Tags: Mitchel | citizen | renounce | tax

Renouncements of US Citizenship, Residency Hit Record High in 2014

By    |   Tuesday, 10 February 2015 03:12 PM

The number of people who renounced their U.S. citizenship or long-term residency soared 14 percent last year to a record of 3,415.

Andrew Mitchel
, a lawyer in Centerbrook, Conn., counts the numbers based on quarterly lists from the Treasury Department.

Many of the renouncements stem from the Foreign Account Tax Compliance Act (FATCA). The law was enacted in 2010, and one if its main provisions took effect last July. That plank requires foreign financial institutions to report the income of their U.S. customers to the Internal Revenue Service.

For the last five years, the IRS has been going after Americans who aren't reporting the income from their offshore accounts.

"Many Americans abroad are finding that retaining their ties is not worth the cost and hassle of complying with the U.S. tax laws," Mitchel told The Wall Street Journal.

In the five years through 2008, an average of fewer than 500 people a year renounced their citizenship or long-term residency, the paper reported.

The renouncers aren't necessarily tax scofflaws. "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."

Michael Graetz, a Columbia University law professor and former 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."
 

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The number of people who renounced their U.S. citizenship or long-term residency soared 14 percent last year to a record of 3,415.
Mitchel, citizen, renounce, tax
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2015-12-10
Tuesday, 10 February 2015 03:12 PM
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