Yesterday the “Name and Shame” list of those individuals who renounced their US citizenship or terminated their long-term US residency (“expatriated”) during the second quarter of 2017 was published by the US Treasury Department. The number of published expatriates for the quarter was 1,759, which according to the International Tax Blog is the second highest quarterly number ever. The number of published expatriates for the first two quarters of 2017 has already reached the skyrocketing number of 3,072 (first quarter 1,313 + second quarter 1,759).
US expatriations set a new record in 2016 at 5,411 as listed by the US Treasury Department. Last year we saw London’s former mayor, Boris Johnson, also become a “former” US citizen. Let’s see if 2017 will surpass the 2016 number. Looks likely!
Surge in Expatriations
The expatriation numbers being issued by the US Treasury Department show annual increases over the past four years with the first surge being noted in 2013. Expatriations are thought to be linked to increased scrutiny by the Internal Revenue Service as it hunts for undeclared assets belonging to US expatriates. It is also connected with the increasing complexity (and cost) involved in US tax filings for those with any overseas financial assets, as the typical American abroad would hold (e.g., think “local” bank accounts, “local” stock trading accounts, pension fund plans established by the “local” employer, all of which are “foreign” assets for US tax purposes).
The practical problems for US expatriates generated by the infamous “Foreign Account Tax Compliance Act” (FATCA) is also cited as another reason. FATCA has caused banking difficulties for many US persons living abroad. In addition, since the surprising election of President Donald Trump, social media sites have seen increases in the number of US citizens posting their intention to relinquish what is perceived as a very burdensome citizenship.
Accidental Americans Caught in a Trap
Many of those giving up their US citizenship are so-called “Accidental Americans“, who learned with utter horror of the onerous US tax rules applicable to them. Many of these persons lack a Social Security Number (SSN) and therefore find it almost impossible to achieve US tax compliance without severe difficulty. Obtaining a SSN when one left the US as a child is a veritable nightmare.
The expatriation tax regime must be carefully considered prior to taking the plunge. And remember, individuals holding a US green card (even one that has expired) can also be subject to these rules.
If you wish more information regarding expatriation, I have prepared numerous tax blog postings on this topic. The list is here.
The International Tax Blog has prepared some excellent graphs reflecting expatriation data:
Graph showing the number of published expatriates per quarter commencing 2008 to Q2 2017.
Graph showing the average annual expatriations per decade from the 1960’s through the 2010’s.
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