The COVID‑19 pandemic has turned the already‑complex process of renouncing U.S. citizenship into a near‑impasse for many expatriates. Consular offices worldwide were forced to suspend routine services, and banks are increasingly refusing to maintain accounts for U.S. persons, leaving a growing number of Americans “stuck” with a passport they no longer wish to keep.
Consular shutdowns and renunciation delays
- In March 2020 the U.S. Department of State halted most non‑emergency services at its overseas embassies and consulates.
- The suspension included the processing of Form N‑565 (renunciation of nationality), meaning applicants could not schedule appointments to submit the required paperwork.
- The Washington Post reported that the halt was “worldwide,” affecting U.S. missions from Paris to Tokyo.
Real‑world impact on expatriates
Aline, a nursing assistant living in Baylen, France
- Received a February warning from her bank that her account would be closed unless she supplied a U.S. Social Security number.
- After a second warning, she attempted to renounce her citizenship at the U.S. Embassy in Paris, only to discover that the service had been suspended.
- She described herself as never having considered herself “American,” yet the birthright citizenship law classifies anyone born on U.S. soil as a U.S. citizen for life, with renunciation not permitted until age 18.
Patrick, born in Georgia (the country) to expatriate parents
- Lived his entire life in Belgium, but his U.S. citizenship triggered a bank’s threat to close his joint account.
- U.S. officials offered little assistance, reinforcing the notion that the government does not intervene on behalf of citizens abroad who wish to relinquish their status.
Other cases
- A former British prime minister (Boris Johnson) faced U.S. capital‑gains tax on the sale of his London home and encountered travel restrictions because he lacked a U.S. passport.
- An unnamed investor could not complete a property purchase overseas because his expired U.S. passport prevented him from obtaining a power of attorney.
Why the surge in renunciation requests?
- U.S. government data indicates a record number of Americans filed Form N‑565 in 2023.
- Motivations cited include dissatisfaction with U.S. political leadership, pandemic‑related uncertainty, and the administrative burden of complying with U.S. tax reporting (FATCA) and banking restrictions.
Practical consequences for expatriates
- Banking: Many foreign banks, especially in the EU, are closing accounts or refusing to open new ones for U.S. persons to avoid FATCA compliance costs.
- Credit and mortgages: U.S. citizens in Switzerland and other jurisdictions report mortgage approvals being withdrawn once their American status is disclosed.
- Travel: An expired U.S. passport can block the issuance of a power of attorney or other documents needed for overseas transactions, even when the holder does not intend to travel to the United States.
Options and risk mitigation
- Alternative residency or citizenship: Securing a second passport (e.g., through investment or naturalization programs) can provide a non‑U.S. travel document and reduce reliance on a U.S. passport for banking or property transactions.
- Tax compliance: Maintaining full FATCA reporting and filing required forms (e.g., FBAR, Form 1040) minimizes the risk of penalties that can trigger account closures.
- Bank selection: Choose financial institutions that explicitly support non‑U.S. persons or have robust policies for handling U.S. clients under FATCA.
- Legal counsel: Consulting a tax attorney or immigration specialist before attempting renunciation can clarify eligibility (age ≥ 18, no outstanding tax liabilities) and anticipate delays.
Outlook
The pandemic exposed how dependent many expatriates are on U.S. consular services and how quickly those services can be withdrawn. As governments worldwide tighten financial regulations and the U.S. continues to enforce strict tax reporting for its citizens, the administrative and financial hurdles for those seeking to sever ties with the United States are likely to remain high. Planning alternative residency options and maintaining rigorous compliance are essential strategies for anyone considering renunciation or simply wishing to avoid the collateral consequences of U.S. citizenship abroad.
