Two court cases filed against the U.S. government that are still pending may be of interest to U.S. citizens who found it difficult to abandon their citizenship in the past few years.
Before 2010, there was no fee to renounce one’s U.S. citizenship. A $450 fee was imposed starting in March 2010. The current fee of $2,350 was introduced in 2015, which coincided with the passing of Foreign Account Tax Compliance Act (FATCA). Around 2020, the U.S. government stopped its voluntary expatriation services due to the COVID-19 pandemic.
In response to this, the France-based Association des Americans Accidentels (AAA) has brought two different lawsuits against the U.S. Department of State, which have been outlined below:
- The first suit contests the constitutionality of the U.S. government’s suspension of voluntary expatriation services. AAA’s argument is that the right to renounce U.S. nationality is a fundamental, natural and inherent right protected by the U.S. Constitution. The U.S. Department of State’s suspension, due to COVID-19 pandemic, of the renunciation service is forcing the plaintiffs in the suit to remain U.S. citizens. This case is still pending in D.C. Circuit court.
- The second suit is challenging the fee, currently $2,350, charged to those who wish to renounce U.S. citizenship. AAA’s argument is the fee violates the due process clause of the Fifth Amendment of the U.S. Constitution, the First Amendment guarantee of freedom of expression and the Eighth Amendment precluding excessive fines.
On Jan. 6, 2023, the U.S. Department of State filed a Defendant’s Notice of Intent to Pursue Rulemaking to Reduce Fee Amount, which stated they would lower the fee back to $450 for those wishing to renounce their U.S. citizenship. As this is a notice of intent, it is not authoritative. Therefore, it will still be some time before the regulations are updated and the new fee formulated. In the meantime, should you have questions about how your citizenship impacts tax compliance concerns, please contact our international tax advisors at Moore Doeren Mayhew.