Four former US citizens – currently living in France, Germany and Singapore – have taken the United States to court to demand a refund of more than 80% of the $2,350 fee that they had to pay to renounce their American citizenship.
The plaintiffs are all former American citizens who renounced their US citizenship within the last several years, which they were only able to do after paying the US government an "exorbitant" fee of $2,350 – which they are now claiming violates their rights and is also illegal.
"Over the last ten years, more than 30,000 individuals renounced their US citizenship, but could only do so after they paid the exorbitant amount of $2,350," Fabien Lehagre, President of the Association of Accidental Americans (AAA), said in a statement.
"Instead of resolving the problems caused by the US Foreign Account Tax Compliance Act (FATCA) and Citizenship-Based Taxation, the State Department has continued to put up barriers to slow down renunciations of American nationality," he added. "These former US citizens deserve a refund."
Class-action lawsuit
Under the FATCA anti-tax evasion measure, financial institutions all over the world must transmit the financial account data of all their customers identified as American citizens to the US authorities.
This includes the data of "accidental Americans" – those who acquired American nationality because they were born in the United States but have no other ties to the country. However, as the US tax system is based on citizenship rather than residency, they must still pay American taxes.
Now, these four plaintiffs who started the lawsuit are also asking the court to recognise the complaint as a class action, which would then benefit the tens of thousands of former US citizens who paid the huge fee to renounce their citizenship.
The $2,350 fee is by far the highest amount charged by any nation for the voluntary renunciation of citizenship. Many countries even charge nothing for the right to expatriate, which was also the case in the United States for over 200 years.
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In early January, the State Department notified the court that it intends to reduce the $2,350 fee to $450, and while the government has indeed started the rule-making process to lower the fee, no new rule has yet come into effect.
Now, the plaintiffs are claiming that the government's intent to lower the fee demonstrates that it was never necessary in the first place and exceeded the government’s actual costs by at least $1,900.
In May this year, the Belgian Data Protection Authority (DPA) became the first to prohibit the "unlawful" sharing of tax data from these so-called "accidental Americans" with the US tax authorities.
