More Americans are renouncing their citizenship

An IRS tax-avoidance crackdown on people living abroad appears to be behind the recent spike.

By Jonathan Berr Aug 12, 2013 10:28AM
U.S. passport (© Rubberball/Mike Kemp/Rubberball/Getty Images)The number of Americans who have given up their citizenship soared sixfold in the second quarter as the government prepares to adopt more stringent disclosures for overseas assets, according to Bloomberg News.

Overall, the number is tiny -- just 1,131 in the three months through June versus 189 in the year-earlier period -- but it highlights the unease many expatriates are feeling about the Foreign Account Tax Compliance Act (FATCA), which requires them to disclose foreign assets in excess of $50,000 to the IRS. Financial institutions abroad must now provide the IRS with information about accounts held by U.S. taxpayers and foreign entities in which U.S. taxpayers hold a substantial ownership interest.

"The U.S., the only nation in the Organization for Economic Cooperation and Development that taxes citizens wherever they reside, is searching for tax cheats in offshore centers, including Switzerland, as the government tries to curb the budget deficit," the news service says.

That quest has resulted in some big scores. UBS (UBS), Switzerland's biggest bank, agreed in 2009 to pay a $780 million penalty to settle criminal and civil charges that it helped U.S. citizens evade taxes. Whistleblower Bradley Birkenfeld, who disclosed the scheme, received a $104 million reward.
 
The IRS has delayed the law's enactment until July 1, 2014, to give foreign banks, which have complained that FATCA is too complicated, more time to comply. It's the second time the law has been delayed.

For Americans who live abroad permanently, complying with FATCA can be a pain.

"Many foreign financial institutions have simply chosen to eliminate their U.S. citizens . . . in order to minimize their exposure to FATCA reporting requirements, withholding fees and potential penalties," according to American Citizens Abroad, an advocacy group that calls it a "breathtaking extension of U.S. legislative overreach."

Renouncing U.S. citizenship comes with a price. The U.S. instituted an "exit tax" on ex-Americans on people who may have avoided higher taxes on capital gains and income that went into effect this year, according to The Wall Street Journal.
 
Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.

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312Comments
Aug 12, 2013 11:35AM
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I am sure POLITICIANS are exempt from any penalties they impose on AMERICANS.

 

This government lives on one standard and that is "DOUBLE STANDARDS"............GO FIGURE!!!!!

Aug 12, 2013 12:11PM
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It doesn't surprise me that people are leaving, and I don't think taxes are the sole reason. A couple years ago my wife and I looked into leaving, but taxes were the last thing on our minds. The political Left and Right are so deeply entrenched in their positions that the probability of working together (aka "compromising" or "cooperating") toward a common goal is shrinking to zero. This nation is facing serious problems that must be addressed, but so many Americans are pitted against each other that our problems are only getting worse.

Obamacare will never work solely because 50% of us hate it, but, either way, we STILL have very serious health care problems. The government (fed, state, local) budgets have to be brought under control, but both sides reject the compromises needed to do so. Our economic foundation (manufacturing, service, finance, etc) has to be restructured in favor of a balanced, managed form of capitalism and markets that benefit the entire country, not just the 1% at the very top. Etc.

These are tough problems, sure, but one would think that the greatest nation in history could find solutions. But doing so would require us to work together, despite our superficial differences, toward a common goal of life, liberty, and the pursuit of happiness. 

 

Aug 12, 2013 11:10AM
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Go to a flat tax and quit providing an incentive to cheat.  Besides, when you tax anything you have less of it.

I often think of the luxury tax on large luxury boats that congress passed years ago.  The wealthy just stopped buying new boats, some boat companies went out of business or laid off some of the workers.  Less tax income and more unemployed.

When it comes to dumb ideas, this administration and congress really takes the cake.

Aug 12, 2013 12:57PM
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Only we can be so arrogant as to tax people WHO AREN'T EVEN HERE! Let's see - someone who has moved to Panama should pay US taxes because FDA?, FBI?, EPA?, School lunch programs? Highways, Sewers, Water? What - why should they have to pay taxes in a country they don't live in?

 

And we have the audacity to tax them for leaving the country? An exit tax?!

 You can't escape from America -what is this now a prison?

Aug 12, 2013 12:30PM
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I feel as if the USA is about to have a great setback due to are backing of greedy and deceptive politicians and the administration who are governing the USA, I'm a Sioux Indian Heritage and proud of it and so sorry that the Country I fought for and spilt blood for is going to Hell in a hand basket. At times I feel like giving up my citizenship because of the current administration, this country makes me sick they vote for a president who is not even an American citizen, and while the people struggle to live this guy can take million dollar vacations every other month. This country is going to fail or another civil war is looming in the near future.
Aug 12, 2013 11:23AM
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Atlas Shrugged effect.  Wait a few more years and then let's revisit the % increase in the producers taking their wealth and talent elsewhere.  Let's also see how many countries start to recruit these folks big time with sweetheart deals to entice them to settle and bring their $ and brainpower.  
Aug 12, 2013 11:26AM
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THIS IS PRETTY SIMPLE.
THAT MONEY YOU  """""EARNED"""" DOES NOT BELONG TO YOU

I am not advocating the fact that people should not pay taxes,,,,but they should only pay what is earned here in the STATES. If G M make $$$$ in CHINA , and that is TAXED there, WILL G M pay taxes at home,even if the $$ are not repatriated     DOUBLE TAXATION @ 50%?????

