Price to renounce citizenship (US) dropping from $2,350 to $450

[jim584672]

The Department of State (“Department”) is proposing to amend the Schedule of Fees for Consular Services (“Schedule”) to reduce the current fee for Administrative Processing of a Request for a Certificate of Loss of Nationality of the United States (CLN) from $2,350 to $450.

https://www.federalregister.gov/doc...processing-of-request-for-certificate-of-loss

 

[Sunset]

What.... it's getting too crowded

 

[brett]

My understanding from several colleagues who have gone through the process is that an even larger cost for some is getting the necessary IRS clearance.

That can also include the cost of professional accounting services other countries.

 

[GhostofTomJoad]

Must be a hefty tax bill to make it worth all that junk. And you can bet the IRS won't just simply wave goodbye.

 

[jim584672]

The price drop was spurred when the State Department got sued by a group called Accidental Americans. The suit is still in the appeal stage, but the State Department agreed to lower the cost for now.

https://www.americains-accidentels.fr/page/1503405-lawsuit-against-state-department

 

[pjigar]

Only if we can abolish the onerous US tax juris-dic-tion for non-residents (just like almost every country in the world) then this will all go away.

 

[ShokWaveRider]

How will renouncing citizenship help with folks who have a large portion of their nest egg in qualified funds? Surely, they would have to pay taxes before they leave, or automatically have a fixed rate of tax deducted when they take distributions.

 

[zinger1457]

I can think of more than a few people I would be more than happy to use taxpayer money and pay them to renounce their citizenship and leave the country, maybe even include a one-way plane ticket.

 

[Bigdawg]

I can think of more than a few people I would be more than happy to use taxpayer money and pay them to renounce their citizenship and leave the country, maybe even include a one-way plane ticket.

Concur.

Can't wait to see where this thread goes.

 

[Car-Guy]

Actually I never heard of such a thing...But I guess there are some. Why don't they just leave? Please!

I can think of more than a few people I would be more than happy to use taxpayer money and pay them to renounce their citizenship and leave the country, [-]maybe even[/-] include a one-way plane ticket.

Fixed it for you.

Concur.

Can't wait to see where this thread goes.

Maybe, CLOSED!

 

[jim584672]

I can think of more than a few people I would be more than happy to use taxpayer money and pay them to renounce their citizenship and leave the country, maybe even include a one-way plane ticket.

Tempting, now I can live on the Isle of Sark and pay almost zero taxes. My UK passport has benefits. I can even get Social Security, being a citizen is not a requirement and US has a Totalization agreement with the UK.

 

[RetiredHappy]

How will renouncing citizenship help with folks who have a large portion of their nest egg in qualified funds? Surely, they would have to pay taxes before they leave, or automatically have a fixed rate of tax deducted when they take distributions.

I "THINK" based on what I had read a long time ago, that withdrawals will be levied at 30% tax rate.

 

[jim584672]

I "THINK" based on what I had read a long time ago, that withdrawals will be levied at 30% tax rate.

You need to be worth more than 2 million to come under the expatriation tax.

 

[marko]

Might be easier and cheaper to just hire a really good tax accountant, if taxes are the motivation.

 

[ShokWaveRider]

You need to be worth more than 2 million to come under the expatriation tax.

You or your QUALIFIED assets?

 

[jim584672]

You or your QUALIFIED assets?

Not a tax expert, here is the IRS page...
https://www.irs.gov/individuals/international-taxpayers/expatriation-tax

This page has some info...
https://www.greenbacktaxservices.com/knowledge-center/renounce-us-citizenship/

 

[Sunset]

Actually I never heard of such a thing...But I guess there are some. Why don't they just leave? Please!
...........

Problem with just leaving is as an American citizen, you still have to pay taxes on world-wide income every year.

There are a few places where taxation is lower than the USA, but not many that are Civilized.

 

[jim584672]

Cayman Islands, Monaco, Dubai no income taxes, the hurdle is getting the right to stay there.

 

[Alan]

How will renouncing citizenship help with folks who have a large portion of their nest egg in qualified funds? Surely, they would have to pay taxes before they leave, or automatically have a fixed rate of tax deducted when they take distributions.

The lawsuit that triggered this is on behalf of "accidental americans" who just happened to be citizens by right of birth but have spent zero or very little time in the USA and are far from wealthy but have discovered that the US is one of only 2 countries that taxes its citizens regardless of where they live and levy hefty fines and back taxes once they find them. I would guess that the majority of folks renouncing US citizenship are mostly folks who fall into this category, not the folks with large portions of their nest eggs invested in the USA.

 

[brett]

The lawsuit that triggered this is on behalf of "accidental americans" who just happened to be citizens by right of birth but have spent zero or very little time in the USA and are far from wealthy but have discovered that the US is one of only 2 countries that taxes its citizens regardless of where they live and levy hefty fines and back taxes once they find them. I would guess that the majority of folks renouncing US citizenship are mostly folks who fall into this category, not the folks with large portions of their nest eggs invested in the USA.

This is exactly the situation with those I know who have gone or are going though the process.

One was born in the US but has not lived there since she was 20. Ditto for the other person. Neither have assets or investments in any US plans. Nor is it about dodging a tax liability on a large amount of money that has been tax sheltered in the US.

Getting an IRS tax clearance certificate for them does not in any way imply that they have not filed or have tax owing. They tell me that the certificate simply confirms the opposite...that they are up to date with the IRS filings etc.

