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

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

1. American Citizens Services at the US Embassy in Seoul tweeted about the fee hike
   https://twitter.com/SeoulCONS/status/506594004322889728

   Their Facebook post on the same topic got 20 shares

   Important Notice – New Application Fee

   The consular fee for application to renounce U.S. Citizenship will change from $450 to $2,350 on September 12, 2014. All applicants must pay the fee on the day of their follow-up interview.

   So I guess they’re still using the BS two-interviews-on-two-separate-days system. On the bright side, most people in Korea would be relinquishing rather than renouncing (people who naturalise/restore citizenship can submit their proof of loss of foreign citizenship up to one year later, though I think people who want to become officers in the military have to submit the proof of loss beforehand).

2. “#EconomicPatriotism” is the #BerlinWall—Rebuilt #fbar #FATCA http://bit.ly/1w1baDi

3. Probably will do no good at all, but I just filed the following comment on the fee increase:

   I object to the raising of the consular fee for administration of a renunciation of United States citizenship from $450 to $2,350. I am a lawyer who has dealt with many renunciations in London over the years. My reasons for objecting are:

   1. I find it hard to believe that the provision of this service actually costs $2,350 per renunciant. That represents some 17 hours of attention at the $135 hourly rate. The right approach to the problem of having to administer so many more renunciations than previously must be to reduce the paperwork and bureaucracy involved, rather than increase the fee. These days, renunciants generally know what they want to do and what the consequences are; all this consular attention could be better directed to young or potentially mentally unstable applicants.

   2. A fee as disproportionately high as this one is actually a deterrent to expatriation. It is a recognized human right to leave one’s country. The United States is the only country other than Eritrea which imposes its taxes on citizens who reside outside the United States on the same worldwide basis as on those who reside within it; hence, it is only US citizens who are forced to renounce citizenship in order to ensure that they are subject to worldwide tax only by the countries where they live and work and from which they receive government services. The stated objective of Congress in the expatriation tax arena was to make expatriation tax neutral. Congress clearly has not done so and the rhetoric coming from Congressional leaders on renunciation is simply hostile. This State Department increase can be perceived (reasonably, I believe) as an attempt to stem a rising tide of expatriations. Why cannot State ask Congress to address the question of why so many people now wish to expatriate, rather than just blindly raise barriers to it happening? If the objective is actually to deter expatriation, the fee increase may well be counterproductive. It is not unreasonable to expect people to adopt the attitude that, if the fee is now four times what it was when it was first set, it is better to expatriate now, before the fee is 8 times what it was when it was first set.

   3. There is an unjustified perception that people who renounce citizenship are rich tax dodgers living lives of luxury in tax havens. In fact, they generally are not. This fee will be a burden for two particular groups of Americans who live outside the United States. The first are young people, who are beginning to learn through the publicity surrounding FATCA and the Swiss banks that their American citizenship will subject them to lifelong tax obligations to the United States, a country with which most of them have had little or no contact other than because of their birth citizenship. These young people are increasingly aware that they cannot choose freely where they wish to live and what they wish to do if they start out already tainted by burdens placed on them, their employers, their bankers and their partners based solely on their United States citizenship. The second group of people who will find the new fees a burden are the large numbers of ordinary people who are reaching retirement. They are not living in tax havens, but in ordinary high-tax countries like Canada, the United Kingdom, and Australia. Again, the publicity surrounding FATCA and the Swiss banks has made them aware that they may not have been completely compliant with their US tax obligations over the sometimes 40 or 50 years they have been living outside the United States. Their retirement savings are vulnerable to draconian penalties imposed by the United States because of these older people’s failure to report their very existence (not failure to pay tax owed). They want to renounce citizenship to simplify their lives and take advantage, if they can, of the legal retirement planning they have already put in place in the countries where they reside. For an elderly couple in this situation, a “price” of $4,700 for giving up US citizenship in their retirement years is very high indeed. Not many of them have that kind of nest egg.

4. @qm: thank you for doing that. Sadly, the State Department does not like anyone questioning their authority to run their little renunciation fiefdom however they want. For example, in 2010 an immigration lawyer (one of the partners of WA/BC-based Preshaw & Zisman) made the following very-reasonable comment about DS-4079:

   A U.S. citizen who wishes to Renunce or Relinquish should not have to wait 2 to 6 months to do so. The time frame for some consulates are in a walk-in mode but others require mailing in the forms; receiving correspondence from the consulate; waiting for an email from the consulate requesting that the applicant make an appointment; appointment date; and then waiting over 1 year for the CLN. Different consulates within the same country have different procedures. This should be standardized.

