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:
Article 15.
- 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.
How ironic that the US talks of building walls to keep people out and hyperventilates about people coming to give birth. While imposing their citizenship on others who are unwilling to keep it and have a hard time scaling the Berlin Wall of exit forms and CLNs.
But I have the answer. In this day of technology and information exchange, I hereby propose a passport exchange. People could download an app and find a buddy to exchange passports with. Those who don’t want their US citizenship could give their passport to someone who does. They might even be able to acquire another passport in exchange. Ideally birthplace exchange would also be possible. Want to have a “New York” birthplace? I’ll happily give you mine!!!
@Fred, maybe “donate” ones US Nationality to a refugee.
@Petros,
re; “Well damn, if I had not encourage so many relinquishers to go and pick up a free CLN, this might not have happened.”
You and the other IBS originators did us all such a great favour by educating us on our range of options and how to exercise them. It was from here that I learned what I needed to know in order to be free of the heavy burden US citizenship became overnight – once I learned about US extraterritorialCBT, FBAR, OVD and then FATCA. I slept so much better once I relinquished.
Many of us benefited greatly from your and other IBS posts about relinquishment (and so much more).
Very grateful always. Thank you!
Gladdens us to see you here again.
“How about the Harper Government providing a tax credit always equal to the State Dept fee?”
Bad move. It would still make Canadian taxpayers pay tribute to the US.
Besides, among the people who most badly need to renounce are those who have zero tax payable in Canada as well as zero to the US.
“The US Government is so deliberately spiteful.”
Yes.
“Whilst all Governments across the world provide their citizens (and locally-born non-citizens too) with the necessary financial liberties to enrich themselves overseas as well as the image of their homeland”
No, quite a lot do not do that. Even though none other than Eritrea and its friend impose ET, quite a lot prevent their citizens (and locally born non-citizens) from going overseas or rehabilitating an image of their homeland.
After thinking for a while, I guess a lawsuit against US Department of State could be brought in US District Court for the District of Columbia, because the place where the action occurred (the decision to deny issuance of a CLN) would be in the District of Columbia.
@Neill , thanks for pointing that out. That wasn’t the intent of my language. I have corrected the post to make my intent more clear: almost all are honest, tax cheaters exist but are minority and are rich and poor, but IRS most likely aiming at the rich.
“almost all are honest, tax cheaters exist but are minority and are rich and poor,”
Yes.
“but IRS most likely aiming at the rich”
No. The IRS aims at the poor because the poor can’t fight back.
Inoue san I think you’ve been here longer than I have, but maybe you didn’t notice this posting:
http://isaacbrocksociety.ca/2013/04/27/gao-report-reveals-ovd-minnows-paid-up-to-129x-more-in-penalties-than-in-tax-owed/
Besides, the IRS loves to penalize people who don’t owe any tax at all. The IRS loves even more to penalize people who overpaid because the IRS gets to keep both the overpayment and the penalties.
@Allison I actually am considering testing that out — suing the State Department on behalf of my child (who would be affected). I’m consulting with a human rights / immigration / naturalization lawyer based in D.C. tonight.
(Don’t get too excited; nothing has happened yet)
Eido Inoue: Best of luck with your D.C. consultation. We’re all looking forward to hearing your developments. The renunciation fee is definitely a human rights abuse and defies U.S. law which forbids obstacles being put in the way of people’s right to renounce. Thank you for creating this thread!
@Norman Diamond
“No, quite a lot do not do that. Even though none other than Eritrea and its friend impose ET, quite a lot prevent their citizens (and locally born non-citizens) from going overseas or rehabilitating an image of their homeland.”
I beg to differ.
Example 1
Someone’s homeland cannot offer him opportunities (e.g. an unemployed engineer in Greece), so he moves to another country with opportunities (e.g. Germany). His homeland will not hound him for taxes in his new country due to residence-based taxation. Meanwhile, he might send remittances to support family back home. He might save up to purchase a home in his homeland after working 10, 20 or 30 years. He might simply settle down in his new country. At the end of the day, he is not disadvantaged in any way compared to his middle-class compatriots back home as he is free to move anywhere to improve his situation.
Example 2:
Someone’s homeland is a high-tax jurisdiction (e.g. a shipping tycoon in Greece), so he moves to a low-tax jurisdiction (e.g. Switzerland). Because he is wealthy, his homeland will attempt to restrict his financial freedoms as protectionist measures.
It is a matter of perspective. Although I fall under Example 1, my American birth subjects me to foreign regulations as per Fatca. Meanwhile, my homeland has never bothered me about my finances here.
@Eido Inoue
Yes, good luck with this – you’ve certainly got our attention now!!! Let us know if you need help of any kind should you decide to go ahead.
