US expats are giving up their passports in record numbers – but how do they go about renouncing their American citizenship for good?
Last year, more than 4,200 Americans handed back their passports and the trend is for more disgruntled expats to desert their homeland in favour of exile as well.
The number of unhappy expats was 20% up last year on 2014 – and since 2010 the number has steadily risen from just over 1,000 to the current level.
The reasons for giving up US citizenship are not published, but many suggest that the Foreign Account Tax Compliance Act (FATCA) is to blame.
FATCA demands overseas financial institutions report information about accounts and investments controlled by US taxpayers to the Internal Revenue Service (IRS) each year.
Renouncing US citizenship
Although expats are allowed an account balance of $200,000 before triggering a FATCA report, many wealthy Americans have discovered the IRS is finding new ways to tax their pensions and investments.
They are also unwelcome at many foreign banks who no longer want the bureaucracy that comes with US customers.
Renouncing US citizenship takes some time and is costly.
Not only is a $2,350 fee payable to the State Department in Washington, but the IRS wants to see five years of tax returns, plus a couple more years after giving up citizenship to make sure the last chance to tax someone to within an inch of their life is not missed.
Giving up American citizenship also means booking and going through a ceremony.
The American passport holder has to stand before a US consular or diplomatic officer and swear an oath of renunciation.
All this takes place at a foreign embassy or consulate – not in the USA.
Final indignity
The State Department warns that anyone planning to renounce their US nationality should seek a foreign nationality prior to swearing the oath or they could become stateless. This would stop them travelling between countries as they would have no passport.
The law also makes clear that renouncing citizenship to escape tax liabilities or military service will not wash – and neither will giving up a passport to avoid prosecution.
The final indignity for a US expat is that their names are published on a public register after the renunciation ceremony.
Giving up a US passport is not a step to lightly take for an expat.
Once the passport is ripped, there is no going back. Renunciation is irrevocable unless the citizen is under 18 years old. If they are they have a last chance to remain American.
After their 18th birthday, they have a six-month window to apply to become American once more.
Jim Atkins really should know better. 4,200 is the official figure, not the real figure. Renunciations don’t necessarily mean that one “deserts their homeland”. It simply means that one deserts discrimination. “unhappy expats” is relative. One is often happy that one was able to escape discrimination but unhappy with US policy. FATCA is a part of the problem, not just “suggested blame”. FATCA demands national origin discrimination, citizenship-status discrimination, privacy violations, employment discrimination, compliance costs, marital complications, etc. This is not just about “wealthy Americans”. These are local banks, not “foreign banks”. Renunciations can be quick, especially for the poor but the fee is indeed excessively costly. Stateless in Europe can travel in Europe. People generally renounce to avoid discrimination, not “prosecution”. Not all names are published in the “register”. Once renouncing, expats may “go back”. Renunciations are not necessarily “irrevocable”. Children under 18 years old may not be allowed to renounce (under 16).
My husband, an American was rejected for a postal account. We just spent an hour at another bank trying to open an account but we still don’t have all the paperwork: past US taxes, copy of Fbars, a government form verifying our address, etc. The bank can still say no. If they say yes he can only have a deposit account and a debit card…nothing for investment. He can’t have a stateside account because he lives overseas. He can’t invest in anything even an interest bearing savings account.
I didn’t desert the US, the US deserted and exiled me. In fact, the single biggest threat to Americans abroad is the US government.
I agree entirely.
Excellent reply from Dani Küttel. This article is, yet again, another one about this situation where the journalist simply didn’t do their homework and only repeats the same cliches and incorrect details, giving, yet again, an untrue slant to the story. You would think that by now, after nearly six years of talking about FATCA and its sinister consequences, that journalists specialising in tax matters would know this story as well as the victims of this do. They don’t.
People are indeed renouncing because they will no longer accept being discriminated against. People are renouncing because they no longer want to be connected to a country that would be responsible for causing and allowing their own citizens to be discriminated against and then do nothing about the situation when it has been made more than clear. People are renouncing because they have seen that the US does not practice representative democracy and simply ignores and abandons its citizens who happen to make their lives abroad. People are renouncing because they don’t want to accept that a country on the other side of the world dictates what investments they are allowed to own in the country where they live, pay taxes and are members of the community. People are renouncing because they refuse to have their hard earned and already taxed money be confiscated by a country where they don’t live, and may never had, and be subjected to audits and endless forms and questions. People are renouncing because many of them have discovered that life outside of the U.S.A. is, more often than not, a far better experience for them and their families. They don’t have live in constant fear of violence, exorbitant health care charges and all the other indecencies that U.S. citizens accept and wave the flag around. These are just some of the reasons people renounce.
Hopefully the journalist of this piece, Jim Atkins, will wake up and start covering this story in-depth, after just regurgitating the usual erroneous talking points that he covers in this mediocre article.