Another Record Year For US Expatriations

by Mike Godfrey, Tax-News.com, Washington

13 February 2015

According to Treasury Department statistics published in the Federal Register, a record 3,415 US taxpayers gave up their passports or their green cards in 2014 – 14 percent more than the previous record of 2,999 in 2013.

The Treasury is required by statute to publish a quarterly list including the name of each individual who has lost or renounced US citizenship during the period. For purposes of this listing, long-term residents or green card holders are treated as if they were citizens of the US who lost citizenship.

The number of individuals giving up their citizenship has been notably greater in the last two years, with the highest level in recent years having previously been set at 1,781 in 2011. 1,062 lost or gave up their citizenship in the last three months of 2014 alone, the second highest quarter ever recorded, after the 1,130 seen in the second quarter of 2013.

The acceleration in the number of individuals giving up their citizenship is seen to have occurred at the same time as increased actions are being taken by the Treasury and the Internal Revenue Service (IRS) to trace American undeclared assets and income held abroad.

Of particular relevance was the July 1, 2014, deadline for the application of the Foreign Account Tax Compliance Act. The Act is intended to ensure that the IRS obtains information on accounts held abroad at foreign financial institutions by US taxpayers. To facilitate this regime, the US is negotiating more tax information exchange agreements with foreign jurisdictions.

It has also been said that more Americans living abroad are becoming aware of their unwanted US tax reporting obligations – for example, the requirement to file a Report of Foreign Bank and Financial Accounts – due to the US "worldwide" tax code, which subjects all of an individual's earnings to US taxation.

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