Why Americans are massively giving up citizenship

The prospect of tycoon Donald Trump becoming president has Americans considering moving out of the country. Google previously reported a surge in searches for “moving to Canada” after New Year’s Day in March.

The Washington Post analyzed the data and concluded that it was not Trump, as a possible next president, that caused the refusals, but taxes.

The United States Revenue Service (IRS) publishes the names of every American who renounces citizenship. The list is published every three months. An international tax lawyer every year, starting with 2008, counts their number. In the first quarter of this year, 1158 people renounced their citizenship. This is more than 10 times the number in the first quarter of the year 2008. Last year, in the first quarter, record-breaking 4279 people refused from citizenship.

The number of failures has steadily increased since 2008 of the year, but a special surge has been seen in 2013, which does not confirm Trump’s theory of involvement.

The increase in refusals of citizenship is associated with the introduction of new federal reporting requirements for foreign assets of US citizens and the introduction of severe penalties.

The requirements were passed in 2010 as part of legislation aimed at encouraging big business in the country to revive the economy. An appendix to the law was the Foreign Account Tax Reporting Act (FATCA), which was supposed to identify and prevent tax evasion through offshore bank accounts.

The law requires foreign banks to report US customers. Failure to comply with the law entails a fine: 30% withholding of income from financial operations of a bank in the United States. This led to the fact that foreign banks began to massively close foreign accounts to Americans.

The new rules entail new filing requirements for individuals with assets abroad and increased fines for failure to submit the form to $10. Also, if you intentionally fail to file financial statements for foreign accounts, you may be subject to a fine of $000 or 100% of the amount due. bank account - whichever is larger.

“Oh my God, my God, the IRS is going to bankrupt me,” one of his clients told Mitchell. "People are horrified by this and they don't want anything to do with the IRS."

Mitchell said many of his clients pay taxes in the country where they currently live and may not have thought to file a return in the United States. In most countries, taxes are paid only when they live on its territory. Only two countries in the world—the United States and Eritrea—require their citizens to pay taxes on income while living in other countries.

Mitchell noted that not only rich people suffer, but also moderate-income pensioners living abroad.

It turns out that the renunciation of citizenship also has its price. A person may be required to pay tax for all his assets around the world, as if he had sold them as an American.

It is difficult to say that the new tax requirements on 100% are the reason for the increase in expatriation, but the fact that they added a headache to all participants, including the US government, cannot be denied.

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