LARS was born in the United States to Swedish parents. Last year he renounced his American citizenship. Not because he hates America, but because he hates dealing with the Internal Revenue Service (IRS). Lars (not his real name) has not lived in the land of his birth since the mid-1990s. Yet each year the IRS would require him to fill out a 65-page tax return, foreign-account declarations and an extra 30-page form because he was a director of a company (in Europe). By contrast, the paperwork in the Nordic country where he lives is just 12 pages. He was sad to give up his passport, he says, but keeping the IRS happy grew ever more time-consuming and costly, until it became intolerable.

With a tax system based on citizenship rather than residence, America is the only advanced country that chases its nationals—even those who have long had no links to their homeland—for a slice of their worldwide earnings. Many of the 7.2m living abroad end up owing nothing, because they get credit for payments to foreign exchequers, which are often higher. But they still have to fill out the forms—or, more likely, pay someone to help. Even in simple cases this can cost $2,000 or more, says Marylouise Serrato of American Citizens Abroad (ACA), an advocacy group.

Filing requirements have grown stricter since 2008. The “tipping point”, says Ms Serrato, was the Foreign Account Tax Compliance Act (FATCA) of 2010, which will take effect next year. This imposes an array of new reporting obligations, especially on foreign financial institutions that serve Americans. The sheer hassle of dealing with all this is prompting more Americans to renounce their citizenship. In 2012 around 900 gave up their passports or green cards. Twice as many did so in the first half of 2013 alone.

Designed to catch tax dodgers, FATCA has made foreign financial firms wary of serving even honest Americans. David Kuenzi of Thun Financial Advisors says he speaks almost daily with ordinary Americans who are having trouble setting up foreign bank accounts or investments, or who have had existing accounts closed.

“FATCA is strangling us economically,” says Genevieve Besser, an American who has lived in Germany for 25 years. Last year her youngest daughter, a dual citizen, had her local brokerage account closed by Deutsche Bank because her mother had signing authority over it. German arms of American fund-management firms are just as unwelcoming, says Mrs Besser. Americans are even being forced out of products that are not subject to FATCA reporting: some have been forced to pay off mortgage balances with Swiss banks, for instance. “When you’re locked out of basic financial services, renouncing citizenship can be a matter of survival,” says Ms Serrato.

Some predict that things will get easier as foreign banks grow more familiar with the new law. But a foreign bank with only a few American expat clients may decide that they are not worth the bother. American banks and brokerages are growing frostier too. Some are closing the accounts of citizens who no longer have an American address because of FATCA. Ellen Lebelle, who has lived in France for 43 years, was recently told by her broker, Fidelity, that although she can keep her account she can no longer use it to buy securities.

Mr Kuenzi says his clients’ biggest worry is being clobbered for inadvertently failing to comply. An American in Europe may have investments there, on which he has long been paying local tax, which he never realised should technically have been declared to the IRS as “passive” foreign investments. Even greater numbers, including Americans studying abroad, may have innocently failed to fill out “FBAR” forms, on which foreign accounts holding $10,000 or more must be declared.

FATCA will expose such unintentional sins. Penalties for non-filing can be up to 50% of the account balance. The IRS may go easy if the mistake was innocent or the taxpayer has entered the agency’s voluntary disclosure programme. But sorting out the mess can still take 18 months and cost $20,000 in legal fees, plus a similar amount in penalties. Mr Kuenzi says this deters some non-American companies from promoting Americans to the executive suite, where their tax affairs will be even more complicated. If they are caught accidentally breaking an unintelligible rule, that would embarrass their employer.

The ACA tries to raise awareness of its members’ plight. But politicians are unsympathetic, since voters assume that the complainers are tax-dodging high-rollers rather than honest students or small-business owners. So for many Americans abroad writing a cheque for $450, the standard expatriation fee, may increasingly seem like a bargain.