The U.S. State Department just made a quiet but notable policy change that could affect Americans living overseas who are considering a major step, giving up their U.S. citizenship. Beginning April 13, the government will slash the fee required to renounce citizenship from $2,350 down to $450, an approximately 80 percent reduction.
Yes, the cost to walk away from American citizenship just dropped by nearly two grand.
The change was finalized through a rule published in the Federal Register and represents a return to the fee level that existed from 2010 through 2014. Back then, the cost of processing a renunciation was set at $450, a price that covered less than a quarter of the government’s actual administrative expenses.
Things changed in 2015 after a spike in renunciation requests. At the time, the State Department raised the fee to $2,350 in order to recover the full cost of processing the paperwork and consular work involved. That increase made the United States one of the most expensive countries in the world to formally renounce citizenship.
Now the department says it is intentionally moving away from the full cost model.
In the final rule, officials explained the reduction was meant to ease the financial burden on Americans living abroad who are considering renunciation. According to the department, the new $450 fee reflects a policy decision to charge less than the full cost of the service.
“In lowering the fee from $2,350 to $450, the Department has made a policy determination not to recover its full costs in response to concerns expressed by U.S. citizens residing overseas who seek to renounce their U.S. citizenship, but believe the current fee is prohibitively high or otherwise is unfair,” the rule stated.
The department also noted that the updated fee strikes a balance between recovering some government costs while not discouraging individuals from requesting a Certificate of Loss of Nationality, commonly called a CLN.
That certificate is the official document confirming that a person has formally given up U.S. citizenship.
Renouncing citizenship is not something that happens automatically. Under U.S. law, it must be done voluntarily and intentionally under Section 349(a) of the Immigration and Nationality Act. In most cases, individuals must appear before a U.S. diplomatic or consular officer outside the United States and formally declare their intention to renounce.
Once approved, the consequences are permanent.
Former citizens lose the right to vote in U.S. elections, cannot live or work in the United States without a visa, and no longer receive U.S. consular protection overseas. They are treated like any other foreign national for immigration purposes if they want to enter the country.
There can also be financial implications. Some individuals may still face U.S. tax obligations, including potential exit taxes depending on their assets and tax status at the time of renunciation.
One factor that has fueled renunciation discussions among Americans abroad is the Foreign Account Tax Compliance Act, commonly known as FATCA. The law requires foreign financial institutions to report information about accounts held by U.S. citizens, which has created compliance challenges for some expatriates.
The new lower fee will not change the serious legal consequences of renouncing citizenship. What it does change is the price of filing the paperwork to make that decision official. Whether more Americans choose to take that step remains to be seen.
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