   In the meantime the applicant does not have proof of his renunciation; his U.S. passport has been stamped as void; but does not receive at administrative decision for one year. This is not acceptable.

   The Consulate should provide a date stamped copy of the application to the applicant to avoid issues at port of entry or as to provide proof for other matters.

   They dismissed it in precisely two BS sentences without any evidence:

   8. The 60-day notice for the current OMB approval for this information collection was published in the Federal Register Vol. 75, No. 118 / June 21, 2010, pages 35,118-35,119. The purpose of the Federal Register notice was to solicit comments from the public. Two public comments were received. The public comments were discussed but the consensus decision is to keep the content of the form as is.
   …
   Comment 2 – The second comment was from a person complaining about the renunciation process. The changes he recommended would make the process much more difficult instead of easier.

   The courts are the only way to force them to act reasonably.

5. @qm
   Great comment. Just one slight correction:

   ” It is not unreasonable to expect people to adopt the attitude that, if the fee is now four times what it was when it was first set, it is better to expatriate now, before the fee is 8 times what it was when it was first set.”

   The fee is actually now five times what it was (5.222.. to be exact). Thie increase was by 422%, but the fee itself has quintupled.

   Sorry to be nitpicky, but we shouldn’t make things look any less severe than they actuallly are.

6. @Eric. I know in my heart you are correct. It’s just that I can’t justify to myself not making the effort….

   @notamused. My partner is a financial type who has told me many times that I am mathematically challenged and who would thank you for the independent confirmation. 😉

7. Eric, I doubt that the consulates using the one meeting method are going to go back to two but they can’t very well acknowledge that in Canada it’s a one stop shopping thing as they are using the two meetings as part of their justification for the sticker shock.

   This is, in my opinion, a knee jerk reaction to two credible lawsuits, increased negative media attention and the UN human rights complaint.

   It is probably also due a bit to the steady thumping the White House has taken since spring on a host of foreign policy issues that are increasingly calling to question whether anyone there has any idea of what they are doing and finally, they have an election coming up in November. The Senate is at stake.

   It is only a matter of time until the real expatriation numbers come out and clearly their efforts to stem the tide via clogging haven’t worked. But as someone else pointed out, when people want out – they will do anything to make it happen.

8. I am not sure if you have read all comments at WSJ, but I highlight this one from Steve…

   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.

9. On another note, Phil Hodgen has an Ask your expatriation question email he sends out from time to time. It, of course, is a tool to generate business, and I am not a shill for him, but….. he does provide some pretty good information for those that care to subscribe. (you can go to his website to sign up if you have an interest.)

   Here is his latest on the increase of fees but for brevity of time, I will leave out all the link references and bold type in his original.

   Hi from Phil Hodgen.

   You signed up for my “Expatriation Only” email list–every Tuesday you will get an email every week with a real question from a list subscriber and a real answer from me. Maybe there will be other emails, but they will only be from me, and only about expatriation-related topics.

   If you want to stop getting these emails, just click on the link at the bottom of the email and you will be instantly unsubscribed.

   If you want to ask a question, hit “reply” and send it to me. 🙂

   This Week
   People who renounce U.S. citizenship have faced the galling prospect of paying the United States government $450 as a fee for the privilege of renouncing their U.S. citizenship. It is increasing to $2,350 on September 6, 2014.

   The increased fee on renunciation will have a number of obvious and subtle repercussions, none of which seem particularly positive-for the country or for people who want to renounce their citizenship.

   For those of you thinking that expatriation is in your future, I suggest that you speed up the decision.

   Source Materials
   For the details, we turn to the Federal Register and the State Department’s announcement on August 28, 2014 of its intention to increase the user fees.

   For those of you who love the internet, the full text of the State Department’s action is online and the renunciation fee increase ruling is also available in PDF. For those of you who like paper (and I remember reading the paper Federal Register as a lad and being oddly thrilled by the exercise; it was far more fun than reading the Riverside Press-Enterprise, except of course for the comics page), go find the August 28, 2014 edition of the Federal Register.

