Tags: passports | citizenship | American | Obama | tax

Americans Renouncing Citizenship top Record

Tuesday, 10 Feb 2015 05:47 PM

The number of Americans renouncing U.S. citizenship increased 37 percent in the three months through December and the annual total reached a record level, data published Tuesday showed.

People giving up their nationality at U.S. embassies rose to 1,062 in the fourth quarter from 776 in the year-earlier period, according to Federal Register data. That’s the highest quarterly total since the second quarter of 2013, according to Bloomberg News calculations based on records starting in 1998.

The annual total reached 3,415 in 2014, from 3,000 in the year-earlier period, according to Federal Register data. The five highest totals have been recorded since the U.S. Congress passed a law in 2010 that gives the Internal Revenue Service unprecedented access to U.S. citizens’ foreign bank accounts.

The U.S. is the only country within the Organization for Economic Cooperation and Development that taxes citizens wherever they reside. There are an estimated 6 million U.S. citizens living abroad.

The U.S. has increased efforts to catch tax cheats after UBS AG paid a $780 million penalty in 2009 and handed over data on about 4,700 accounts. That has led some banks to forgo doing business with people who have ties to the U.S.

More than 10,000 Americans living overseas have given up their passports over the past five years.

One of the primary U.S. moves took effect last year as asset-disclosure rules under the Foreign Account Tax Compliance Act kicked in. The measure, known as Fatca, requires U.S. financial institutions to impose a 30 percent withholding tax on payments made to foreign banks that don’t agree to identify and provide information on U.S. account holders.

It allows the U.S. to scoop up data from more than 77,000 institutions and 80 governments about its citizens’ overseas financial activities.

In establishing the 2010 Fatca law, Congress and President Barack Obama in effect threatened to cut off banks and other companies from easy access to the U.S. market if they didn’t pass along such information. It was projected to generate $8.7 billion over 10 years, according to the congressional Joint Committee on Taxation.

Obama this month proposed making it easier for those who the U.S. considers “accidental” citizens to stay out of the U.S. tax system. What the administration refers to as accidental citizens include people born in the U.S. while their parents were visiting the country from abroad or individuals whose only connection is a parent who was a U.S. citizen.

Under the proposal, such people would have to give up their citizenship in 2016 or 2017 and make sure they had complied for the past five years with federal tax laws that would have applied if they were U.S. nonresidents.

The special rules exempt those people from U.S. taxes and from the mark-to-market tax imposed when people expatriate, which taxes people as if they sold their assets before turning in their passports.

The Obama administration proposals would be available only to dual citizens who haven’t lived in the U.S. since age 18 1/2 and haven’t had a U.S. passport, except for one they used to leave the U.S.

The proposal was part of Obama’s 2016 budget plan and any changes would likely have to be passed by Congress.

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The number of Americans renouncing U.S. citizenship increased 37 percent in the three months through December and the annual total reached a record level, data published Tuesday showed.People giving up their nationality at U.S. embassies rose to 1,062 in the fourth quarter...
passports, citizenship, American, Obama, tax
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2015-47-10
Tuesday, 10 Feb 2015 05:47 PM
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