By Alan Olsen, CPA, MBA (tax)
Greenstein Rogoff Olsen & Co. LLP
For most Americans, their citizenship is a source of pride. Citizens and foreigners alike, often recognize America as the world’s greatest country. Of course, America is not perfect, but for the most part, the United States is a great place to live, where people can enjoy freedoms and opportunities not found in many other countries. However, one of the biggest complaints amongst U.S. citizens is the country’s tax policies and procedures.
In fact, according to a recent report, a record number of American’s are breaking up with the country they call home. U.S. offices in other countries have reported that in just the first three months of the year, more 1,001 Americans and green-card holders had already renounced their citizenship. If those numbers continue, this year will easily top last year’s renunciation total of 2,999.
It’s About the Money
So what’s causing all of these citizens to say goodbye to the country they used to love? No one can say for sure as each case is different, however, many experts believe you can put the blame squarely on “Uncle Sam.” According to these experts, the government’s campaign to find undeclared accounts held by Americans who live abroad is a big reason for so many people renouncing their citizenship.
This collection campaign by the U.S. government has amassed at least $6 billion from more than 40,000 U.S. taxpayers in taxes, penalties and interest since it began five years ago. However, the government isn’t stopping there. Federal prosecutors have also issued at least 100 criminal indictments against people for tax evasion. The main reason behind the increased renunciations, however, is that the government’s campaign is also hurting many middle-class citizens who are living abroad.
While giving up your citizenship does not free you from paying any past due to taxes, it does prevent the U.S. from going after you and your family in the future with large taxes and penalties. There is more evidence that the renunciation trend appears to be growing, as almost 8,000 taxpayers have given up their citizenship in America in just the last five years alone. In the 10 years before that, less than 5,000 people renounced their citizenship. That’s a sizable increase.
Middle America Being Hurt
Although the federal government’s campaign is aimed at finding wealthy individuals who are dodging their tax bill, it’s also hurting many middle-of-the-road citizens who are living abroad. These people are not wealthy, they pay their taxes to the country in which they live, and they aren’t trying to hide anything from the U.S. government.
What Does The Future Hold?
The problem could get even worse, as some experts believe that as more Americans become aware of the campaign, more of them will choose to renounce rather than be the target of the federal government. For their part, the government claims that although nearly 7.5 million Americans live abroad, only a fraction of those people has filed the necessary disclosure forms. That’s why the Treasury Department will continue to go after these individuals to make sure they aren’t cheating on their taxes.
At GROCO we not only handle domestic tax issues, but we can also help you with your international taxes as well. If you live abroad and you don’t want to give up your citizenship but you don’t want to be unfairly targeted by the federal government either, then just contact us today and we can help.
The post More Americans Are Renouncing Citizenship Due to Tax Rules first appeared on Advisors to the Ultra-Affluent – Groco.