Wall Street Journal Article
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.
A total of 1,130 names appeared on the latest list of renunciations
from the Internal Revenue Service, according to Andrew Mitchel, a tax
lawyer in Centerbrook, Conn., who tracks the data. That is far above the
previous high of 679, set in the first quarter, and more than were
reported in all of 2012.
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 AG
UBSN.VX 0.00%
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. In addition, a law enacted in 2010, the Foreign Account Tax
Compliance Act, or Fatca, requires foreign financial institutions to
certify they aren't hiding U.S. taxpayer assets, which lawyers say is
leading some to reject U.S. customers.
Taxpayer penalties for failing to report assets can be severe, including up to 50% of an account balance for each year.
The web of rules is "overly burdensome," said Jeffrey Neiman, a
former federal prosecutor who led the 2009 UBS case, which resulted in
the bank's agreeing to a $780 million settlement. He now is a lawyer in
private practice in Fort Lauderdale, Fla. "You basically find yourself
in this continuous nightmare."
The cost of complying with various rules and regulations can be steep even for people with small tax bills.
Carol Tapanila, who moved to Canada more than 40 years
ago and is now retired, renounced her citizenship in November and
appeared on the current list. She says her U.S. taxes amounted to about
$250 last year and she didn't take the step to avoid paying them. Legal and accounting fees and other costs of making sure she was in
compliance in recent years have added up to nearly $40,000, says Ms.
Tapanila. "It is nothing but stress."
Expatriation can also be costly, requiring that taxpayers prove they have properly paid five years' taxes, among other things.
Saturday, August 10, 2013
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WOW!!! Are you saying 1,100 people left a nation of 350-400 MILLION people? My God, at that rate.....oh that's actually nothing. Never mind. Dude, are you crazy?
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