Giving Up US Citizenship – The Path Gets More Complex As DS-4079, Now 18 Pages, Is Revamped

The increase in expatriations may be influencing the government to tighten the process.  There were 2123 expatriations in Q3 of 2024 (the highest in 4 years).  Historically, a rise in expatriations can prompt governments to take steps that either add scrutiny or raise barriers, especially when citizenship renunciations become associated with financial or tax motivations.   Let’s not forget the IRS has a special audit campaign going for individuals who expatriate.  The State Department and IRS communicate with one another on various things, including expatriations.  Make sure things are done right.

Here’s why this change to the Form DS-4079 might be happening and what it could mean:

1. Increased Regulatory and Financial Scrutiny: Expatriations often involve very significant tax implications, as the US taxes citizens on their worldwide income, unlike many other countries. An uptick in renunciations could make the government concerned that individuals are exiting primarily to escape tax obligations, prompting additional verification steps to ensure compliance. Adding complexity or lengthening the process may discourage casual or financially motivated renunciations.
2. Enhanced Compliance and Reporting: With increased international tax enforcement, there is pressure on governments to ensure that individuals are not using expatriation to bypass tax obligations, especially if they have substantial US connections. By making the process more rigorous, the government ensures it has a detailed understanding of each expatriating individual’s financial situation, tax history, and reasons for expatriation.
3. Political and Public Perception: Expatriations, especially by high-profile or wealthy individuals, sometimes draw media attention, which can lead to public pressure on the government to scrutinize such decisions more carefully. Adding procedural requirements, like the tailored DS-4079 sections, may signal to the public that expatriations are carefully monitored and controlled.
4. Administrative Efficiency and Deterrence: The redesigned form may also serve as a mild deterrent by signaling that expatriation isn’t an easy process. For individuals genuinely seeking to cut ties with the US, a more extensive procedure may ensure they’re well-informed and committed to their decision, while discouraging those who may not fully understand the implications of renunciation.

In summary, while procedural changes like the updated DS-4079 may seem minor, I think they are likely intended to subtly raise the threshold for expatriation, ensuring only well-considered, compliant, and genuinely motivated cases go through. This fits with broader trends in many countries where tax compliance and national ties are increasingly scrutinized in cases of citizenship renunciation.