Americans Living Abroad Set Record for Giving Up Citizenship

Americans-giving-up-citizenship

 

 

 

 

From: http://www.bloomberg.com/news/articles/2015-05-07/americans-abroad-top-quarterly-record-for-giving-up-citizenship

More Americans living outside the U.S. gave up their citizenship in the first quarter of 2015 than ever before, according to data releasedThursday by the IRS.

The 1,335 expatriations topped the previous record by 18 percent, according to data compiled by Bloomberg. Those Americans are driven to turn in their passports in part because of laws that have expanded bank reporting and tax compliance requirements for expatriates.

The increase in early 2015 follows an annual record in 2014, when 3,415 Americans gave up their citizenship.

An estimated 6 million U.S. citizens are living abroad, and the U.S. is the only country within the Organization for Economic Cooperation and Development that taxes citizens wherever they reside.

In many cases, those choosing to give up their citizenship have limited connections to the U.S. and have lived outside of the country for most of their lives. Anyone born in the U.S. automatically receives citizenship, and people born abroad to U.S. parents are typically citizens as well.

For some the decision is easy, because they perceive little benefit from holding U.S. citizenship. For others, the choice is more complicated.

‘Highly Distressing’

“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. “The thought of doing so is highly distressing for me since I am a born and bred American with a love for my country.”

London Mayor Boris Johnson, who had a tax dispute with the IRS, said earlier this year that he would give up the U.S. citizenship he received because he was born in New York. His name isn’t on the IRS list. Eduardo Saverin, a Brazilian-born co-founder of Facebook Inc., gave up his U.S. citizenship in 2012.

U.S. citizens who live abroad can exclude as much as $100,800 in earned income and in many cases can receive tax credits for payments to foreign governments.

Tax Cheats

The U.S. has increased efforts to catch tax cheats after the Swiss bank UBS AG paid a $780 million penalty in 2009 and handed over data on about 4,700 accounts. That has led some banks to forgo doing business with people who have ties to the U.S.

One of the primary U.S. moves took effect last year as asset-disclosure rules under the Foreign Account Tax Compliance Act kicked in. The measure, known as Fatca, requires U.S. financial institutions to impose a 30 percent withholding tax on payments made to foreign banks that don’t agree to identify and provide information on U.S. account holders.

It allows the U.S. to scoop up data from more than 77,000 institutions and 80 governments about its citizens’ overseas financial activities.

The new laws, combined with past rules, can make tax filing difficult for U.S. citizens living overseas who are trying to start businesses or set up trusts, said Andrew Mitchel. He’s an international tax lawyer in Centerbrook, Connecticut, who has been tracking expatriations.

“These are complicated rules, and these are laypeople who don’t really understand the rules,” he said. “It can be tens of thousands of dollars to file tax returns.”

In establishing the 2010 law, Congress and President Barack Obama in effect threatened to cut off banks and other companies from easy access to the U.S. market if they didn’t pass along such information. It was projected to generate $8.7 billion over 10 years, according to the congressional Joint Committee on Taxation.

–ENDS

ON A PERSONAL NOTE

Some U.S. citizens are dependents of a foreign spouse or a spouse working in a foreign country. By no means must or should you consider them rich. Rather, many are indeed quite simple families getting caught up in a predator nation’s attempt to form a blanket opinion of all U.S. citizens living overseas.

In my opinion the part of this FATCA law that is not being talked about is how it will entrap every U.S. citizen to service the U.S. debt by making it impossible for families to pay for renouncing their U.S. citizenship and simply trying to live a better life elsewhere.

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