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US calls for dismissal of ‘meritless’ Fatca lawsuit

By Cristian Angeloni, 5 Apr 22

Accidental Americans argue suspension of emigration services was a constitutional breach

The US Department of State has asked a federal court to dismiss the lawsuit brought by France-based Association of Accidental Americans (AAA) alongside 11 other plaintiffs.

The suit was first filed in November 2021, after the association raised $25,000 (£18,955, €22,743) in September 2021 to cover expenses.

The AAA and the others involved claimed that shutting down of expatriation services from US embassies and consulates around the world during the covid pandemic was a breach of the American constitution as it did not allow US citizens living abroad to renounce their citizenship.

The AAA has called the act “discriminatory” and in contravention of the right to renounce US nationality which is a “natural and inherent right protected by the US constitution”.

They also claimed that suspension and delay in renunciation services violated the Administrative Procedure Act.

Many have been turning to waiving their US citizenship due to the impact of the Foreign Account tax Compliance Act (Fatca), which requires US citizens and their foreign financial institutions to send personal data to US authorities for tax purposes, since the United States has a citizenship-based taxation model.

Covid impact

In its submission, seen by International Adviser, the US Department of State argued that the association’s claims are “meritless”, and that it had been forced to “balance competing priorities” during the pandemic, meaning that “protecting the health and safety of its personnel” came first.

The AAA said: “After a delay of over five months, on 4 April 2022, the government filed a motion to dismiss the complaint. The government argues that it has no ‘clear duty’ to arrange for renunciation interviews and that any delays in providing renunciation services is ‘reasonable’.

“The government also claims that plaintiffs do not have a fundamental right to ‘obtain an appointment […] within days or weeks of requesting one.’ However, the government does not address the fact that, for over two years, it had completely suspended these services, making it impossible to schedule an appointment at US missions abroad.

“The government equates US citizens wishing to exercise their right to renounce with non-US citizens wishing to apply for non-immigrant visas. In these latter cases, several courts have held that visa-processing delays due to covid-19 and related matters were reasonable.

“Plaintiffs plan to file a comprehensive opposition to the government’s motion. The association has also filed a separate challenge to the State Department’s $2,350 renunciation fee.  A decision is expected shortly.”

Tags: Accidental Americans | FATCA | US

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International Adviser covers the global intermediary market that uses cross-border insurance, investments, banking and pension products on behalf of their high-net-worth clients. No news, articles or content may be reproduced in part or in full without express permission of International Adviser.