The January 6, 2026 anniversary and a summary of this post:
January 6, 2026 marks the three year anniversary of the State Department promise to U.S. citizens. Specifically, the promise was to lower the fee to issue a CLN from $2350 to $450. It is now three years later and the fee reduction has not been achieved. I am not suggesting that the fee will never be lowered. Maybe the fee will be lowered. The process of lowering the fee is still “in the system”. As of late December 2025, RIN 1400-AF61, titled “Schedule of Fees for Consular Services–Administrative Processing of Request for Certificate of Loss of Nationality (CLN) Fee,” was in the Final Rule stage. This suggests that the fee reduction WILL become a reality. Yet, the failure to have lowered the fee suggests evidence of a continuing animus and indifference toward Americans abroad and certainly strengthens the arguments for renunciation.
On October 2, 2023 the State Department began the rule making process as described in the Federal Register.
The “rulemaking” process generated more than 800 comments . Generally the comments emphasized that the fee to issue a CLN was NOT the dominant problem. Rather the problem was the need for Americans abroad to renounce at all. Comment after comment linked renunciation to the difficulties of complying with US citizenship taxation and FATCA.
The claim that Americans abroad are being forced to renounce because of U.S. citizenship taxation and FATCA raises the question of whether these circumstances violate the constitutional principle in Afroyim v. Rusk. The teaching of Afroyim is that Congress is prohibited from engaging in conduct that results in the “forcible destruction of citizenship”. It is clear that the specific rules of U.S. citizenship taxation do force some (but not all) people to renounce. At the very least, the circumstance of U.S. citizenship, makes it unreasonably difficult for Americans abroad to live freely outside the United States.
Is the difficulty citizenship taxation per se or the specific rules of U.S. citizenship taxation?
Could citizenship taxation be retained but be changed into a method of taxation that is more like “Eritrean citizenship taxation” – only an excise tax or possibly a passport renewal fee? Perhaps the United States could look to “Eritrea” for an acceptable means to tax Americans abroad.
Anecdotal evidence makes clear that some people have delayed renouncing U.S. citizenship in the hopes that the fee for issuing the CLN will be reduced. Would a fee reduction trigger a stampede to renounce?
Those who do NOT wish to read further should (at the very least) read the comments from Americans abroad about why they are renouncing U.S. citizenship.
For those who wish to read further …
The complete post is lengthy, comprehensive and organized into the following parts:
Part I – Introduction and purpose
Part II: “Rulemaking” and the comments it generated
Part III: “Rulemaking” and the comments it generated
Part IV – The $2350 fee is the first of three “Exit Taxes”
Part V – The “comments” to the notice and what those comments suggest
Part VI – U.S. “citizenship taxation”, Afroyim and the “forcible destruction of citizenship”
Part VII – Why does the United States continue to abuse U.S. citizens abroad?
Appendix A – AI generated podcast summarizing the “notice” to reduce the fee for a CLN
Appendix B – Two recent podcasts discussing Afroyim v. Rusk
Part I – Introduction and purpose
January 6, 2026 marks a three year anniversary for Americans abroad. It is the date that the State Department announced its intention to reduce the fee to issue a CLN for U.S. citizenship relinquishment from $2350 to $450. Although the State Department DID (on October 2, 2023) initiate a “rulemaking” process (which attracted more than 800 comments), the $2350 fee remains the same. (Rulemaking is the policy-making process for Executive and Independent agencies of the Federal government. Agencies use this process to develop and issue Rules.)
What the $2350 USD is payment for (it’s not a fee to actually renounce)
The $2350 fee is NOT for the privilege of renouncing U.S. citizenship. Rather it is an administrative fee for the State Department to issue a CLN (“Certificate Of Loss Of Nationality”). A CLN is necessary for former U.S. citizens to prove to financial institutions that they are NOT U.S. citizens (and subject to the disabilities of U.S. citizenship). A CLN allows former U.S. citizens the same access to financial accounts afforded to all other residents in their country of residence. As the recent example of Fidelity reminds us, either actual U.S. citizenship or a U.S. birthplace, can mean that one is not eligible for accounts at various banks. All of this is the result of FATCA which came into force on March 18, 2010.
