Record Number of Americans Renounce Citizenship

Monday, February 10, 2014

Nearly 3,000 people renounced their American citizenship or voluntarily handed over their green cards in 2013, exceeding the previous record by more than 1,000, according to the Treasury Department. Many of those expatriating say they’re doing so because of provisions of the U.S. tax law.


“Above all, fear seems to be driving this increase in expatriations," tax attorney Andrew Mitchel told The Wall Street Journal characterizing the actions of the 2,999 people who expatriated last year. The Treasury Department is required to publish a quarterly list of those who have expatriated.


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. And those requirements are about to get more onerous. The Foreign Account Tax Compliance Act, which goes into effect this year, requires foreign financial institutions to report account information for U.S. citizens and permanent residents to the U.S. government. Some foreign banks, faced with having to file more documentation on their U.S. customers, have simply closed accounts held by Americans, according to Andrew Mitchel’s International Tax Blog.


This additional requirement is causing more Americans living overseas to consider giving up their U.S. passports, according to the BBC. One expatriate who gave up her citizenship in 2011, who asked to remain anonymous, said the new law would have cost her several thousand dollars to have her taxes done, even though she wouldn’t owe any money to the U.S. government. “In the end, I sleep better now knowing that I no longer have to worry about the US requirements,” she told the BBC.


Potential penalties for failure to file required informations can be heavy, up to $10,000 per unfiled form, per year, or in some cases, up to 50 percent of an account balance per year of non-compliance.


The federal government has increased its scrutiny of expatriates’ tax issues since 2009, when Swiss bank UBS admitted it had helped U.S. taxpayers hide their money. The bank was fined $780 million and turned over records on more than 4,400 account holders. In 2012, Swiss bank Wegelin & Co., closed down and pleaded guilty to helping U.S. taxpayers hide more than $1.2 billion.


"I don't know any Americans abroad who aren't thinking about giving it up but what I say to myself is that I will fight as long and as hard as I can,” Victoria Ferauge told the BBC. Ferauge has lived abroad, mostly in France, for about 20 years.

-Steve Straehley


To Learn More:

2013 Expatriations Increase by 221% (by Andrew Mitchel, International Tax Blog)

Expatriations Rose to Record Last Year (by Laura Saunders, Wall Street Journal)

Why are Americans Giving up their Citizenship? (by Tom Geoghegan, BBC News)

Number of Americans Renouncing Citizenship Set to Break Record (by Noel Brinkerhoff, AllGov)

Tax Evaders Renounce U.S. Citizenship (by Noel Brinkerhoff, AllGov)


Taxidea Taxus 10 years ago
The numbers are far higher than the Federal Register reports. Several credible researchers and journalists have been trying to establish the true totals of those giving up US citizenship, and citizenlike status (ie greencard holders/permanent residents): this happens by 'renouncing' by swearing out an oath actively giving up US citizenship (which is what the Federal Register numbers appear to be reporting - with consistent inaccuracies and errors), 'relinquishing' (performing a relinquishing act like naturalizing as a citizen elsewhere, etc - with deliberate, conscious, voluntary intent to give up US status, or surrendering one's greencard and notifying the US that one is no longer a US permanent resident. The true statistics are elusive, and FOI requests have so far proved fruitless . Even the FBI database of those not allowed to own a firearm (which by law must include expatriates ) consistently reports much higher number than the 'name and shame' list in the Federal Register. Many known names of those who have reported expatriating - and have obtained a CLN Certificate of Loss of Nationality to prove it, have not appeared on the Federal Register. Those abroad that the US government defines as 'US taxable persons' without any US residency or US economic connection includes many individuals who are birthright citizens of a non-US country - born dual outside the US, of a US/dual parentage. These people have a permanent life outside the US, and are only 'accidently' US citizens. Yet, the US government claims their local (non-US)assets and earnings to be taxable on the same basis as actual US residents. The Foreign Income Exclusion does NOT cover many types of income that the US has deemed taxable - ex. the maternity, unemployment and disability income we receive from our home country where we are also citizens and taxpayers. These non-US government benefits have been paid for by us and our fellow citizens and taxpayers in the non-US country we live in. So the US asserts the right to extraterritorially impose US taxes on the taxes and government funded benefits of all other countries. For example, ALL of my fellow Canadian citizens and Canadian taxpayers and ourselves as Canadian-US dual citizens/Canadian resident taxpayers have paid our Canadian home country taxes in full - but the US seeks to benefit by imposing taxes on income that originated in the tax assets of another country - merely based on a Canadian resident having had a US parent. Since when was taxing someone outside the US, based solely on parentage (and no US income or other connection) just or fair? That is one of the reasons behind the expatriations. We've paid our home country taxes in full. Our local legal bank accounts are primarily savings AFTER our local taxes were withheld at source - in Canada. We live in a modern stable democracy with layers of legal oversight to ensure that we are not money launderers, criminals, and terror funders. We do NOT need the US extending its dubious authority to our chosen permanent home or country of birth and claiming jurisdiction over individuals just because they happened to have a parent who was once a US citizen. US Extraterritorial taxation of everyone else in the world is arrogant and extortionate. That is why the numbers are rising and will continue to rise.

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