   The official citation is Schedule of Fees for Consular Services, Department of State and Overseas Embassies and Consulates-Visa and Citizenship Services Fee Changes, 79 Fed. Reg. 51,247 – 51,254 (August 28, 2014) (to be codified at 22 C.F.R. Part 22). That’s for you Blue Book fans.

   Background
   I did my first renunciation under the current exit tax regime (and I use that word “regime” advisedly) fewer than three weeks after the current exit tax rule was enacted in mid-June, 2008. It was a simple matter of scheduling an appointment at the Embassy or Consulate of your choice. You showed up and did the necessary dance. No fee. That first appointment was in Bern, on a glorious early July day.

   In 2010, the State Department imposed a $450 fee for renouncing U.S. citizenship. The State Department was concerned that setting the fee too high might be a bad thing to do:

   The CoSS demonstrated that documenting a U.S. citizen’s renunciation of citizenship is extremely costly, requiring American consular officers overseas to spend substantial amounts of time to accept, process, and adjudicate cases. A new fee of $450 will be established to help defray a portion of the total cost to the U.S. Government of documenting the renunciation of citizenship. While the Department decided to set the fee at $450, this fee represents less than 25 percent of the cost to the U.S. Government. The Department has determined that it must recoup at least a portion of its costs of providing this very costly service but set the fee lower than the cost of service in order to lessen the impact on those who need this service and not discourage the utilization of the service, a development the Department feels would be detrimental to national interests. See 31 U.S.C. 9701(b)(2).

   Emphasis added. I guess the national interests in 2014 favor extracting the cost of a crappy used car from a would-be renunciant.

   User Fees in Federal Law
   User fees are not new, and the State Department has the legal authority to do what they are doing.

   User fees were authorized in 1951, when Congress passed a law authorizing Federal agencies to charge fees. You probably think that you pay taxes to support the government services you receive. Apparently not always. You, dear taxpayer, are a burden on the government and you should pay for the services you receive. Our now-dead politicians said it this way:

   It is the sense of Congress that each service or thing of value provided by an agency (except a mixed-ownership Government corporation) to a person (except a person on official business of the United States Government) is to be self-sustaining to the extent possible. [1]
   Congress authorized Federal agencies to charge user fees:

   The head of each agency (except a mixed-ownership Government corporation) may prescribe regulations establishing the charge for a service or thing of value provided by the agency. Regulations prescribed by the heads of executive agencies are subject to policies prescribed by the President and shall be as uniform as practicable. Each charge shall be-
   (1) fair; and

   (2) based on-

   (A) the costs to the Government;

   (B) the value of the service or thing to the recipient;

   (C) public policy or interest served; and

   (D) other relevant facts. [2]

   “Fair”
   Note that the user fees must be “fair”.[3] This is a wooly concept. It 2010, $450 seemed fair, considering the needs of people who requested the renunciation services. In 2014, $2,350 seems fair, considering the needs of the State Department. Those of you who are of a certain political bent will immediately think of Fox News and its “Fair and Balanced” tagline.

   The late Sparky Anderson would congratulate himself on how fairly he treated journalists. (Sound excerpt, SFW). Unrelated: if you want a giggle and you can tolerate a swear word or two, listen to Tommy Lasorda’s epic rant after a day that the Dodgers were not really doing a good job at the plate. (NSFW).

   Cost-based
   The user fee should be based on the cost of the service delivered, said Congress.[4] As you will see, the State Department leaned heavily on this as its justification for increasing the renunciation fee from $450 to $2,350. (Never mind that the government created the complexity it needed to justify the quadrupled fee increase it wanted.)

   Public Policy, Other Relevant Facts
   Then there are a couple more wooly factors that can be used to set the user fee: public policy or interest[5] and “other relevant facts.”[6] To me, this is much like the often-heard “Won’t somebody think of the children?” appeal asjustification for government action. (Youtube). At best these factors are ambiguous and susceptible to alternate interpretations, and at worst they devolve into self-justification for persons hell-bent on achieving certain results.

   Actually, User Fees Make Some Sense
   User fees actually make some sort of sense. Taxes are collected from you by force, while a user fee is paid by someone who voluntarily chooses to use a specific government service or receive a specific benefit. In some ways it makes sense for you to pay for the specific benefit you request from the government.

   In theory, user fees should be plowed back into the service for which they are paid-if you pay to enter a National Park, the money should be used to help the National Park itself, or at least the government agency that manages all National Parks.

