Many unhappy former Americans want a refund on their citizenship renouncement fees

A group of former Americans (people who renounced their citizenship) filed a class-action lawsuit on October 5 against the State Department to demand part of their fees back, reported NBC.

The plaintiffs are all "accidental Americans." They are people who live in other countries who received American citizenship and the obligations that come with it at birth but have no ties with the country.

The problem is that the US has a citizenship-based taxation system, unlike most developed nations, which have a residency-based one. It means that they still have to pay income taxes even if they never lived in the country.

Those obligations imposed by Congress in 2010 surprised many of these "accidental Americans" years after they became financially active.

Some have fought for a change in taxation laws for a decade after realizing that the legal fees to solve their issues amounted to thousands of dollars.

Those legal charges are added to other fees, like fines after failing to register tax forms and payments to accountants and other experts in the US to fill out the paperwork.

Many foreign American citizens found the system too complicated to navigate outside the country, so they had to hire consultants.

They also started having issues with banks in their countries of residency, as those who comply with US tax laws started demanding them to register their tax identification number and even blocking accounts.

The US also pressures international financial institutions to guarantee their clients comply with tax law, so many banks refuse to take on American clients that reside in other countries.

With that scenario in mind, the only solution many of these accidental Americans found was renouncing their citizenship, which also came with complications.

A sharp increase in applications to renounce citizenship led the State Department to raise the imposed fee in 2014 from $450 to $2,350, one of the highest in the world.

Two days before the group filed the demand, the State Department announced the fee for the application to renounce citizenship would be $450 again.

So now, with the class action lawsuit, a group of former American citizens is demanding that the Department pay the difference, as their fees were inflated.

Image: Tingey Injury Law Firm / Unsplash

The lawsuit was filed through the Accidental Americans Association. This French-born organization advocates for tax law changes and responds to inquiries from these citizens.

Fabien Lehagre, president of the association, told NBC that "rather than resolving the causes" behind the massive desertion of American citizenship, "the State Department has preferred to limit the constant increase in requests."

The organization estimates thousands face the problem. A high-profile example is former UK Prime Minister Boris Johnson, who renounced his citizenship in 2016, complaining about the tax problem.