Complex tax rules to blame? Americans living abroad set record for giving up citizenship
Expansion of bank reporting and tax compliance laws may have contributed to record 1,335 expatriations in first quarter of the year
More Americans living outside the US gave up their citizenship in the first quarter of the year than ever before, according to data released by the IRS.
The 1,335 expatriations revealed on Thursday topped the previous record by 18 per cent, according to data compiled by Bloomberg. Those Americans are often driven to turn in their passports in part because of laws that have expanded bank reporting and tax compliance requirements for expatriates.
The increase in early 2015 follows an annual record last year, when 3,415 Americans gave up their citizenship. An estimated six million US citizens are living abroad, and the US is the only country within the Organisation for Economic Cooperation and Development that taxes citizens wherever they reside.
In many cases, those choosing to give up their citizenship have limited connections to the US and have lived outside of the country for most of their lives.
Anyone born in the United States automatically receives citizenship, and people born abroad to US parents are typically citizens as well.
For some the decision is easy, because they perceive little benefit from holding US citizenship. For others, the choice is more complicated.
"The cost of compliance with the complex tax treatment of non-resident US citizens and the potential penalties I face for incorrect filings and for holding non-US securities forces me to consider whether it would be more advantageous to give up my US citizenship," Stephanos Orestis, a US citizen living in Oslo, wrote in a March 23 letter to the Senate Finance Committee.
