The number of Americans who renounced their citizenship in 2013 just shattered 2011′s record

posted at 5:21 pm on February 10, 2014 by Erika Johnsen

There are any number of reasons a person might consider giving up their U.S. citizenship, ranging from the familial to the professional to the financial, but for me at least, it would take a heck of a lot for me to even think about it. And by “a heck of a lot,” I mean that I have difficulty fathoming a situation in which I would actually want to give up my citizenship and/or live anywhere permanently other than the United States, because from where I’m sitting, the mere suggestion sounds pretty ghastly — which is precisely why our spiking expatriation rates of the past few years are so troubling. Via Andrew Mitchell at his International Tax Blog:

Expats_1998_2013

Today the Treasury Department published the names of individuals who renounced their U.S. citizenship or terminated their long-term U.S. residency (“expatriated”) during the fourth quarter of 2013.

The number of published expatriates for the quarter was 630, bringing the total number of published expatriates in 2013 to 2,999.  The total for the year shatters the previous record high of 1,781 set in 2011 and is a 221% increase over the 2012 total of 932.

We do not believe that the primary reason for the increase in expatriations is for political purposes or for individuals to reduce taxes.  Instead, we believe that there are likely three principal reasons for the recent increases in the number of expatriations:

1. Increased awareness of the obligation to file U.S. tax returns by U.S. citizens and U.S. tax residents living outside the U.S.;

2. The ever-increasing burden of complying with U.S. tax laws; and

3. The fear generated by the potentially bankrupting penalties for failure to file U.S. tax returns when an individual holds substantial non-U.S. assets.

Sure, the total expatriation numbers are a relatively miniscule phenomenon, but the pace at which they are increasing probably says a lot about the direction in which the federal government is taking our tax code. Hint: They aren’t making it easier or more attractive for people working out in the global market to maintain their citizenship, as Robert Wood at Forbes explains:

No group is more severely impacted than U.S. persons living abroad. For those living and working in foreign countries, it is almost a given that they must report and pay tax where they live. But they must also continue to file taxes in the U.S. What’s more, U.S. reporting is based on their worldwide income, even though they are paying taxes in the country where they live.

Many can claim a foreign tax credit on their U.S. returns, but it generally does not eliminate all double taxes. These rules have long been in effect, but enforcement was historically less of a concern with expats. Today, enforcement fears are palpable.

Moreover, the annual foreign bank account reports known as FBAR forms carry civil and criminal penalties all out of proportion to tax violations. The penalties for failure to file these forms, civil and criminal, are severe. Even civil penalties can quickly consume the balance of an account.

The coup de grace is FATCA, which is ramping up now worldwide. It requires an annual Form 8938 to be filed with income tax returns for foreign assets meeting a threshold. And foreign banks are sufficiently worried about keeping the IRS happy that many simply do not want American account holders. Americans abroad can be pariahs shunned by banks for daily banking activities.

In other words, foreign financial institutions are required to certify that U.S. taxpayers aren’t “hiding” money with them as a condition for being allowed to do business with the U.S. I seriously doubt that many of these newfound expatriates were really gunning to give up their citizenship, but the federal government incorrigibly continues to make it more and more worth people’s while to investigate the option.


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I don’t blame them.

Switzerland sounds good if it wasn’t so cold. I understand the gun laws in Belize are as bad as GB.

Lanceman on February 10, 2014 at 5:26 PM

Today the Treasury Department published the names of individuals who renounced their U.S. citizenship or terminated their long-term U.S. residency (“expatriated”) during the fourth quarter of 2013.

Um, these two categories that they casually lumped together are as different as apples & oranges pizzas.

Those of us who live elsewhere but still love & appreciate the US are quite different from those who are willing to renounce their citizenship.

itsnotaboutme on February 10, 2014 at 5:34 PM

This great experiment is turning into a great nightmare for many, many citizens . . . can’t blame them for looking for a better place.

rplat on February 10, 2014 at 5:34 PM

Meanwhile has nothing for residents in West Virginia who lack basic water access because of corporate negligence. But if Obama speaks sternly to Fox it’s a four blog post worthy event.

libfreeordie on February 10, 2014 at 5:35 PM

it would take a heck of a lot for me to even think about it. And by “a heck of a lot,” I mean that I have difficulty fathoming a situation in which I would actually want to give up my citizenship

Given what you’ve written before, I can easily fathom such a situation:

President Trumka.