How did the proposed fee reduction come about?
The background to the announcement was described by me on my Citizenship Solutions blog.
Origins – 2020
Notice of intention to reduce the fee for a CLN – 2023
The Judge’s decision (which does NOT acknowledge a constitutional right to renounce) dismissing the lawsuit is here.
The background was also explained by Helen Burggraf at her American Expat Finance News Journal. A later article from Helen Burggraf is here.
(Interestingly the promise to reduce the fee also triggered a second lawsuit in which those who paid the $2350 CLN administration fee sued for a refund.)
Part II: “Rulemaking” and the comments it generated
A separate post describing the background to the State Department’s announcement, including the lawsuit against the State Department, will come later. The primary purpose of this post is to discuss the significance of the comments generated by the “rulemaking” process. The process generated more than 800 comments from affected individuals. Regrettably, three years after the announcement to reduce the fee to issue a CLN, the fee remains at the $2350 level!
The January 6, 2023 announcement from the State Department which was described as follows:
Introduction And General Context
On Friday January 6, 2023 the State Department announced its intention to reduce the administrative fee for issuing CLNs (“Certificates Of Loss Of Nationality”) for US citizenship relinquishments from the current $2350 fee to $450. Notably it was in 2015 that the State Department increased the fee from $450 to $2350.
The precise language found in the Declaration of Assistant Secretary For Consular Affairs Reena Bitter was:
3. Under 31 U.S.C. 9701, 22 U.S.C. § 4219, and Executive Order 10718, the Department has the authority to establish fees to be charged for official services provided by U.S. embassies and consulates. The Department intends to pursue rulemaking to reduce the fee for processing CLN requests from the current amount of $2350 to the previous fee of $450, as set in 75 FR 36522 on June 28, 2010. The Department will consider any necessary changes to this fee, as appropriate, in a future rulemaking.
http://citizenshipsolutions.ca/wp-content/uploads/2023/01/24-1-3.pdf”>24-1 (3)
Ms. Bitter was true to her word. On October 2, 2023 (nine months later) the State Department began a “rulemaking” process. Notice of this “rulemaking” process was published in the Federal Register on October 2, 2023. You are invited to read it here:
Click to access 2023-21559.pdf
The notice is long and comprehensive. It includes an interesting history of the evolution of the fees for issuance of a CLN. Buried in the text is an interesting nugget (see the first column on page 2 in the “Background” section”) which reads:
“The fee for CLN services is remitted entirely to the Department of Treasury; revenue collected from the fee for CLN services is not factored into the Bureau of Consular Affairs’ (CA) budget.”
The notice in the Federal Register is a long (but interesting) read. For those who are NOT inclined to read the Notice (I suspect most people), I have created an AI generated podcast which describes the content and relevance of the Notice. The podcast is available as Appendix A to this post.*
The $2350 paid to issue the CLN does NOT go to the State Department. Rather it goes directly to the Department of Treasury. The IRS is part of the Department of Treasury.
Part III – Status of NOT being a U.S. citizen vs. the proof of that status
The $2350 fee to issue a CLN is a fee to prove one’s status.
Notably the CLN is NOT what creates the status of no longer being a U.S. citizen. Rather it is merely documentation/acknowledgement/proof of NOT being a U.S. citizen. It plays the same role as a birth certificate, citizenship certificate, green card, passport or other certification of status.
At $2350 the CLN costs more than a citizenship certificate or even the government fee of $760 to naturalize as a U.S. citizen. It is difficult to understand the $2350 fee as being other than a punishment or deterrent to expatriation. At $2350 USD the fee to issue a CLN is more than three times the fee to naturalize as a U.S. citizen.
