Americans renouncing citizenship on pace to eclipse 2015

As of June 30, 2016, slightly over 500 American citizens renounced their citizenship in the second quarter of 2016, according to statistics complied by the Internal Revenue Service (IRS).

The total number of those renouncing their citizenship for the year comes to 1,666, which nearly mirrors the first and second quarter total for the same time period in 2015.  A total of 4,279 American citizens abandoned their nationality in 2015.

The fee to renounce sits at $2,350, up from $450 in years prior to 2014.

Veteran tax specialists say the dramatic increase in those renouncing citizenship is driven by the 2010 Foreign Account Tax Compliance Act (FATCA), which was enacted to force U.S. citizens including those living abroad to report all non-U.S. financial accounts to the Department of the Treasury.

Under the provisions of the FATCA, the IRS enters into agreements with foreign financial institutions which allows the IRS access to their customer databases to identify U.S. citizens’ assets abroad.  The law also imposes penalties on accounts abroad.

Former London mayor Boris Johnson, now serving as Foreign Secretary of the United Kingdom, holds dual British-American citizenship.  Johnson threatened to renounce in February, 2015, over IRS demands he pay a capital gains tax on the sale on his north London home.  The IRS pursued Johnson for over $100,000 in taxes.

The 4,279 citizens who renounced citizenship was an all-time high.

 

[Washington Examiner] [public-inspection.federalregister.gov] [Photo courtesy expatnetwork.com]