Stoic Patriot on February 10, 2014 at 5:36 PM

This great experiment is turning into a great nightmare for many, many citizens . . . can’t blame them for looking for a better place.

rplat on February 10, 2014 at 5:34 PM

While true, you should qualify that a bit further. The “great experiment” was working just fine in the 80′s and even the 90′s. It all started going sideways in 2006 when we got both houses controlled by DimocRats, AND a progressive Republican president who went along with the vast majority of what they wanted.

2009 was the tipping point, when the phrase “we’re all socialists now” became more than just a leftist dream and became reality.

Left_is_Wrong on February 10, 2014 at 5:40 PM

Meanwhile has nothing for residents in West Virginia who lack basic water access because of corporate negligence. But if Obama speaks sternly to Fox it’s a four blog post worthy event.

libfreeordie on February 10, 2014 at 5:35 PM

Never mind me. Perhaps you shouldn’t be beltin’ the bottle before 9am

Lanceman on February 10, 2014 at 5:42 PM

Meanwhile has nothing for residents in West Virginia who lack basic water access because of corporate negligence. But if Obama speaks sternly to Fox it’s a four blog post worthy event.

libfreeordie on February 10, 2014 at 5:35 PM

I guess you missed this.

Midas on February 10, 2014 at 5:47 PM

Meanwhile has nothing for residents in West Virginia who lack basic water access because of corporate negligence. But if Obama speaks sternly to Fox it’s a four blog post worthy event.

libfreeordie on February 10, 2014 at 5:35 PM

Shouldn’t you ask the Democrats who have run West Virginia since forever why that is?

Del Dolemonte on February 10, 2014 at 5:47 PM

Meanwhile has nothing for residents in West Virginia who lack basic water access because of corporate negligence. But if Obama speaks sternly to Fox it’s a four blog post worthy event.

libfreeordie on February 10, 2014 at 5:35 PM

Yeah ! After you take their job, all they have left is Bread and water. /

Jabberwock on February 10, 2014 at 5:50 PM

Meanwhile has nothing for residents in West Virginia who lack basic water access because of corporate negligence. But if Obama speaks sternly to Fox it’s a four blog post worthy event.
 
libfreeordie on February 10, 2014 at 5:35 PM

 
Erika, I’ve said it before, I’ll say it again, and I stand by it entirely. It’s not nice to prevent our resident (D)s from posting on the
 

Here we go: White House delays ObamaCare employer mandate for some small businesses until 2016

 
thread.
 
Management should let them post freely on all threads or none at all.

rogerb on February 10, 2014 at 5:52 PM

3000 gone?

That’s nothin’

Obama will have tons more replacement citizens…

Electrongod on February 10, 2014 at 5:52 PM

3000? Out of 300,000,000 that is literally nothing. Those people could have permanently gone abroad for many reasons, including retirement, job relocation, marriage, adventure, or even anti-Americanism. To claim or in any way imply it was due to taxes without any evidence whatsoever is clearly an attempt to score cheap political points.

Federati on February 10, 2014 at 5:54 PM

libfreeordie on February 10, 2014 at 5:35 PM

Don’t make us call your mother! Does she know you are off topic on a thread?

ledbylight on February 10, 2014 at 5:56 PM

Meanwhile has nothing for residents in West Virginia who lack basic water access because of corporate negligence.
 
libfreeordie on February 10, 2014 at 5:35 PM

 
BTW, did Huffpo just post something about it? The story is a month old. Literally.
 
Way to stay up to date on current events, professor.

rogerb on February 10, 2014 at 5:56 PM

Meanwhile has nothing for residents in West Virginia who lack basic water access because of corporate negligence. But if Obama speaks sternly to Fox it’s a four blog post worthy event.

libfreeordie on February 10, 2014 at 5:35 PM

Meanwhile, libcommie’s comments are as useful as one square of Sheryl Crow designer toilet paper. It may be messy, and leave a stink on you, but it’s easy to flush!

ZeusGoose on February 10, 2014 at 5:58 PM

Meanwhile has nothing for residents in West Virginia who lack basic water access because of corporate negligence.
 
libfreeordie on February 10, 2014 at 5:35 PM

 
BTW, did Huffpo just post something about it? The story is a month old. Literally.
 
rogerb on February 10, 2014 at 5:56 PM

 
Ha. They did. Five hours ago.
 
Screengrab:
 

http://imgur.com/HqM4qYN

 
Way to stay informed on important news stories, professor.

rogerb on February 10, 2014 at 6:01 PM

BTW, did Huffpo just post something about it? The story is a month old. Literally.

