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Americans Who Have Renounced Their Citizenship Heading for Record Year



Ronald Marini, Tax Advisor

As many as 1,400 Americans have renounced their citizenship in the third quarter of 2017, according to US Treasury Department data. The trend suggests the total for 2017 will be more than 6,800, which is 26% above the 2016 total and 56% higher than 2015.

Americans are on pace to renounce their citizenship in record numbers in 2017, according to the latest quarterly report from the Treasury Department.

  • Some 5,411 U.S. citizens expatriated in 2016, a record high that topped 2015’s numbers by 26 percent.
  • 2017 is currently on track to beat those figures, Bloomberg News reported, estimating a total of 6,813 by the end of the year if the fourth quarter is similar to 2016’s.
  • 2011 was the first year in which more than 1,000 people chose to terminate their American citizenship, according to the Federal Register.

Under federal law, Americans are taxed according to their nationality, which causes U.S. citizens living outside the country to face taxation from both the U.S. and their nation of residence. The pace of Americans jumping ship started to accelerate in 2010, when the Foreign Account Tax Compliance Act (FATCA) became law. The act was intended to stem tax evasion of U.S. citizens living or working abroad by basically requiring foreign institutions holding assets for American expats to report those accounts or withhold a 30 percent tax on them.

2016 q4 annual

The above graph is based solely on IRS data and shows the number of published expatriates per year since 1998.The connection between the list of expatriates and the IRS implies a link to tax policy.

The U.S. is one of a very small number of countries that tax based on nationality, not residency, leaving Americans living abroad to face double taxation. The escalation of offshore penalties over the last 20 years is likely contributing to the increased incidence of expatriation.

You may be asking yourself, “Should I Stay or Should I Go?” Fortunately, we can help!

Have other questions? Contact Ronald Marini

Your comments are welcome!

Mr. Marini concentrates his practice in Representation before the IRS and All Other Tax Authorities, IRS Collections, Offers in Compromise, Installment Payment Plans, Appeals, Sales Tax Audits, International and Tax Law, Asset Protection and Estate Planning.

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3 comments

  1. Daniel Kuettel says:

    Finally, some honesty from the compliance industry. The purpose of #FATCA is to double-tax the hell out of those damn expats, hence the high renunciation fee.

    I had to renounce in 2012 to refinance my mortgage. The result of renouncing is as if nothing happened. Life goes on as normal, only that one is then no longer discriminated against.

    As such, I highly recommend renunciations. It is the best and most efficient means of dealing with US policy.

    Yet, it is unfortunate for America that it’s citizens have to stop being Americans in order for them to continue living normal lives.

  2. Juan says:

    Ronald,

    I just wanted to say thanks for your coverage of the difficulties FATCA causes for Americans overseas. So few people in the US understand this and many tax professionals tend to have their own ‘agenda’ when discussing this matter. It’s refreshing (and relieving) so see someone in the tax community fairly explain what is happening.

    Thank you,

    Juan

  3. Nononymous says:

    The following statement is not accurate on two grounds:

    “The act was intended to stem tax evasion of U.S. citizens living or working abroad by basically requiring foreign institutions holding assets for American expats to report those accounts or withhold a 30 percent tax on them.”

    First, the impetus for FATCA was stopping tax evasion by US residents stashing money offshore and not reporting the income – a direct response to the Swiss bank scandals. Ordinary expats or dual citizens abroad, paying taxes and saving for retirement in their countries of residence (and likely not owing the US any tax anyway, if they were filing at all) are collateral damage.

    Second, the 30 percent withholding was absolutely NOT against the income or assets of individual account-holders, but rather the penalty that would be levied against any US transactions of the institution itself if it were deemed to not be compliant with FATCA by finding and reporting it’s US persons. It was precisely the threat of these penalties, as well as domestic privacy laws, that forced governments to negotiate IGAs.

    I think it’s important to get your FATCA facts straight if you’re going to be advertising your services.

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