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On Friday, the US State Department published a final rule in which it outlined a reduction in the fee needed to renounce US citizenship from $2,350 to just $450, a reduction of 80%.
The decision comes after several years of legal battles from representatives of mostly dual US citizens who felt it was extortionary and disproportionate.
The reduction was something the Department had claimed it intended to do since 2023, and now brings the fee down to an amount last seen in 2010.
For over 200 years, citizenship renunciation was free in the US. In 2010, the first-ever fee was instated at $450 at the same time as new tax reporting requirements on American citizens for foreign financial institutions. The Foreign Account Tax Compliance Act required all non-US foreign financial institutions to search their records for customers with indicators of a connection to the US, including records of birth or prior residency, and to report such assets and identities to the Treasury Department. FATCA also requires such persons to report their non-US financial assets annually to the Internal Revenue Service (IRS).
Then, in 2015, the $450 was increased to $2,350 to cover the administrative costs of the FATCA requirements, which in turn caused the number of people seeking to renounce citizenship to surge, CNN reported.
If the reader finds it strange to think that mere tax requirements would cause someone to give up their US citizenship, considered among the most valuable citizenship in the world, the fact is that the US and Eritrea are the only nations on Earth that collect taxes according to citizenship rather than residency.
As a result, the FATCA laws suddenly subjected thousands of people who had US citizenship, but few other ties to the country, to the rigid reporting requirements of the IRS which all Americans are so familiar with. For Fabien Lehagre, a French national who happened by accident to be born on US soil, that change subjected him to time-consuming, stressful, and expensive compliance processes, even though he didn’t even have a social security number.
Lehagre founded the AAA, the Association of Accidental Americans, in 2017 first to support those affected by FATCA, and then to help them either obtain the necessary information and SSN to comply with the law, or work to renounce their citizenship.
Described by one member of AAA as a “very burdensome process,” renunciation requires multiple in-person meetings and form-filling sessions at a US consular outpost before paying the fee and taking the oath of renunciation.
“This victory is the direct result of six years of relentless legal action and advocacy,” Mr. Lehagre said in a statement. “The Association of Accidental Americans welcomes this decision, which acknowledges the necessity of making this fundamental right accessible to all”.
Jefferson said it should be free
“FATCA has a huge impact on many people, particularly people who want to start a business, or young people seeking a loan,” one member of AAA said at one of the group’s conferences in 2018.
Another remarked that with the added scrutiny required of any bank or financial institution on their behalf, many were denied basic financial services, with one woman stating “we have become second-class citizens in France” as a result.
20 members of AAA representing 10 different nationalities filed lawsuits against the State Department in 2021 and 2023, arguing that the rule violates several constitutional amendments, such as expression and self-determination under the First Amendment, and Due Process under the Fifth, while also citing Founding Father Thomas Jefferson in their oral case.
Though not a legally-enforceable or binding document, Jefferson wrote in the Bill Declaring Who Shall Be Deemed Citizens of This Commonwealth, dated Virginia, June 18th, 1779, that he clearly considered relinquishing citizenship a natural right inherent to all men.
And in order to preserve to the citizens of this commonwealth, that natural right, which all men have of relinquishing the country, in which birth, or other accident may have thrown them… it is enacted and declared, that whensoever any citizen of this commonwealth, shall by word of mouth in the presence of the court of the county… that he relinquishes the character of a citizen, and shall depart the commonwealth; or whensoever he shall without such declaration depart the commonwealth and enter into the service of any other state, not in enmity with this, or any other of the United States of America, or do any act whereby he shall become a subject or citizen of such state, such person shall be considered as having exercised his natural right of expatriating himself, and shall be deemed no citizen of this commonwealth from the time of his departure.
AAA also cited protections against excessive fines under the Eighth Amendment. However, neither the citizenship renunciation fee, nor the Foreign Bank Account Reporting Act (FBAR), another burdensome piece of financial compliance law that affects dual citizens, have been found by courts to be an unconstitutional violation of the Eighth Amendment. Indeed, in response to the 2023 suit filed by AAA in the District Court of Washington, DC, Judge Tanya Chutkan ruled against both First and Eighth amendment protections.
At the time the AAA’s suit was rejected and appealed, the State Department had already issued notice of a rulemaking procedure to reduce the fee back to $450.
AAA’s official position is that the fee should be zero dollars, as it had been in the country for so long, and that the organization will continue to advocate for that outcome. WaL
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PICTURED ABOVE: United States Department of State headquarters PC: Agnostic Preacher Kid CC 3.0. via Wiki.