   But . . .
   In reality, of course, money is fungible and a user fee paid to the National Park Service just means that Congress can reduce that agency’s funding from general tax revenues and spend the money elsewhere.

   And in further reality, many Federal user fees just drop into the Federal government’s general fund. The default rule is that any money collected by any official or agent of the Federal Government must immediately go into the Federal government’s Giant Bucket o’ Cash:

   Except as provided in section 3718(b) of this title, an official or agent of the Government receiving money for the Government from any source shall deposit the money in the Treasury as soon as practicable without deduction for any charge or claim. [7]
   “I Created a Problem for You. Now You Pay to Fix It.”
   Let’s look now at the $2,350 user fee imposed if you want to renounce your U.S. citizenship. The State Department, of course, starts by pointing to its power to impose user fees.

   The State Department then tells us how it is going to compute the appropriate user fee: by using activity-based cost accounting methods. To the best of their ability, the State Department will compute what it actually costs to deliver the service of relieving you of U.S. citizenship, and charge you that fee. Here is what the State Department says about the cost of handling a renunciation case:

   The [cost analysis prepared by the State Department] demonstrated that documenting a U.S. citizen’s renunciation of citizenship is extremely costly, requiring American consular officers overseas to spend substantial amounts of time to accept, process, and adjudicate cases. For example, consular officers must confirm that the potential renunciant fully understands the consequences of renunciation, including losing the right to reside in the United States without documentation as an alien. Other steps include verifying that the renunciant is a U.S. citizen, conducting a minimum of two intensive interviews with the potential renunciant, and reviewing at least three consular systems before administering the oath of renunciation. The final approval of the loss of nationality must be done by law within the Directorate of Overseas Citizens Services in Washington, DC, after which the case is returned to the consular officer overseas for final delivery of the Certificate of Loss of Nationality to the renunciant. These steps further add to the time and labor that must be involved in the process. Accordingly, the Department is increasing the fee for processing such requests from $450 to $2,350. As noted in the interim final rule dated June 28, 2010 (77 FR 36522), the fee of $450 was set substantially below the cost to the U.S. government of providing this service (less than one quarter of the cost). Since that time, demand for the service has increased dramatically, consuming far more consular officer time and resources, as reflected in the 2012 Overseas Time Survey and increased workload data. Because the Department believes there is no public benefit or other reason for setting this fee below cost, the Department is increasing this fee to reflect the full cost of providing the service. Therefore the increased fee reflects both the increased cost of the provision of service as well as the determination to now charge the full cost.
   For those of us on the outside, it is an interesting glimpse inside the bureaucracy. You can also get a glimpse into the State Department’s procedures for renunciation by reading the Foreign Affairs Manual’s relevant rules on the renunciation process. (PDF).

   Of course, the Federal government created all of the work for which you must now pay $2,350. This is an amusing variation on Parkinson’s Law (“work expands so as to fill the time available for its completion”). Let’s phrase it this way:

   A bureaucracy expands the work required by the users of its service to justify the user fee it charges.
   And of course this is merely a variant of Pournelle’s Iron Law of Bureaucracy.

   Resistance is Futile
   Whatever your feeling about the $2,350 user fee imposed on citizens who wish to renounce, we can’t fight City Hall. Or, as St. Paul heard after falling to the ground, blinded by a light greater than the sun, you can’t kick against the pricks. [No, it doesn’t mean what you want it to mean. Go read the linked web page to see that “kick against the pricks” is an ancient idiom referring to an ox goad.]

   User fees can be imposed by the State Department. They can make up work and justify its necessity. [Two appointments? Is that really necessary?] Further, the statutory language that Congress gave us means that the State Department can set the user fee as it wants, and reverse-engineer the self-justification for the user fee as it needs to.

   As The Borg would say, resistance is futile. You must pay.

   Impact on the Government
   We’ve looked at the user fee-why it exists, why it can be imposed, and what causes it to be increased to the cost of a nice (not great) mountain bicycle. Let’s now look at the impact of the State Department’s actions. The new user fee on renunciation is a rock dropped into a pond. Let’s talk about the ripple effects.

   More Money for Uncle Sam
   The State Department will collect more money. According to its internal accounting, it will now be charging enough money to compensate for the workload that it has. Careers will be enhanced. Merit-based promotions and raises will occur.

