Accidental Americans ask US to cut fees for renouncing citizenship

Accidental Americans ask US to cut fees for renouncing citizenship
  • LinkedIn  

The Accidental Americans Association (AAA) has written a letter to the US Secretary of State, asking the country to reduce the costs of renouncing American citizenship.

Many accidental Americans would like to give up their US citizenship to avoid having tax obligations to a country most have never even lived in. However, the waiver procedure alone costs $2,350 and the final sum could run to thousands of dollars since they also need to pay the Internal Revenue Service any tax obligations from the previous five years.

"$2,350 is an exorbitant sum and does not correspond at all to the real cost of the procedure," Fabien Lehagre, president of the Accidental Americans Association wrote in the letter addressed to Mike Pompeo.

$2,350 is an exorbitant sum and does not correspond at all to the real cost of the procedure"

According to a recent report by the Office of Information and Regulatory Affairs of the Executive Office of the President, State Department calculations show the cost of the procedure is just $20.25 per person.

"Therefore, on behalf of the accidental Americans I have been representing around the world for the past five years, I would ask you to kindly instruct your administration to reduce the costs associated with the renunciation procedure drastically, so that accidental Americans can get rid of their unwanted [American] nationality if they so wish," Lehagre added.

The EU has urged the US to cut the $2,350 (£1,785) bill for renouncing American citizenship, and to simplify tax filing requirements.

The US is the only country aside from Eritrea that taxes non-resident citizens on their global income.

Accidental Americans is the name given to individuals who are citizens of countries other than the United States, but who are deemed also to be a US citizen, by virtue of the fact that they were born there to non-American parents, but typically only discovered this fact recently, as FATCA came into force.

FATCA was passed in 2010 and forces banks wanting to operate in the US to report any assets held by American citizens overseas. While the measure is aimed at tax avoidance, it has created problems for many American expats and dual nationals who have been rejected by retail banks seeking to avoid hassle and risk.

Dutch banks have started freezing the accounts of dozens of ‘accidental' Americans in the Netherlands because they have failed to provide them with their US tax information numbers (TINs), a requirement under FATCA.

French Finance minister Bruno Le Maire has said that failure to comply with the FATCA TIN requirement is not cause for banks operating in the country to immediately close the accounts of French-American taxpayers. However banks are nervous about what to do.

It is estimated that over 9 million Americans live overseas, not including accidental Americans. 

 

Subscribe to International Investment's free, twice-daily, newsletter

  • LinkedIn  

More on Expats