Immigration Software Blog

The latest & coolest time-saving tech for immigration lawyers (plus some Docketwise updates).

Giving it Up: Renouncing US Citizenship

Why on Earth would anyone give up their US citizenship when there are so many people who go to great lengths to immigrate to America?  Believe it or not, a few people do so every year for personal reasons.  In this post we’ll discuss why and how this  takes place. 

In decades past, very few people ever renounced their citizenship. It was typically a step only contemplated by those who had been born outside the US and had immigrated to the US and become naturalized. These individuals sometimes decided later in life to return to their country of origin and chose to give up the US citizenship for personal reasons, for example, to serve in a government position in their country of origin. 

In the last few years (2016 -present), between 5000-6000 Americans per year gave up their citizenship. This is a substantial increase from the numbers in previous decades. Some of this is probably due to the overall increase in global mobility, particularly among those involved in the tech and financial sectors. 

The statutory provisions covering the the loss of US Nationality are found at  Section 349 of the Immigration and Nationality Act (INA), which may also be cited as 8 USC Section 1481

There are two terms used when discussing loss of US Nationality. These are "renunciation" and "relinquishment".  Renunciation refers to proactively notifying the government of one's desire to give up one's US citizenship and going through the prescribed procedure in order to effect that change.   

The ways someone can lose their US citizenship are by voluntarily doing one of the following “expatriating” acts while holding the intention of relinquishing US citizenship:

1) Naturalizing as a citizen of another country, after reaching age 18
2) Taking an oath or making an affirmation or other formal declaration of allegiance to a foreign state or a political subdivision thereof, after reaching age 18
3) Entering, or serving in, the armed forces of a foreign state (A) if such armed forces are engaged in hostilities against the United States, or (B) if serving as a commissioned or non-commissioned officer. 
4) (A) Accepting, serving in, or performing the duties of any office, post, or employment under the government of a foreign state or a political subdivision thereof, after reaching age 18 after acquiring the nationality of such foreign state; or (B) accepting, serving in, or performing the duties of any office, post, or employment under the government of a foreign state or a political subdivision thereof, after attaining the age of eighteen years for which office, post, or employment an oath, affirmation, or declaration of allegiance is required;
5) Formally renouncing their citizenship while abroad in front of a US Consular Officer (see below)
6) If the US is at war, by formally renouncing their citizenship inside the United States in front of an official of the US Department of Homeland Security  
7) Committing, and getting convicted of, an act of treason against the Government of the United States or attempting to force to overthrow the Government of the United States 

Process of Voluntary Renunciation of US Nationality
As a practical matter, the most common common way that an individual loses US citizen is number 5 above, through voluntary renunciation. One goes about this by contacting any of the US consulates or embassies abroad and scheduling an appointment to meet with the consular officer for purposes of renunciation.  The Foreign Affairs Manual states that renunciations should be held inside the US Embassy or Consulate. Generally, there are two meeting with consular officials. The first meeting is for the consular officer to discuss with the prospective ex-American the consequences of renouncing and to be sure that the person is acting of their own free will. Although the law does not mandate any waiting period, often times the consular officer will tell the US citizen to return for a second appointment to sign the necessary and paperwork, amd thereby allow the individual time to think over the matter. 

At the second appointment with the consular officer, the Applicant will pay the fee for renunciation of US citizenship, which is currently $2350 and then sign the necessary forms which consist of:
DS-4079 Request for Determination of Possible Loss of United States Citizenship Although technically this form is used for relinquishment situations, rather than proactive renunciations conducted at the same time, some consular posts may still request the Renunciant to complete it.
DS-4080 Oath/Affirmation of Renunciation of Nationality of the United States  The Consular Officer will conduct the “ceremony” whereby the Applicant actually recites the words that will cause him to lose his US citizenship. Consular officers are supposed to have the applicant read the oath aloud in front of the US flag to emphasize the seriousness and solemnity of the occasion.
DS-4081 Statement of Understanding Concerning the Consequences of Renunciation or Relinquishment of US Nationality  This form must be completed with the renunciant information and signed by him and by the consular officer. 
DS-4083 Certificate of Loss of Nationality of the United States
The consular officer will prepare this form, which will serve to evidence legally the fact that the person named in the document in no longer a US citizen. 

The Applicant will be required to sign the above forms, sometimes in sets of 3, 5, or even 8 copies. At least one set of the forms will be sent to the US State Department offices in Washington DC for final approval. The State Department will  send an officially stamped copy of the DS-4083 Certificate of Loss of Nationality (CLN) back to the Applicant for retention so that the former American has legal proof the he is no longer a US citizen.  The ex-American must separately notify the Internal Revenue Service (see below) of their loss of nationality.

Tax Obligations
Every individual who loses US nationality is obligated to notify the Internal Revenue Service of this fact by filing IRS Form 8854. Failure to file this form before the deadline is punished with a $10,000 penalty.   Generally, in order for the former US citizen to avoid any further tax obligations, they must prove five years of compliance with federal tax obligation. Additionally, high net worth individuals will be subject to an exit tax (sometimes referred to as an "expatriation tax"). The Exit Tax will apply to individuals who have a net worth in excess of $2 million.  This tax is based on the inherent gain (in dollar terms) on all assets including all deferred compensation, such as pensions, existing at the time of expatriation. The exit tax will also apply to individuals who have not complied with US tax obligations for the five years preceding expatriation, even if their net worth is below $2 million.  Moreover, the $2 million threshold will not apply to certain individuals who are dual citizens at birth, but those person will also be subject to the tax if they have not met the five year tax compliance test.