More Americans Quit US Before FATCA Begins

by Mike Godfrey, Tax-News.com, Washington

11 August 2014

According to Treasury Department statistics published in the Federal Register, a record number of 1,577 United States taxpayers gave up their passports or their green cards in the first half of this year, up from 576 in the first quarter. This is already a long way towards reaching the record level of 2,999 in the whole of 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 the 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 accelerating number of individuals giving up their citizenship in the first six months of 2014 has come as actions being taken by the Treasury and the Internal Revenue Service (IRS) to trace American undeclared assets and income held abroad gather pace.

Of particular relevance was the July 1 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, and under which the US is negotiating more agreements with foreign jurisdictions. In addition, more than 100 Swiss banks have now agreed to participate in a US tax regularization program and disclose information on US account holders.

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.