Way to stay up to date on current events, professor.

rogerb on February 10, 2014 at 5:56 PM

Okay, that explains the lack of coverage, -the story is behind a wall at a filthy moneygrubbing multinational corporation.

slickwillie2001 on February 10, 2014 at 6:03 PM

the story is behind a wall at a filthy moneygrubbing multinational corporation.

slickwillie2001 on February 10, 2014 at 6:03 PM

I certainly hope so.

Lanceman on February 10, 2014 at 6:08 PM

If Hillary is elected president in’16, I won’t have bailed out on America, America woud have bailed out on me.

JackM on February 10, 2014 at 6:25 PM

B.O. would have renounced his U.S. citizenship long ago, if he were a U.S. citizen, that is.

JackM on February 10, 2014 at 6:28 PM

” Meanwhile has nothing for residents in West Virginia who lack basic water access because of corporate negligence. But if Obama speaks sternly to Fox it’s a four blog post worthy event.”

libfreeordie on February 10, 2014 at 5:35 PM
Since you seem concerned about the plight of folks in West Virginia I’m wondering what your thoughts are on the EPA attempting to regulate the coal industry out of existence? And, assuming you support such efforts, how do you think the loss in local tax income will HELP in events like…. say a chemical spill cleanup? Or do you think that all those new folks on some sort of welfare program
will help their local economies?

Von Kleist on February 10, 2014 at 6:32 PM

Adios then, be sure to write.

Bishop on February 10, 2014 at 6:37 PM

Meanwhile has nothing for residents in West Virginia who lack basic water access because of corporate negligence. But if Obama speaks sternly to Fox it’s a four blog post worthy event.

libfreeordie on February 10, 2014 at 5:35 PM

Shouldn’t you ask the Democrats who have run West Virginia since forever why that is?

Del Dolemonte on February 10, 2014 at 5:47 PM

Sorry. Just wanted to see that again.

A+++, Del.

kim roy on February 10, 2014 at 7:17 PM

When my husband started doing contract work with a Canadian company, they required him to open a Canadian account to pay him via direct deposit. It’s not a tax shelter. We never deposit anything and we declared all of it, even though the IRS had no way of knowing our income. No 1099, and most of his work is outside the country.

Now we’re paying a lawyer and accountant to keep us out of bankruptcy and/or prison, because we didn’t file a form declaring our foreign bank account. Note that we did have an accountant prepare our taxes, and he did know about the account.

All of the things that changed in our lives when he took this job, from figuring out how to pack his tools, keep him in the kid’s lives, coping without him at home, etc., kept us very busy. Too busy to get a crash course in international tax law, so we trusted the professional that we’d trusted for years.

I was just telling our new accountant that the prevalence of these stories gives me hope. Orphan diseases get little research money, and orphan tax problems don’t generate much concern in political terms, but we’re decent, honest people who will be eating cat food in our golden years because we didn’t fill out a form. How can that be right?

ral514 on February 10, 2014 at 11:16 PM

Meanwhile has nothing for residents in West Virginia who lack basic water access because of corporate negligence. But if Obama speaks sternly to Fox it’s a four blog post worthy event.

libfreeordie on February 10, 2014 at 5:35 PM

This is an “At some point, you’ve made enough money” thread.

If you want an “at this point, what difference does it make,” take it up with HuffPo.

Maddie on February 11, 2014 at 10:12 AM

Meanwhile has nothing for residents in West Virginia who lack basic water access because of corporate negligence. But if Obama speaks sternly to Fox it’s a four blog post worthy event.

libfreeordie on February 10, 2014 at 5:35 PM

Ignorance so thick you’d need a chain saw to make a dent. Where to begin?

307wolverine on February 11, 2014 at 11:25 AM

Wow, I had no idea this country had so many racist. Well, at least they’re gone now.

brentspolemics on February 11, 2014 at 12:01 PM

Finally we have a border security issue Democrats can get behind — to keep people in.

Three decades ago or so, there was another place with the same problem. I can’t remember where it was, exactly — someplace in Eastern Europe, I think. Not sure…….

brentspolemics on February 11, 2014 at 12:04 PM

3000? Out of 300,000,000 that is literally nothing. Those people could have permanently gone abroad for many reasons, including retirement, job relocation, marriage, adventure, or even anti-Americanism. To claim or in any way imply it was due to taxes without any evidence whatsoever is clearly an attempt to score cheap political points.

Federati on February 10, 2014 at 5:54 PM

You are right. Clearly, it had nothing to do with the economic climate here. Obviously, this is happening for all reasons except that, for as long as people can argue over it. So, let’s just move along with our lives as if this has no political meaning worth inferring — unless it’s a liberal one. After all, we have no right to presume any conservative thing, no matter how apparent.

brentspolemics on February 11, 2014 at 12:12 PM