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Tags: foreign | tax | citizenship | renunciation

New Foreign Tax Law Sparks Record Number of Citizenship Renunciations

By    |   Wednesday, 10 September 2014 12:17 PM

The new tax law that tightens rules on foreign income isn't making too many of us proud to be Americans.

Indeed, expatriate Americans are rushing to renounce their citizenship. In the first six months of the year, 1,577 did so, which puts 2014 on pace to be a record, according to the IRS. Last year, a record 2,999 Americans dropped their citizenship.

The Foreign Account Tax Compliance Act (FATCA), originally passed in 2010, was strengthened July 1. The idea was to collect taxes that Americans had been ignoring on their foreign income. Clearly many of the 6.32 million American expats aren't too happy about that.

Editor’s Note:
5 Shocking Reasons the Dow Will Hit 60,000


The law also required foreign financial institutions to provide information on any accounts held by Americans.

"What is really driving Americans to expatriate is not that they do not want to pay taxes," David Kuenzi, founder of Thum Financial Advisors, told CNBC.

"What is driving them crazy is that now filling out tax returns is much more complicated. It requires tremendous work in terms of tax-record keeping and then it can cost thousands of dollars to get a competent person to fill it out."

Renowned investor Jim Rogers lives in Singapore and therefore has to file the complicated forms since he is a U.S. citizen.

"My filing requirements and possible penalties are very much different [to U.S. residents]," he told CNBC. "It is treating Americans who live abroad differently — you would think it is some kind of discrimination."

Michael Graetz, a Columbia University law professor and former top U.S. Treasury Department official, offers a mixed take on the law.

"FATCA is an ambitious effort to root out wealthy U.S. taxpayers hiding money offshore and put an end to tax evasion as a profitable line of business for banks," he told The Wall Street Journal.

"But U.S. authorities need to make an effort to avoid catching innocent middle-class citizens in its net."

Editor’s Note: 5 Shocking Reasons the Dow Will Hit 60,000

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Finance
The new tax law that tightens rules on foreign income isn't making too many of us proud to be Americans.
foreign, tax, citizenship, renunciation
338
2014-17-10
Wednesday, 10 September 2014 12:17 PM
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