The $2350 fee to issue a CLN is in effect a warning that:
Although U.S. citizens may have a statutory right to expatriation, they will pay a hefty fee to seek documentation of their status as NO longer being American.
It is difficult to accept that $2350 reflects the administrative cost of issuing a CLN. It is an “Exit Tax” that applies to all.
Part IV – The $2350 fee is the first of three “Exit Taxes”
The three kinds of Exit Taxes triggered by citizenship relinquishment
Exit Tax 1: The $2350 fee is the first “Exit Tax” and is paid by all
The $2350 fee to issue the CLN is an “Exit Tax” applies to ALL people who wish to relinquish U.S. citizenship.
Exit Tax 2: The 877A Exit Tax is a second “Exit Tax” that is payable by those who are “covered expatriates”
The 877A “Exit Tax” is simply an additional “Exit Tax” that applies to some but not all U.S. citizens relinquishing U.S. citizenship. (Everybody pays the basic “Exit Tax” and “covered expatriates” pay an additional “Exit Tax”.)
Exit Tax 3: The 2801 “Covered Gift” Tax is a third tax designed to punish those receiving/inheriting from a “covered expatriate”
The 2801 “Covered Gift” tax is a tax that applies to the recipients of gifts or bequests received from former U.S. citizens made post renunciation. The tax applies to ALL gifts or bequests regardless of whether the subject of the gift existed at the time of renunciation. It is currently a tax of 40% of the value of the gift.
Part V – The “comments” to the notice and what those comments suggest
The Notice generated more than 800 public comments including this one (which is I think highly representative)
“For a bit of background, I am an American living in Canada. We moved to Canada in 1971. I am now a dual citizen. The current US tax laws for Americans living aboard are extremely punitive. Just filing an annual tax return and completing the FBAR each year is time consuming and makes no sense. I have not lived in the United States in over 50 years. The cost of this annual ritual is about $2,000 a year in accounting fees. It is not like I owe money, but I am still required to file my taxes in Canada and then file in the United States as well. I have tried using some of the free services available for Americans living aboard, but because I run a small business I need the help of an accountant. It is such a waste of money, especially as I get older and every dollar counts.
I am proud to be an American, but after a great deal of consideration, I have decided to renounce my citizenship. At this point in my life, I no longer need two citizenships. I believe that filing tax returns in one country is complicated enough. As I get older, I don’t need the hassle that goes along with holding two citizenship. I also find it insulting that I am required to pay $2400 to renounce, but at this point, I feel I no longer have a choice. I have written letters in the past. I don’t think anything will change in my lifetime, especially with the state of our Congress. It is embarrassing. It is beyond dysfunctional. At some point common sense will need to prevail.
Reducing the fee to renounce will certainly help some people, but in my case, it will be too late. I have my appointment in a few weeks. I don’t believe reducing the fee is the issue. In fact, I believe more Americans living aboard will apply to renounce when the fee is reduced. The punitive tax filing requirements are the issue. The United States is only one of two countries in the world that requires their citizens living aboard to file taxes in the United States as well. A change is needed. I support legislation that requires citizens living in the United States to disclose their world wide assets, but if you have lived abroad for most of your life and paid taxes in the country that you lived in, you should be exempt. It is just basic common sense.
Thank you for giving me the opportunity to share my thoughts.”
What is most striking about the comments is that:
While approving of the decision to reduce the fee, the coments strongly communicate the message that the fee to issue the CLN was NOT the primary issue. The primary issue was that people were renouncing at all. The comments also communicated that people were renouncing because of various aspects of U.S. citizenship taxation. Although citizenship taxation frequently results in the actual payment of additional tax, most of the commentors did NOT actually pay additional tax to the United States. Yet they were still renouncing. Specifically, they were renouncing because of an inability to comply with BOTH the tax laws of both the United States and their country of residence.
To put it another way, the comments were telling the State Department that:
Americans abroad were NOT renouncing because they wanted to.