   No Introspection
   It is unlikely that anyone inside the State Department will look at the situation and ask “Is this work really necessary?” According to internal metrics, everything is operating smoothly. Costs are being properly paid for by the people using services.

   Oh, there will be some noise from overworked employees in random Consulates and Embassies, but these complaints will be dismissed by management. Excessive workload far afield will not be taken as an indicator of a broken process; rather, blame will fall where it always does. On the employee. Work harder, will ya?

   More relinquishments
   Proving that you relinquished your U.S. citizenship is a more difficult task than renouncing your citizenship. Yet now the price differential is substantial enough so that the State Department will face more petitions for relinquishment. After all, it’s free. The renunciation fee of $2,350 does not apply.

   Because the State Department’s cranked up the user fee for renunciation, its work load will skew towards providing services that cannot be covered by a user fee. Ironic.

   Want to Renounce? Your Four Choices
   For many U.S. citizens who want to renounce their citizenship, $2,350 is a big number. (Hint: this fee will be higher in a few years; I guarantee it.) If you fit into this category, you have four choices.

   Renounce and pay $2,350
   Your first choice is to proceed with renunciation and pay the new and improved $2,350 user fee. The expense might hurt, but you pay the money anyway.

   Why would you do this? Because the alternative (keeping your U.S. citizenship) is worse. It might be necessary to give up U.S. citizenship because of FATCA-driven banking issues. There might be political reasons-many countries do not allow dual citizenship and you have inadvertently backed into violation of your home country’s laws. There might be other reasons.

   By far the easiest reason for paying the $2,350 user fee is to simply look at the cost of preparing and filing U.S. income tax returns and the FBAR form every year. In a couple of years you will be dollars ahead. You will not be spending money on accounting fees anymore.

   I think this is going to be the most common reaction. Over a few years, the savings achieved by removing U.S. tax reporting from your life will more than pay for the painful $2,350 user fee.

   Claim You Relinquished Citizenship
   If the facts work in your favor, you can claim that you relinquished your U.S. citizenship. The primary one I have seen is that you acquired another citizenship with the intention of terminating your U.S. citizenship. This is harder to do, but certainly not impossible. This is a cunning strategy because the user fee does not apply, and the government must eat the entire cost of dealing with your application.

   Don’t Expatriate, Comply with U.S. Tax Law
   The third choice is to keep U.S. citizenship. Coupled with this will be the continued legal obligation to file U.S. tax returns and (if your income is high enough) pay U.S. income tax. There are a host of other U.S. laws that apply to you as well. The various sanctions rules will limit your ability to travel to or do business in various countries, depending on the political whim-du-jour in Washington DC. Sometimes whims last a very, very long time. Cough *Cuba* cough.

   Don’t Expatriate, Don’t Comply with U.S. Tax Law
   The path of least resistance is to keep your U.S. citizenship, but never re-enter the United States. Let your U.S. passport expire and do not renew it. Pull all of your money out of the United States. Stop filing U.S. income tax returns, and drop off Uncle Sam’s radar. In short, pull a DIY renunciation.

   I think this will happen rather more often than Uncle Sam expects. The increased user fee, along with other impediments to expatriation, will create a subtle culture of noncompliance. Among U.S. persons abroad, deliberate violation of U.S. law will become an acceptable level of ethics.

   The IRS, of course, will be outraged. So will Congress. Higher penalties will be created to discourage this behavior. FATCA agreements will be rolled out in an effort to fish for these people with dynamite.

   Except that it isn’t that easy. We are talking mostly about ordinary people. People with relatively small amounts of income and wealth. It is simply not cost-effective for the IRS to pursue small taxpayers for failure to file income tax returns and FBARs. The reality is that these people will get away with it.

   FATCA is designed to prevent DIY renunciation. Foreign banks must query their customers and determine if the customer is a U.S. person. The response, I think, will be simple. People will lie.

   More subtly, there will be a host of reasons why foreign banks and governments feel that it is not in their best interests to roll over and play dead for the benefit of the United States Treasury. In a multitude of overt, covert, and passive-aggressive ways, FATCA compliance will bog down. “The beatings will continue until morale improves” is not a long-term solution for Uncle Sam.

   I think this is the most likely solution that regular people will choose. Noncompliance (deliberate or unwitting) with U.S. tax law is how most Americans abroad deal with their tax obligations.

