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Fee for Renouncing United States Citizenship Increases Significantly

September 11, 2014 (1 min read)

"On August 29, 2014, the U.S. Department of State (“DOS”) published an interim final rule in the Federal Register, which raised the fee for processing renunciations of United States citizenship from US$450 to US$2,350, a 522.22% increase. This new fee became effective on September 6, 2014.

The obvious reason for this fee increase is to discourage dual citizens from renouncing their United States citizenship. During the past two years, renunciations of United States citizenship have increased significantly.

Every quarter, the U.S. Department of the Treasury publishes the names of all individuals who have expatriated. For the first two quarters of 2014, the total number of individuals who expatriated was 1,577. The total number of individuals who expatriated in 2013 was 2,999. In 2012, the total was only 932.

It is widely believed that this increase in expatriations is due to the United States’ aggressive global tax reporting obligations, which includes the Foreign Account Tax Compliance Act (“FATCA”). Among other things, FATCA requires foreign financial institutions and U.S. withholding agents to implement new procedures for tax information reporting and withholding, account identification, and documentation. The objective of these procedures is to identify U.S. persons who are evading U.S. tax obligations using financial accounts held outside of the United States.

The rush to expatriate has created backlogs for renunciation appointments at United States consular posts in Canada. As a result, it is currently not possible to schedule a renunciation appointment until the beginning of 2015.

Many of these proposed renunciants are Canadian citizens who believed that they had lost their United States citizenship years ago. However, as a result of FATCA, they have recently obtained formal legal advice and discovered that they are still United States citizens.

Individuals who intend to renounce their United States citizenship should be aware that, as a result of 1996 amendments to the Immigration and Nationality Act, a former U.S. citizen who renounces United States citizenship (on or after September 30, 1996) for the purpose of avoiding U.S. taxation will be considered inadmissible to the United States. ..." - Henry J. Chang, Sept. 2014.