled in its citizens outside the continental USA. We are not all rich tax dodgers as everyone down in the US has been led to believe. I am a college educated graduate and I cannot even understand the directions for most of the forms I have to fill out for my fairly common situation. The US government (IRS) offers absolutely no services for its citizens living outside the United States. The last time I called to get some help from the IRS, it cost me over a hundred dollars in long distance charges and I got a very polite lady in Alabama who did not even know where Canada was and had no idea what forms I was talking about. It costs me over $2000 per year in accountant fees just to tell the US government that I OWE NO TAXES. My elderly parents who are on a very restricted budget pay the same. They were hoping for the financial relief that holding only their Canadian citizenship would afford and now that is probably not an option anymore as the fees for renunciation would now cost them over $5000 Canadian. The US government has arbitrarily imposed citizenship on my children for free – ASSUMING that it was their and my intent to acquire US citizenship and now you make it almost impossible to get rid of it. How many Canadians are banging at the gate to become US citizens? You cannot compare our situation with the millions of poor oppressed people who are seeking citizenship and asylum in the USA, Canada, or the many other countries that enjoy peace and stability. Not everyone wants to be an American. We have the right to leave and determine our own citizenship and we should not be enslaved by the cost of renouncing. At the very least, the cost of renouncing should be comparable to the cost of acquiring citizenship – in my case FREE.

  8. How can they claim this is a “user pays” service to cover the actual costs when relinquishments are free? It obviously costs more to process a relinquishment. I can only assume that they believe that “renouncing” is an act that should be punished whereas relinquishing is more palatable to them.

    Sadly, many duals don’t have the option of relinquishing as they are born with 2 nationalities. So the homelander who leaves and takes up a citizenship elsewhere gets treated better than a dual who has never set foot in the US.

    I don’t get it?

  9. Osgood if they charged for a relinquishment. Clln they would likely need to amend 8 us code which would require Congress to get involved.

  10. They will just start to disallow relinquishment in every way that is allowable. Relinquishment is going to be a rare thing.

  11. @Mushi, I don’t think commenting directly to State will do any good. Firstly, I don’t think the decision came straight from state alone. I also think they are probably short handed and did not foresee this large amount of extra work. Expats were costing them money rather than making money for the U.S. as FATCA predicted it would.

    State can’t comment on FATCA as they don’t comment on domestic affairs even though this directly affects expats which state serves usually through fee based services. I could be wrong but, the impression I got when visiting the consulate was that the people working there were simply hard working folks trying to navigate this situation as best they could do under the circumstances. Some even seemed rather sad about it. I do not blame the officers or people who work at the consulates. They simply have no control over this. No, this decision came from the tip top. I am sure the invitiation to comment was done without really expecting that to matter very much at all.

    The problems being caused here had nothing to do with what State decided from the beginning until now. I wish they didn’t have to deal with it, I wish we didn’t have to deal with it. It’s just a big mess and nothing will be resolved until or unless FATCA is amended to mean accounts held where you do not reside full time. As many of you won’t do, I will not hold my breath.

  12. Raising the fee for renouncing US citizenship is a knee-jerk reaction from the Obama administration. The increase in renunciations is becoming an embarrassment and will soon be a political issue.

  13. @ Atticus
    “They will just start to disallow relinquishment in every way that is allowable. Relinquishment is going to be a rare thing.”

    I wonder if the last remaining allowable act of relinquishment will be treason. I can’t imagine retirees joining the army of a hostile nation but they could send a cheque I suppose. Trouble is, Canada follows lockstep with the USA as to whom it considers to be hostile so trying the treason gambit would be very tricky. A person wouldn’t want to end up in a Canadian prison in the process.

  14. @Embee, I doubt it will go that far and I certainly hope that as they originally did continue to realize there are still very good reasons for relinquishment. In fact I think that road should be open to kids born abroad who never even knew they were “American” At least something should be done in cases where people clearly need an easier way to give up citizenship than renouncing or maybe even relinquishing. I don’t think the U.S. realized it had so many accidentals and people who left as babies. I don’t think they even considered all those long ago border hospitals or kids born abroad to one U.S. parent who maybe didn’t want to be American if they knew about it at all. It still seems perfectly reasonable in those cases and even in the case of taking a second citizenship to make a path like a no fault divorce.