   People in this position are likely to be relatively unsophisticated. They will not necessarily be aware of the implications of their decision to choose a DIY renunciation. This is the cheapest and easiest way to go. They will ignore the risk. They are likely to be customers of very small financial institutions, rather than the Citibanks and the HSBCs of the world. They will be more likely to be able to avoid the “drain the ocean to catch the fish” approach to life that is FATCA.

   This creates a culture of deliberate noncompliance with U.S. law that is unhealthy for all of us. The IRS rails against “the rich” for a variety of real and imagined tax dodges. Yes, that’s bad. But so is deliberate noncompliance at any income range. Ethics are ethics, rules are rules. Anything that creates an incentive for some people to cheat will hurt all of us.

   Prediction: More Renunciations
   The increase in the user fee is a wake-up call. The government is slowly and steadily making it more painful to terminate their U.S. citizenship. For those people who are conscious and aware, the new user fee is another indicator that getting out now is better than waiting. I expect people to see this and favor renunciation now rather than later. Perversely, by making it more expensive to expatriate, the government has increased the incentive to renounce citizenship.

   The user fee will increase again. The fee went from nothing to $450 in 2010. It is going up to $2,350 now. “Unanticipated” is an adjective you will find in the lazy (or politically biased) journalist’s lexicon when describing economic statistics unfavorable to the reputation of the President supported by that journalist. You can fully anticipate higher fees in the future.

   Higher taxes for expatriation. Congress will write new, harsher tax laws punishing people who renounce citizenship. All you need to do is remember Senator Carl Schumer’s rants following Edward Saverin’s expatriation (“Tax them more!”). It is politically expedient to pound on people who give up U.S. citizenship.

   Travel restrictions. There is a recurring effort in Congress to allow the IRS to control your passport. The most recent effort was in Senate Bill 1813, from 2012. If you had a ” seriously delinquent” tax debt of $50,000 or more, your passport could be revoked. The definition of “seriously delinquent” would morph over the years, of course, and the $50,000 threshold might change. The usual thing to expect in tax would be that the scope of “seriously delinquent” might change from an actual hard tax debt that you unquestionably owe and the IRS has issued a lien (that is very concrete) to something more akin to a thought crime-the IRS thinks you might have a tax problem so let’s take a pre-emptive strike to ensure that the Treasury collects its money and you don’t run overseas.

   We know what you own, and we can ruin you. Transparency is such a nice word. It is eco-friendly and cuddly like a puppy. In the interests of transparency, the government wants to know everything that an American owns abroad. This troubles me. Yes, call me paranoid.
   These are things I can see coming over the horizon. For the risk-averse individual who is thinking of expatriation, getting out now is the best choice. Over time, legal and tax conditions will deteriorate. I think people who are on the fence will be encouraged to accelerate their plans to renounce citizenship.

   [1] 31 U.S.C. §9701(a).

   [2] 31 U.S.C. §9701(b).

   [3] 31 U.S.C. §9701(b)(1).

   [4] 31 U.S.C. §9701(b)(2)(A).

   [5] 31 U.S.C. §9701(b)(2)(C).

   [6] 31 U.S.C. §9701(b)(2)(D).

   [7] 31 U.S.C. §3302(b).

   Next Week
   Next Tuesday we will be back to questions and answers. Send yours in. Hit “Reply” and start typing. When you’re done, hit “Send”.

   Phil.

   .

10. @YogaGirl, an article the other day said that three-quarters of the renunciations were coming from Canada, UK and Switzerland which was causing the backlog. Both Canada and Switzerland use the one visit method so if the UK does too (I don’t know if it’s one or two) then the whole two visits causes extra expense scenario is out of the window.

11. @Medea Fleecestealer. The London Embassy issues a preliminary “informal” paper on which the expatriate signs off that, among other things, he or she does not need a pre-expatriation appointment. The appointment is made by submitting the documents by email. There is only one actual physical meeting which is apparently quite short and to the point. The alleged costs can’t really be justified on the basis of the London procedure. There is no appreciable backlog in London–the delay in getting an appointment is about 4-6 weeks at the moment.

    There will be some new delays, for sure, going forward when students and retired people don’t have a big enough credit limit on their credit cards or overdraft facility to pay the new $2,350 charge…but we’ll have to see what happens when some poor (literally and figuratively) person says he can’t pay.

