Introduction:

What follows is a post written by Helen Burggraf in October of 2023 discussing the U.S. government intention to reduce the fee for a CLN from $2350 USD to $450 USD.

It is reposted with the kind permission of Helen Burggraf.

BREAKING: U.S. gov’t at last moves in direction of lowering renunciation fee

By Helen Burggraf

In what some expat groups and individuals are already hailing as a potential breakthrough, the U.S. State Department is seeking comments on its plans to reduce by almost 80% the basic fee it currently charges U.S. citizens for processing their requests to expatriate.

In a notice dated today [Oct 2] and posted on the Federal Register,

https://www.govinfo.gov/content/pkg/FR-2023-10-02/pdf/2023-21559.pdf

the State Department says it is “proposing to amend” the fee from its current $2,350 to $450, in response to concerns that “members of the public have continued to raise” since the fee was increased to the current amount from $450 in 2014.

It says that it is proposing to do this in spite of the fact that the lower amount has only ever represented “a fraction of the cost of providing” the consular services involved in processing a CLN (Certificate of Loss of Nationality).

The State Department said it is accepting comments on the matter from the public until 1 November.

Americans currently interested in renouncing their citizenships had been wondering for months whether the government would go ahead with its intention to lower the fee, which was first announced by the State Department on Jan. 6.

That announcement came days before a U.S. District Court judge in Washington, DC had been scheduled to hear oral arguments in a long-running challenge over the U.S. government’s citizenship renunciation regime – including the fee – that had been brought by a group of so-called accidental Americans, known as L’Association des Américains Accidentals (AAA).

A group of people holding signs

Description automatically generatedAccidental Americans, led by AAA founder Fabien Lehagre, demonstrating in Paris during Donald Trump’s visit there in 2018

Accidental Americans are citizens of countries other than the U.S. whom the U.S. considers to be U.S. citizens as well, even though they may not be aware of it, but because of the United States’ citizenship-based tax regime, are therefore deemed by the U.S. to have tax reporting (and potential tax-paying) obligations as long as they live, even if they never set foot in the U.S.

Such American citizenship is normally the result of having been born in the U.S. to non-American parents who returned to their own country in their offspring’s infancy or early childhood, or having been born abroad to at least one U.S. citizen parent.

Concern the reduction
wouldn’t happen

Concern that the fee might never be reduced began to grow earlier this year as months went by, and there was no further word from the government about the proposal to do so. It grew still further after the DC court dismissed the AAA’s case in August, citing a lack of jurisdiction in the matter, and noting that “time” had “whittled away the plaintiffs’ live claims” in the matter.

https://casetext.com/case/lassociation-des-americains-accidentels-v-united-states-dept-of-state-2

(Specifically, the court noted that seven of the 11 plaintiffs involved in the case had successfully managed to renounce their citizenships, while the four others lacked standing, either because they didn’t request or failed to attend a renunciation appointment with the U.S. consular officials who handle such matters.)

Wealthy expats still on the hook

While the reduction in the cost of obtaining a CLN (certificate of Loss of Nationality) to $450 will be widely welcomed by most expatriate and accidental Americans looking to give up their U.S. citizenship, those with a net worth greater than $2 million, or who have an average annual net income for the past five years of $190,000 or more, will still have to pay an “exit tax”.

This is based on the value of all your property, based on what it would be worth if such assets as property were to be sold at the point of expatriation. Long-term resident Green Card holders can also be obliged to pay this exit tax, American tax experts say.

Also potentially included in the exit tax, according to Toronto-based lawyer and expatriation expert John Richardson, would be any non-U.S. pensions the expatriating American happens to have – even though their U.S. pensions wouldn’t be.

Chances it might not be approved

Richardson and other campaigners for fairer tax treatment of American expatriates say they are reasonably certain that the reduction in the renunciation fee, to $450, will go ahead, as it was presented in court as a matter of fact, but they weren’t able to say when it is likely to happen.

Sources at the State Department didn’t immediately respond to requests for comment.

For Fabien Lehagre, the Paris-based founder of the AAA (who is himself an accidental American), the State Department notice published today represents “a massive relief for accidental Americans, as well as our fellow Americans living abroad, especially given the daily challenges they face, due to the far-reaching FATCA law.

“Rest assured, I intend to make it even more affordable,” Lehagre added, without giving further details.

A PDF version of this post is here:

BREAKING; U.S. gov’t at last moves to reduce renunciation fee

John Richardson – Follow me on X.com @ExpatriationLaw