The number of people who decided to dump US citizenship last year surged, breaking all records ever registered.
At least 4,279 people rejected US citizenship and green cards last year, surpassing the previous record set in 2014 by 864 people, according to a US Treasury Department report.
Andrew Mitchel, an international lawyer analyzing Internal Revenue System (IRS) data, told the Wall Street Journal (WSJ) that 2015 was the third year in a row which beat prior records regarding deliberate deprivations of US citizenship. He noted that the tendency may be related to the “hassle and cost of complying with US tax law.”
The expert have suggested that the trend could be caused by US authorities’ efforts to tackle unregistered offshore accounts. The campaign kicked off in 2009, when the Swiss bank UBS AG admitted it had called for its clients, including US taxpayers, to hide their assets abroad.
Since then, the US raised $13.5 billion in taxes and fines from foreign-based individuals and legal entities. The campaign caused hurdles for roughly 7 million US nationals living abroad, pronpting them to cut ties with their homeland.
Under US legislation, American expatriates face double taxation and can only get part of their money back, tax lawyer Philip Hodgen pointed out.
In 1995, the US increased fines for Americans living abroad. Now if expatriates don’t return tax forms on time – even unintentionally – they will have to pay the state up to $70,000 in fines, Mitchell added.
Another reason behind the record number of citizenship rejections is the Foreign Account Tax Compliance Act (FATCA). Passed in May 2015, this federal law obliges foreign banks to provide the US IRS with information about accounts heldy by American nationals. If banks fail to comply with the act requirements, the US can take up to 30 percent of payments proceeded by those financial establishments in taxes. Over 180,000 have adhered to FATCA so far.
The US is the only nation in the Organization for Economic Cooperation and Development that imposes taxes on its citizens regardless to their location.