Record Number of Americans Giving Up Citizenship
Americans abroad have set another record this year—for not being American anymore. The Internal Revenue Service reported (pdf) that 1,335 people voluntarily renounced their U.S. citizenship during the first three months of 2015. That’s an 18% increase over the previous record and is on track to far exceed last year’s record renunciation number of 3,415.
The United States, alone among developed nations, requires its citizens and permanent residents to file tax returns regardless of where they live or where their income is earned. Such returns became more essential last year, when the Foreign Account Tax Compliance Act went into effect. That law requires foreign financial institutions to report account information for U.S. citizens and permanent residents to the U.S. government. If the institutions don’t comply, U.S. banks are required to impose a 30% withholding tax on payments made to those banks. Some foreign banks, not wishing to file more documentation on their U.S. customers, have given up and closed accounts held by Americans.
“The cost of compliance with the complex tax treatment of non-resident U.S. citizens and the potential penalties I face for incorrect filings and for holding non-U.S. securities forces me to consider whether it would be more advantageous to give up my U.S. citizenship,” Stephanos Orestis, a U.S. citizen living in Oslo, wrote in a March 23 letter to the Senate Finance Committee, according to Bloomberg. “The thought of doing so is highly distressing for me since I am a born and bred American with a love for my country.”
In many of cases however, those renouncing their citizenship have limited ties to the United States, having come by their status because they were born in the U.S. or because one or both of their parents is an American citizen.
To Learn More:
Americans Living Abroad Set Record for Giving Up Citizenship (by Richard Rubin, Bloomberg)
Quarterly Publication of Individuals, Who Have Chosen To Expatriate (pdf) (Internal Revenue Service)
Record Number of Americans Renounce Citizenship (by Steve Straehley, AllGov)
Tax Evaders Renounce U.S. Citizenship (by Noel Brinkerhoff, AllGov)
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