IRS Plans a $1,900 Fee Cut to Renounce US Citizenship

FATCA's reporting requirements for foreign financial institutions and U.S. taxpayers have made banking and financial management more complex for expats, leading some to renounce their citizenship (expatriation).

Background of Citizenship Renunciations

From 2010 to 2020, over 36,840 people renounced U.S. citizenship, with numbers continuing to rise. In 2022, there were 2,390 renunciations, and by mid-2023, the count reached 5,315. The administrative and financial burdens created by FATCA are major factors driving these decisions.

Proposed Fee Reduction

In a move to alleviate some of these burdens, the U.S. State Department recently proposed reducing the renunciation fee from $2,350 to $450. This decision responds to feedback about the prohibitive cost of renouncing citizenship and revisits the fee set in 2010, which had increased in 2014 due to the surge in demand.

Implications of the Fee Reduction

While the fee reduction is welcome news for many, renouncing U.S. citizenship remains a significant decision. It involves various considerations and should be approached with professional advice to ensure a proper understanding of the implications and process.

Conclusion

The proposed fee cut reflects the State Department's acknowledgment of the challenges faced by expats under FATCA. However, the decision to renounce citizenship should be made cautiously, with guidance from qualified professionals.