Washington, Aug 6 (Newswire): The number of Americans renouncing U.S. citizenship fell by nearly two-thirds in the second quarter, according to a list released by the Treasury Department.
The drop, to 189 citizens from 520 in the same period in 2011, may reflect the fact that many people inclined to renounce already have done so, experts say.
A 1996 law requires the Treasury Department to publish new renunciations each quarter. The list includes names of people who renounce their permanent residency by turning in their "green cards" as well as those who renounce U.S. citizenship.
The last list of expatriations, released April 30, revealed the names of Facebook Inc. co-founder and billionaire Eduardo Saverin, and Denise Eisenberg Rich, a Grammy-nominated songwriter and the ex-wife of commodities trader Marc Rich. In the first quarter of 2012, expatriations totaled 460.
Expatriations surged to almost 1,800 in 2011, a sixfold rise from 2008. Experts say the increase was related to a recent drive to enforce U.S. tax laws concerning foreign accounts.
The sharp decrease in the second quarter took some experts by surprise. "It may be that many people who were inclined to expatriate have already taken steps to do so," said Bryan Skarlatos, a tax attorney at Kostelanetz & Fink in New York.
The U.S. is highly unusual in that it imposes taxes on "world-wide" income, no matter where a citizen or permanent resident lives.
The U.S. also has a broad definition of who is a citizen—including all those born on U.S. soil. As a result, there are many "accidental citizens" who don't consider themselves American but owe U.S. taxes.
The recent enforcement efforts began after the terrorist attacks of Sept. 11, 2001. They accelerated after evidence showed that giant Swiss bank UBS AG and other offshore providers encouraged U.S. taxpayers to hide money abroad. Now the penalties for willful concealment of a foreign account are draconian and can empty an account.
Legal expatriation isn't easy, however. The people on the Treasury Department's list had to prove five years of tax compliance, and they owe an exit tax when they renounce. The tax applies to people with net worth greater than $2 million or whose average annual income for the five previous years is $151,000. (There is an exemption of about $650,000.) Some members of Congress want to stiffen these or other penalties.
In addition, expatriates may find it difficult to return to the U.S. on a regular basis. "Lots of people ask about expatriation, but they reconsider when they find out the tax requirements and what ties they would cut," said Mr. Skarlatos.
The drop, to 189 citizens from 520 in the same period in 2011, may reflect the fact that many people inclined to renounce already have done so, experts say.
A 1996 law requires the Treasury Department to publish new renunciations each quarter. The list includes names of people who renounce their permanent residency by turning in their "green cards" as well as those who renounce U.S. citizenship.
The last list of expatriations, released April 30, revealed the names of Facebook Inc. co-founder and billionaire Eduardo Saverin, and Denise Eisenberg Rich, a Grammy-nominated songwriter and the ex-wife of commodities trader Marc Rich. In the first quarter of 2012, expatriations totaled 460.
Expatriations surged to almost 1,800 in 2011, a sixfold rise from 2008. Experts say the increase was related to a recent drive to enforce U.S. tax laws concerning foreign accounts.
The sharp decrease in the second quarter took some experts by surprise. "It may be that many people who were inclined to expatriate have already taken steps to do so," said Bryan Skarlatos, a tax attorney at Kostelanetz & Fink in New York.
The U.S. is highly unusual in that it imposes taxes on "world-wide" income, no matter where a citizen or permanent resident lives.
The U.S. also has a broad definition of who is a citizen—including all those born on U.S. soil. As a result, there are many "accidental citizens" who don't consider themselves American but owe U.S. taxes.
The recent enforcement efforts began after the terrorist attacks of Sept. 11, 2001. They accelerated after evidence showed that giant Swiss bank UBS AG and other offshore providers encouraged U.S. taxpayers to hide money abroad. Now the penalties for willful concealment of a foreign account are draconian and can empty an account.
Legal expatriation isn't easy, however. The people on the Treasury Department's list had to prove five years of tax compliance, and they owe an exit tax when they renounce. The tax applies to people with net worth greater than $2 million or whose average annual income for the five previous years is $151,000. (There is an exemption of about $650,000.) Some members of Congress want to stiffen these or other penalties.
In addition, expatriates may find it difficult to return to the U.S. on a regular basis. "Lots of people ask about expatriation, but they reconsider when they find out the tax requirements and what ties they would cut," said Mr. Skarlatos.
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