@Duality – At the end of the day all everyone wants is a level playing field vis-à-vis other citizens residing in your country.
The same tax reporting, the same taxation, the same opportunities and disadvantages without the US Government sticking their nose in. Full stop.
With the Facebook ruling from the ECoJ yesterday, I’m more convinced a European Court would be more sympathic to our plight and strike down the IGAs.
Another thought would it be possible to get an injunction within the EU arguing FFIs are private institutions and transfer of banking account data to an untrustworthy US Government is counter to EU privacy laws? That ruling may affect EU bank’s ability to transfer data directly to the IRS and having the IGAs struck down by the ECoJ would make it legally tougher for FATCA to operate within the EU as the US Government wishes.
A legal expert should look at this closer.
“Whilst all Governments across the world provide their citizens (and locally-born non-citizens too) with the necessary financial liberties to enrich themselves overseas as well as the image of their homeland”
‘No, quite a lot do not do that. Even though none other than Eritrea and its friend impose ET, quite a lot prevent their citizens (and locally born non-citizens) from going overseas or rehabilitating an image of their homeland.’
“I beg to differ.” … followed by a single example of a country that does allow their citizens to go overseas.
Besides Greece, I could also name a lot of countries that do allow their citizens (and locally born non-citizens) to go overseas. That lot is not “all.”
There are a lot of countries that do not allow their average citizens (and locally born non-citizens) to go overseas. Not as many as there used to be, but there are still a lot.
Wikipedia’s article gives prominence to a historical section but later sections are more current.
https://en.wikipedia.org/wiki/Illegal_emigration
New post here about the imposition of fee to relinquish:
http://blogs.angloinfo.com/us-tax/2015/10/07/fee-hike-for-clns-documenting-loss-of-us-citizenship-by-relinquishment/
Thank you for sharing that @Eido Inoue. Will be interesting to hear what the lawyer says.
I just received a response from the Department of State on my FOIA request from May 2013, asking for the number of CLNs issued each year. After 2.4 years, their response is that I should count the names in the Federal Register lists. Others had similar responses so this was expected.
I have another pending request from October 2013, asking for the number of cases of loss of nationality recorded in the Consular Workload and Statistics System (CWSS). Since this request was sent 5 months after the first one, I expect a response in March 2016. But I don’t think they will release the data.
Thank you for pursuing that @ Shadow Raider, and keeping us posted. It is really arrogant of them to point you to the Federal Register – about 29 months later. If that was the answer, why did it take almost 2.5 years or so to issue it?
@badger, Because the Department of State has a huge backlog of FOIA requests, and it processes them in the order received.
Well that’s BS. Anyone who renounced and didn’t show on the name and shame list that year can tell you that. Like me.
Why am I not surprised.
@ Norman Diamond
Yes, I now see your point; “many” ought to replace “all” in that statement. Thank you for pointing this out.
The circumstances of each and every expat of all nationalities around the world really do vary, so there is no way for me to list all possible situations. My point is that people move around the world for different reasons. At the end of the day, we normally fulfill our tax obligations wherever we decide to reside, without being hounded by our homeland governments. The American precedent of double taxation is ridiculously awkward (to say the least). I am not the right person to elaborate on this topic because I am still trying to understand it myself.
@Don
“A legal expert should look at this closer.”
I am hoping that Sophie in ‘t Veld could co-ordinate this at Brussels, as I have neither the money nor the influence to do so at this end. I am still wondering how to pay $2,350 to officially relinquish a useless citizenship. A month of starvation and arrears? This is the very unfortunate reality for some of us here in (high-tax) Europe.
“The American precedent of double taxation is ridiculously awkward (to say the least).”
It’s a human rights violation. The US proved that by sponsoring a UN resolution that condemned Eritrea for copying part of the US’s policy.
“I am not the right person to elaborate on this topic because I am still trying to understand it myself.”
You’re reading the right site ^_^
@Duality – Legal Aid may be available for such a challenge. A human rights group in London told me that sometimes Legal Aid is granted in such cases. It’s a bit of a long shot but worth looking into.
Has anybody refused to pay the new fee of 2350$ for relinquishment? What would happen then?
On June 8th they told me to fill out the forms, told me I would have to appear personally, and that there would be no fee involved. On June 19th I sent the required document scans in by email. On Sept. 7th I inquired if they had received my documents and for when they could give me an appointment. That’s when they sent me an attachment in which the fee for renunciation of 2350$ was first mentioned (see post from Oct. 7th).
I feel cheated by them changing the fee structure in the middle of handling my case and wonder if they will sue me for the fee, even if I tell them now during the telephone interview tomorrow, that I do not need the CLN to retain my new German nationality. What a mess!