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08.02.2016 01:49 Age: 2 days

Record number of US citizens, green-card holders cut ties with US in 2015


Increase attributed to recent enforcement campaign against US taxpayers with undeclared offshore accounts, reports the Wall Street Journal.

A record 4,279 individuals renounced their US citizenship or long-term residency in 2015, according to data released by the Treasury Department.

Last year was the third year in a row for record renunciations, according to Andrew Mitchel, an international lawyer in Centerbrook, Conn., who tallies and tracks renunciation data. The Treasury Department renunciation list for the fourth quarter, which contained 1,058 names, was released on Friday.

"An increasing number of Americans appear to believe that having a US passport or long-term residency isn't worth the hassle and cost of complying with US tax laws," Mr. Mitchel said.

Experts say the growing number of renunciations by citizens and long-term holders of green cards is related to an enforcement campaign by US officials against undeclared offshore accounts. It intensified in 2009, after Swiss banking giant UBS AG admitted that it encouraged US taxpayers to hide money abroad.

Since then, the US has collected more than US$13.5 billion from individuals and foreign financial firms in taxes and penalties due on such accounts. This week, Swiss bank Julius Baer Group AG admitted it encouraged US taxpayers to hide money abroad and agreed to pay US$547 million to settle potential charges.

However, the campaign by US officials also has complicated the financial lives of an estimated seven million or more Americans living abroad, leading growing numbers to sever their US ties.

Unlike many countries, the US taxes nonresident citizens on income they earn abroad. According to Philip Hodgen, an international tax lawyer who practices in Pasadena, Calif., the law provides only partial offsets for double taxation when taxes are owed to both the US and a foreign country, and complying with the law is onerous.

Mr. Mitchel adds that since 1995, the penalties for noncompliance by Americans living abroad who didn't intentionally avoid filing common IRS forms have increased dramatically-in some cases from as little as US$2,000 to as much as US$70,000 annually.

IRS scrutiny of Americans abroad is also intensifying because of a new law known as Fatca, which requires foreign financial institutions to report income information for their customers who are US taxpayers to the IRS, or else face severe penalties. More than 180,000 foreign banks and other firms have signed up to comply with Fatca.

The Treasury Department is required by law to publish quarterly lists of people who renounce their citizenship or long-term residency. The list doesn't distinguish between people turning in passports and those turning in green cards, or indicate which other nationality the individuals hold.

There is often a lag between when a person renounces and the government's publication of his or her name. No information appears other than the name.

In the fiscal year ended Sept. 30, 2015, nearly 730,000 people became US citizens, according to a spokesman for the US Citizenship and Immigration Services division of the Department of Homeland Security.

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Record number of US citizens, green-card holders cut ties with US in 2015