Rather they were renouncing because they felt that they had to!
Furthermore, many of the comments were NOT saying that citizenship taxation per se was forcing them to renounce.
Rather the comments were saying that the specific rules of U.S. citizenship taxation were forcing them to renounce.
For many people:
The issue is NOT citizenship taxation per se. For example, Eritrea imposes a simple excise tax on its citizens abroad.
Rather the issue is the specific U.S. rules of citizenship taxation which impose very punitive taxation and penalty laden reporting requirements on non-U.S. income streams, assets and the necessities of life as described here and here.
All of the comments are available here:
https://www.regulations.gov/document/DOS-2023-0026-0001/comment
Part VI – U.S. “citizenship taxation”, Afroyim and the “forcible destruction of citizenship”
Does a requirement that effectively forces Americans to renounce their citizenship violate the constitution?
In 1967 Justice Black in Afroyim v. Rusk** (discussed here) wrote that:
Citizenship in this Nation is a part of a cooperative affair. Its citizenry is the country, and the country is its citizenry. The very nature of our free government makes it completely incongruous to have a rule of law under which a group of citizens temporarily in office can deprive another group of citizens of their citizenship. We hold that the Fourteenth Amendment was designed to, and does, protect every citizen of this Nation against a congressional forcible destruction of his citizenship, whatever his creed, color, or race. Our holding does no more than to give to this citizen that which is his own, a constitutional right to remain a citizen in a free country unless he voluntarily relinquishes that citizenship.
Does the punitive taxation of US citizens abroad result in the “forcible destruction of citizenship”?
I invite you to read as many of the comments as you can. They describe a world where (at least for those Americans abroad who are diligent about their U.S. tax obligations):
- Americans abroad are being forced to renounce U.S. citizenship.
- Justice Black’s decision in Afroyim v. Rusk should be interpreted to mean that Congress cannot impose a form of taxation on Americans abroad that (in effect) does force them to renounce?
As described in the following post, the United States imposes a more punitive form of taxation on Americans abroad than it does on U.S. residents.
The idea that the specific rules of U.S. citizenship taxation result in the forcible destruction of U.S. citizenship was developed here.
Those interested in a “deeper dive” into Afroyim are invited to listen to the podcasts included in **Appendix B.
Part VII – Why does the United States continue to abuse U.S. citizens abroad?
In 2011 it was possible to believe that the abuse inflicted on Americans abroad was an unintended consequence of the evolution of citizenship taxation. In 2026 it is quite clear that the United States is comfortable with its horrific treatment of Americans abroad. The United States is maintaining pressure on its citizens abroad to renounce U.S. citizenship AND to make it particularly and expensive for them to do so.
Since 2011 Americans abroad have done their best to communicate their plight in every way possible. This has included numerous comments to Congress and proposed legislative and regulatory fixes. What is most worrying is that any consideration of legislative change appears to be linked to ensuring that changes to the taxation of Americans abroad be revenue neutral. Significantly the LaHood Bill of 2024 has NOT proceeded because the cost of providing tax relief to Americans abroad has not been determined by the U.S. government.
In other words, the greater the cost to the U.S. Treasury of tax relief for Americans abroad, the less likely that change is possible. In the United States tax fairness is not and likely will never be the issue.
Furthermore, it’s become increasingly clear that:
It’s not that the United States doesn’t care about fairness to Americans abroad. It’s that they the United States doesn’t care that it doesn’t care.
The arguments for renouncing U.S. citizenship have never been stronger!
The case for the United States ending citizenship taxation and moving to residence taxation has never been more compelling!
Looking forward to your thoughts and comments.
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*Appendix A – Podcast summarizing the Federal Register of October 2, 2023 introducing the Rule Making process to reduce the fee for a CLN
**Appendix B – Recent discussions of the significance and meaning of Afroyim v. Rusk
With IRS Medic:
With Parviz Malakouti