    These days though who knows what is to come. Five years ago I would have said my bank would never confiscate my spouses banking information and share it with anyone, ever. Not unless he committed a crime for which there was evidence and a warrant. Never would I have said that just living outside the U.S. was suspicion enough for all of this to happen. Yet here we are. Truly the U.S. ought to admit they were wrong on some of this, amend or get in line with the rest of the world and stop calling a checking account two blocks from someones home “off shore” Quite shocking that such simple and sensible steps can’t be taken rather than all this.

  15. @EmBee, in order to change the relinquishing acts, Congress would have to become involved and Congress couldn’t agree on how to fix its immigration problems so I wouldn’t worry overmuch about them successfully being able to do anything about emigration.

    Besides, Congressional action would attract too much media and the USG is already trying to downplay the exodus. The last thing they want is for real numbers to find their way to the press or for the American public to get even a glimmer of factual information about who we really are as opposed to the spin they’ve put out.

    I do think however that consulates will start demanding documentation of relinquishing upon taking citizenship in another country and people who have yet to complete the immigration process in their chosen lands need to be made aware that they should info their consulate before their oath ceremonies of their intentions and request the first available appointment to fill out paperwork after the deed is done, document the event and have it witnessed (preferably by the judge or official who administers the oath, make sure to have that document notarized – make copies – and perhaps send a pdf of the document to the consulate prior to the appointment.

    The only way they can deny a relinquishment is if you can’t prove your intentions and if you behave like an American after the fact (vote in US election, renews the passport and use it as your go to, etc.)

    I don’t see relinquishment going away. In fact with this fee hike, they’ve probably made people more determined to find and document a relinquishing act when they might have been resigned to simply renouncing.

    For Canadians, this is a win – in a strange way – because it highlights that the IGA is something that we, our spouses and our children can’t simply avoid by renouncing. The USG has done our Charter Challenge a favor by making it obvious that we are meant to either enslaved or punished by a foreign govt with the help of our own govt. Clear second class status and hardship due to our origins.

    This sucks. No doubt about it. And we should raise as big a media stink as we can in addition to raising holy hell with our political representatives but we knew this was coming. Now it’s here. We simply give them the finger and continue on with our plans.

  16. Just my luck. My appointment (set in May) is for October 2nd. Can’t wait to get this monkey off my back. I feel awful for those who don’t have the new fees to spare.

  17. If the US government truly believes that a fee-hike for renunciation of citizenship is warranted due to the self-perpetuating enormous cost of processing the forms then, surely, a fee should be charged as Americans enter the polling booth. (I imagine it costs a great deal to run an election.) Renunciation is a right — no more, no less, — than the right to vote. If rights in the 21st century are to be extended only on a user-pay basis than the same should apply to all rights.

    Of course, this scenario is ridiculous. In reality, like voting, expatriating is a right that the government MUST allow and MUST therefore provide the mechanism, at its cost, for any American to do so. If it’s costs are too great it is up to the government to find a way to make it cheaper.

    “I cannot consent to pay for a privilege where I have intrinsic right.” — Ralph Waldo Emerson (America’s 19th century “philosopher-laureate”) from his essay on “Self-Reliance”. The last line of this essay is: “Nothing can bring you peace but the triumph of principles.” Indeed.

  18. Hat tip to the Reddit hive mind for pointing out this song:

    https://www.youtube.com/watch?v=S7Jw_v3F_Q0

    Well, let me tell you of the story of a man named Charlie
    On a tragic and fateful day
    He put ten cents in his pocket, kissed his wife and family
    Went to ride on the MTA

    Well, did he ever return?
    No he never returned and his fate is still unlearned
    He may ride forever ‘neath the streets of Boston
    And he’s the man who never returned

    Charlie handed in his dime at the Kendall Square station
    And he changed for Jamaica Plain
    When he got there the conductor told him, “One more nickel”
    Charlie couldn’t get off of that train

    But did he ever return?
    No he never returned and his fate is still unlearned
    He may ride forever ‘neath the streets of Boston
    He’s the man who never returned

  19. @NotThatTara
    >Unfortunately, we have seen some U.S. citizens erroneously denied bank accounts or being forced to
    >close existing accounts.

    I wonder what they think the error is? Bank says it doesn’t want to deal with the mess so it terminated the customer. Tells you a lot that they even advance this argument.

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