A Record 1,380 People Renounce US Citizenship in Third Quarter

According to applicationfiling.com 1.380 Americans renounced their citizenship in the third quarter of 2106, the second highest total ever. One of the main reasons people are renouncing is due to FATCA, otherwise known as the Foreign Acccount Tax Compliance Act, which was enacted in 2010.  There are now 18 times as many renouncers as in 2008.

FATCA was instituted in order to catch individuals who have unreported offshore bank accounts and other assets in order to avoid paying taxes. The law mandates banks to provide Americans’ account information to the U.S. government.  FATCA has been painstakingly implemented worldwide by President Obama’s Treasury Department. It now spans the globe with an unparalleled network of reporting. America requires foreign banks and governments to hand over secret bank data about depositors. Non-U.S. banks and financial institutions around the world must reveal American account details or risk big penalties.

FATCA has been painstakingly implemented worldwide by President Obama’s Treasury Department. It now spans the globe with an unparalleled network of reporting. America requires foreign banks and governments to hand over secret bank data about depositors. Non-U.S. banks and financial institutions around the world must reveal American account details or risk big penalties.

America’s global income tax compliance and disclosure laws can be a burden, especially for U.S. persons living abroad. Like pariahs, they may be shunned because of their American status by banks abroad. Foreign banks are sufficiently worried about keeping the IRS happy that many do not want American account holders. Americans living and working in foreign countries must generally report and pay tax where they live. But they must also continue to file taxes in the U.S., where reporting is based on their worldwide income.

Many people claim a foreign tax credit, but it generally does not eliminate double taxes. Moreover, the annual foreign bank account reports called FBARs carry big civil and criminal penalties. FATCA has ramped up worldwide and requires an annual Form 8938 filing if foreign assets meet a threshold. Still, leaving America can be costly. To exit, you generally must prove 5 years of IRS tax compliance.

 

Are You Considering Renouncing your U.S. Citizenship?

Renouncing your United States citizenship is not a decision to be taken lightly.  There are a number of various factors to consider.  We advise talking to an attorney who is well-versed in all of the tax and legal implications involved.