Rina Bitter, the Assistant Secretary for Consular Affairs in the USA, wrote a declaration stating that “the Department intends to pursue rule-making to reduce the fee for processing CLN requests [renunciation of US citizenship] from the current amount of $2,350 to the previous fee of $450.”
Bitter also said that “the Department will consider any necessary changes to this fee, as appropriate, in future rule-making.” The Washington DC District Court was set to hear in-person oral arguments on January 9th.
The change has been particularly welcomed by ‘Accidental Americans’ – people born in the US who therefore have American citizenship but have little connection to the US during their adult lives – but applies to anyone who wants to renounce their US citizenship.
The usual reason for wanting to do this is the strict tax rules that continue to apply to Americans, even if they live outside the US for many years.
The Accidental Americans group founder and president, Fabien Lehagre said: “By lowering the fee to $450, the US government is showing that the right of voluntary expatriation is not to be trifled with and deserves the utmost protection.”
Nevertheless – the change has not yet been put into practice, and the court case was still ongoing as of January 9th, a fact that Lehagre acknowledged, stating that “time will tell how the government will formulate and develop the new fee.”
However, even with lower fees, renouncing American citizenship remains a lengthy and complex process, that for most people will involve paying a lawyer or accountant.
The United States is unusual in that it imposes tax responsibilities based on both residence and citizenship – so even citizens who have lived abroad for many years and have no economic activity in the US have to file an annual tax declaration to the IRS.
There are also certain limitations on US citizens who live abroad such as the FATCA law that make it hard for them to open European bank accounts and limitations on certain types of financial products such as pensions in Europe.
“Renouncing US citizenship is not as simple as scheduling an appointment at a US embassy or consulate, paying the applicable fee, and declaring that one does not want to be American,” explained international tax law specialist Alexander Marino. “There are many details to consider, and careful planning is essential.”
Set in 2010 to $450 to pay for the processing renunciation requests, the amount was later increased to $2,350 due to the need for “close and detailed case-by-case review,” according to Bloomberg Tax.
The Accidental Americans group is made up of European citizens who also have American citizenship – often without even knowing it.