12. @qm, don’t even need that here in Switzerland. They send you copies of the Oath and Statement of Understanding plus some other info about how serious giving up your citizenship would be, but you just fill in the Oath and Statement and send them back to the embassy. On the day they go over the two forms with you to make sure there are no mistakes, if not you pay your fee and then finally do the oath-taking. Out of the hour and 40 minutes it took me I reckon only half an hour was actually dealing with the embassy staff, the rest was just waiting time.

    Last heard though the waiting time at Bern was up to around a year. I don’t know if that’s come down at all lately. If it hasn’t then the fee hike is really unfair on those people, some of whom have been waiting months to renounce.

13. Many of these articles do NOT note that the fee was ZERO up until July of 2010. So, between July 2010 and September 2014, the fee went from ZERO to 2350. US.

    To me it is no coincidence that 2010 was also the year the HIRE Act which contained FATCA was passed.

14. Here twitterers….

    The State Department is asking, and you can reply…

    https://twitter.com/StateDept/statuses/505437067581874176 A real knee slapper!!

    How can we do a better job of serving the American people & improving the world? Learn how to submit your thoughts: http://go.usa.gov/ycDR

15. @ Medea Fleecestealer,
    I heard some news from Bern about 2 weeks ago (they didn’t post on the site, but sent a report in to the directory). “Another Lost Ambassador,” initial contact with the embassy was June 2014, meeting July 2014 and CLN arrived in August. I hope this is typical of Bern at this current time, but I don’t know.

16. @Pacifica777, that does sound like good news then. Hopefully it’s not just because everyone’s on holiday here in July and August.

17. I fully agree with Phil Hodgens:

    “Prediction: More Renunciations
    The increase in the user fee is a wake-up call. The government is slowly and steadily making it more painful to terminate their U.S. citizenship. For those people who are conscious and aware, the new user fee is another indicator that getting out now is better than waiting. I expect people to see this and favor renunciation now rather than later. Perversely, by making it more expensive to expatriate, the government has increased the incentive to renounce citizenship.”

18. Medea Fleecestealer, no surprise there. But eventually someone in the media is going to point out the inconvenient truths – like forcing 18 year olds to pay a huge fee that is on par with a semester of university tuition to dump a citizenship that they probably inherited is punitive and clearly old-school totalitarian. Or that forcing senior citizens to choose between bankruptcy and not eating for a few months is an over top reaction.

    Why no one in the US media has picked up on the fact that Canadians (aren’t we like the little step-brother they always wanted?) are willing to do anything to shed American citizenship, baffles me.

    They can crow all they want to about how people are fleeing civil worn torn countries and poverty to walk barefoot across the desert to be Americans but when people they wouldn’t mind sharing citizenship with don’t want to? That’s huge.

    Or maybe that is why the media in the US are ignoring this (because I am sure more than a few know about it). Canadians. Brits. Swiss. We don’t invoke (too many) American stereotypes about non-Americans. Our shunning them and their citizenship brings up too many questions about their values, government, class system, racism, sexism, militarism, hyper-religiousity – to name a few things. And it also brings up that pesky fact that the US is no longer the best place on earth to live (if it ever really was). Americans enjoy navel gazing but not this kind.

19. From Barrie McKenna, The Globe and Mail today: http://www.theglobeandmail.com/report-on-business/international-business/us-hits-citizenship-renouncers-with-hefty-fee-hike/article20308580/

    Abandoning citizenship is often a last desperate way for Americans living outside the U.S. to escape a lifetime of onerous tax filings.

    But it’s about to become a much costlier exit strategy.

    Citing “dramatically” increased numbers of Americans abandoning their citizenship, the U.S. State Department is raising its renunciation fee to $2,350 (U.S.) a person on Sept. 12, up from the current $450.

20. Calgary411, I like Barrie’s use of air quotes. It was almost like he was rolling his eyes at the State Department and mouthing, “drama queen much?”

21. Yoga Girl,

    !!!!!

22. Another:

23. The day will come when you can’t even buy it anymore.

24. pacifica777, is there a way to post images? My kid trashed his burned abroad thing because he knows now that he owes 2300 to a country he never lived in. It is on my facebook but it be would nice to post images for all to see.

25. @kermitzii

    “….because he knows now that he owes 2300 to a country he never lived in.”

    Well said. My kids, too.