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Number of Americans Renouncing Citizenship Surges

8/14/2013

 
The number of U.S. taxpayers renouncing citizenship or permanent-resident status surged to a record high in the second quarter, as new laws aimed at cracking down on overseas assets increase the cost of complying and the risk of a taxpayer misstep.

Taxpayers aren't required to explain the move, but experts said the recent rise is likely due to tougher laws and
enforcement. "The IRS crackdown on U.S. taxpayers living abroad seems to be having an effect," said Mr. Mitchel.
The IRS declined comment.
Lags in reporting renunciations might mean that many who appeared on the current list made the move months earlier. Taxpayers who renounced can be subject to an exit tax, and people who renounced last year may have avoided higher taxes on capital gains and income that went into effect in 2013. The U.S. is rare in that all income earned by citizens and permanent residents, even those living abroad, can be subject to U.S. tax, according to Bryan Skarlatos,
a New York lawyer. The U.S. also confers citizenship on people who are born on American soil.
The U.S. launched the tax crackdown after the terrorist attacks of Sept. 11, 2001, and ratcheted up its efforts after 2009, amid evidence that UBS and other foreign institutions helped U.S. taxpayers hide assets.
Some taxpayers have applied for IRS limited-amnesty programs, in which they pay stiff penalties for past noncompliance but avoid prosecution. Tax lawyers say the crackdown has ensnared smaller violators who weren't
intentionally evading U.S. taxes.
-NY Times 

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