Americans living abroad and not happy with the US double taxation laws often seek to give up their US citizenship. Those who are seeking to renounce their US citizenship will now incur lower costs.
The cost for Americans to renounce their U.S. citizenship was lowered by the State Department from $2,350 to $450, a decrease of around 80%.
But who are these Americans who want to renounce their US citizenship?
There are many American citizens overseas who wish to give up their US citizenship, supposedly due to reporting requirements imposed on them by US laws.
The US laws of double taxation and stricter reporting requirements are making Americans living abroad renounce their US citizenship. Now, after a 80% cut in renouncing fees, more Americans are likely to give up their US passports.
One such reporting requirement was imposed by the Hiring Incentives to Restore Employment Act of 2010, on foreign financial institutions with which U.S. nationals have an account or accounts. The HIRE Act added chapter 4, commonly known as the Foreign Account Tax Compliance Act, or FATCA.
“Stringent regulatory crackdown to curb tax evasion, investments and hiding foreign assets by US citizens, as prompted by the Foreign Account Tax Compliance Act (FATCA), has increasingly compelled Americans expats to relinquishing their US Citizenship to avoid not only the complex reporting mechanism to the Internal Revenue Service (IRS) but also the imminent threats of heavy penalties and punitive legal actions owing to previous tax non-compliance and foreign asset non-disclosure,” says Prof. (Dr.) Hemant Verma, Vice-Chancellor of SGT University.
“US citizens with dual citizenship are quickly becoming persona non grata in adopted countries, and the plight is further compounded as foreign financial institutions must also declare the foreign assets of their American clients,” adds Prof. (Dr.) Verma.
Difficulties of FATCA reporting
Critics of the U.S. system of worldwide taxation, often called double taxation, have expressed concerns about FATCA.
They claim it complicates their ability to invest in ETFs or mutual funds, secure mortgages, or open bank accounts in their countries of residence.
Some noted that they also faced difficulties investing in the United States, due to a lack of a U.S. address and phone number.
This significantly impacted their ability to save for retirement. Some also expressed frustration with the complicated reporting requirements imposed by FATCA as well as by Foreign Bank Account Reporting (FBAR), Passive Foreign Investment Company (PFIC), and Global Intangible Low-Taxed Income (GILTI) rules.
Higher Fees
The other factor that became a contentious issue was the rise in the fee for renouncing U.S. citizenship. The fee for renouncing U.S. citizenship was increased from $450 to $2,350 in 2015 to address rising administrative costs, driven by a surge in applications related to new tax reporting requirements for American expatriates.
After significant deliberations, the cost burden for those US citizens living abroad and who decide to request Certificate of Loss of Nationality (CLN) services, the government has reduced the fee to $450.
However, most of these US citizens emphasized that the real problem was not the fee but the US system of worldwide taxation.
According to the Federal Register notice dated March 13, 2026, the final rule adjusts the Schedule of Fees for Consular Services by reducing the fee for Administrative Processing of Request for Certificate of Loss of Nationality (CLN) of the United States from $2,350 to $450. This final rule is effective on April 13, 2026.