Aug 12, 2013 2:08PM
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i am pretty sure if we were to take away the Billions of dollars  from the islamic countries we support there would be plenty of money for good healthcare for all americans even the ones who sit on their asses collecting money from our government as well.
Aug 12, 2013 12:35PM
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taxing overseas  ctizens is   just  one  more  example of  federal govt  arrogance

even more arrogance is  taxing  for  10 years after they renounce

pity these foreign banks  dont  man up and   give the  finger to these  federal facists
Aug 12, 2013 1:34PM
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An IRS tax-avoidance crackdown on people living abroad appears to be behind the recent spike.

ISN'T AVOIDING TAXES THE RIGHT OF EVERY AMERICAN ??    LOOK AT CONGRESS
Rangel didn't pay taxes on his estate in the Dominion Republic - go down the list of congress /  NOT ONE - ALL

Aug 12, 2013 12:36PM
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What a tragedy that people will renounce their citizenship in order to avoid taxes. I have always say that many American don't appreciate how wonderful this country is.
 I just became a US citizen 3 weeks ago and I am excited and grateful for the opportunity for me and my family. I have always work and pay my taxes and I see the benefit of doing so in all the services that I receive from the government.  

I grew up in Honduras now sadly the most violent country in the world where criminal will kill you on the streets just to steal your cell phone or your sneakers. Taxes there are almost non existent but believe I would never trade living here for anything !!!
Aug 12, 2013 2:17PM
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I read this article then the litany of vitriol comments and had to respond.  I exited the US nearly four years ago because this one article and it's respondents are a microcosm of what's happening to the country.  The America I grew up in is gone and it's never coming back.  The country is being overrun by takers who have learned to vote themselves more of what the makers have.  The makers fear being labeled as uncaring or worse and simply pay more and more, and more.  You hard working Americans have a much higher threshold for getting screwed than I had.  I now live happily stress free in a country whose citizens enjoy much more freedom than most Americans do.  Taxes are added to all purchases except food.  No income tax at all...  Government is stable,  infrastructure is modern.  I have a successful small business with six employees, none of which are American citizens.  Why should I have to pay taxes to to US?  What protections does it offer me?  I'll answer... none.  Americans voted to go over the financial cliff and at some point the world will stop loaning it money.  When it collapses, which is inevitable, the whole world will not collapse with it.    Good Luck!
Aug 12, 2013 1:31PM
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Tax people who do not live here and use any of the federal government but odumbo can take another vacation at the tax payers expense.  I for one believe he needs to be taxed on all the money he spends on vacations.  Just think of what he spent on his African trip alone up to 100 Million dollars.  Lets just say a small tax of 10% that would give the feds 10 million dollars back to the people who they steal it from. we the working class.
Aug 12, 2013 12:54PM
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Theodore Roosevelt,

"The man of great wealth owes a peculiar obligation to the State, because he derives special advantages from the mere existence of government. Not only should he recognize this obligation in the way he leads his daily life and in the way he earns and spends his money, but it should also be recognized by the way in which he pays for the protection the State gives him."

Good luck getting help from foreign governments.

Aug 12, 2013 12:32PM
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Some  live outside the US and  have an account in a bank make it hard and expensive , $5-20,000 a year for the US paperwork that the bank has to file with the US IRS. The millionaires always get around taxes with crooked lawyers and accountants.  I'm looking at S. America.  Don't  have a million so I can live in Cal, don't like 100 deg. heat in AZ. and can't afford $6-8000 a year insurance in FL. Humidity in some southern states is a deal breaker. Have fun and goodbye.
Aug 12, 2013 1:19PM
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I just want to see the same effort to collect taxes being put on corporations that hide profits abroad, or heck, let just start collecting on the profits they make at home for a change. I guess we ran out of money from the Americans at home to pay the GE and  oil companies after they made record profits, now we have to go after the American who possibly was born overseas and never lived in the US just because he/she holds a US passport and has a bank account. Let's start with wealthy corporations.
Aug 12, 2013 2:34PM
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The House Divided,

    At every conceivable level our crooked government's far flung tentacles and over-reach are disenfranchising more and more American citizens. At this juncture, who can really blame anyone with connections and financial resources from leaving the country? Frankly, it's hard to believe that so many foreign nations would actually agree to comply with IRS tactics to collect taxes from offshore or overseas assets held by residents who have given up their US citizenship. These nations ought to tell the IRS to go to Hell because it's none of their business. If the IRS really wants to grow revenue, why don't they go after most of the 'Fortune 500 Corporations' who collectively have $Trillions in assets in offshore tax havens and foreign multi-layered 'shell companies. Apparently they won't exercise that option because all of those corporations and their lobbyist shills have direct ties to the 535 'esteemed' stripe-suited criminals on Capitol Hill, (which should really be spelled 'Capital Hill').

    It's a sorry state of affairs and quite painful to admit this, but we as a nation are fast approaching a tipping point. As things continue to spiral downward, as the government's growing abuse of powers are un-checked and as the distrust by the citizenry continues to grow there will inevitably be a move towards civil insurrection, the likes of which have not been seen since Lincoln and the Civil War. The sign posts for danger are up and all around us, and unfortunately it's simply a matter of time.

Peace to all ~

Aug 12, 2013 2:46PM
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Kennedy democrats; "ask not what can your country do for you but what you can do for your country"

 

Obama democrats; " where's my free stuff you promised?"

 

I guess there are more and more wealthy tired of supporting the freeloaders.

Aug 12, 2013 3:03PM
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We need to clean house in Washington, fire all of them.  Special interest groups and lobbyists' write these bloated 2700 page bills that these clowns on both sides of the isle vote on without even reading. It's shameful, and it's irresponsible, and if we don't come together to rid ourselves of this vermin, we will have nobody to blame but ourselves.
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