They are required to file an IRS return each year and pay tax on their world income. In most instances the tax is minimal depending on the tax treaties that apply based on the jurisdiction where they live. It is the hassle and the cost of doing so when living outside the country.

Both pay an accountant each year to complete their US tax returns on their world wide income even though none of it is income from the US. For one of them, the annual accountancy fees are higher than the tax to be paid.

So, one of my spouses friend's won $100K in a lottery. It is not subject to income tax where she lives but it is taxable income by the IRS despite the fact that she has not lived or earned money in the US for 30 plus years. Ditto for her gain on sale of her home.

As a recall, Boris Johnson, former UK PM, had a tax issue on a capital gain resulting from sale of a residence. He was born in the US...but left at age 2. IRS apparently still claimed he was subject to US tax on that gain.

They tell me that it is a PITA to go through this process. The ONLY reason they do it is the onerous nature of the US tax code on those who have lived a very short period of their non income earning lives in the US.

 

[Alan]

This is exactly the situation with those I know who have gone or are going though the process.

One was born in the US but has not lived there since she was 20. Ditto for the other person. Neither have assets or investments in any US plans. Nor is it about dodging a tax liability on a large amount of money that has been tax sheltered in the US.

Getting an IRS tax clearance certificate for them does not in any way imply that they have not filed or have tax owing. They tell me that the certificate simply confirms the opposite...that they are up to date with the IRS filings etc.

They are required to file an IRS return each year and pay tax on their world income. In most instances the tax is minimal depending on the tax treaties that apply based on the jurisdiction where they live. It is the hassle and the cost of doing so when living outside the country.

Both pay an accountant each year to complete their US tax returns on their world wide income even though none of it is income from the US. For one of them, the annual accountancy fees are higher than the tax to be paid.

So, one of my spouses friend's won $100K in a lottery. It is not subject to income tax where she lives but it is taxable income by the IRS despite the fact that she has not lived or earned money in the US for 30 plus years. Ditto for her gain on sale of her home.

As a recall, Boris Johnson, former UK PM, had a tax issue on a capital gain resulting from sale of a residence. He was born in the US...but left at age 2. IRS apparently still claimed he was subject to US tax on that gain.

They tell me that it is a PITA to go through this process. The ONLY reason they do it is the onerous nature of the US tax code on those who have lived a very short period of their non income earning lives in the US.

Yes, I see many stories on the expat forum I frequent and the most common way to get IRS compliance is to use their streamlined program to get current on tax returns. If they qualify I believe they only have to file for the last 3 years. Once in compliance they can then renounce their citizenship. The whole process paying tax preparers and then the renunciation fees is very expensive so I’m sure this reduction if fees will be very welcome to many.

https://www.irs.gov/individuals/international-taxpayers/streamlined-filing-compliance-procedures

Taxpayers must certify that conduct was not willful. Taxpayers using either the Streamlined Foreign Offshore Procedures or the Streamlined Domestic Offshore Procedures, will be required to certify, in accordance with the specific instructions set forth below, that the failure to report all income, pay all tax and submit all required information returns, including FBARs (FinCEN Form 114, previously Form TD F 90-22,1) was due to non-willful conduct. Non-willful conduct is conduct that is due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law

 

[Alan]

As a recall, Boris Johnson, former UK PM, had a tax issue on a capital gain resulting from sale of a residence. He was born in the US...but left at age 2. IRS apparently still claimed he was subject to US tax on that gain.

They tell me that it is a PITA to go through this process. The ONLY reason they do it is the onerous nature of the US tax code on those who have lived a very short period of their non income earning lives in the US.

You recall correctly. He came into the IRS spotlight when he tried to go on vacation to Mexico with his family and the flight went through Houston. His UK passport flagged him as an “accidental American “ because he was born there. (He was denied boarding rights so his family went on the scheduled flight while he bought passage on another carrier that went to Mexico City without changing flights in the USA)

It took about 10 years to get compliant, with the final tax bill paid being around $120,000 on the sale of his main home in England, the capital gain, which was tax free in the UK was way above the limit in the USA. He then renounced his US citizenship.

 

[JoeWras]

I don't blame accidental Americans for pushing this.

Ironically, some non-Americans intentionally try to be in the USA to give birth.

I also learned that "AAA" doesn't just mean "American Automobile Association".

(It also means "Association of Accidental Americans")

 

[youbet]

The lawsuit that triggered this is on behalf of "accidental americans" who just happened to be citizens by right of birth

I believe that is correct based on news clips I've run across.

I do wonder how the USA finds and keeps track of "Accidental Americans" if they never live here; have no business or accounts here, never apply for a USA passport, etc. Say they're born here while mom is on vacation and she takes the child back to "country X" within a couple weeks. The child never returns, never does any business with the USA, has no accounts here, has no USA passport, etc. How would the USA fed gov't even know they exist?

Perhaps the rule could be changed so that if the child is born here and substantially resides here until 18 years old, then they become a citizen? Or something like that? It seems counter-intuitive to make it difficult for "Accidental Americans" to renounce citizenship if they wish or, really, even force it upon them in the first place if they've never even lived here.

 

[W2R]

Of course, everybody has to make their own decisions about these things and a substantial tax to a country one has never seen would be quite a motivator. I do understand that.

But I just gotta say that in my case, I'm American through and through, so American that I bleed red-white-and-blue and would both sing the Star Spangled Banner and pledge allegiance before every meal no matter where, if I could get away with it. This is my country and nobody is taking my citizenship away from me! Like I said above, we all have to make our own decisions and that's mine, 100% set in stone and forever. God bless America.