(Newswire.net — October 27, 2014) — Treasury Department published Friday a list of people that renounced U.S. citizenship. In just the third quarter of 2014, there are already 776 names on the list.
According to Andrew Mitchel, an international tax lawyer in Centerbrook, Connecticut, that’s the third highest quarterly figure ever. The total number of published renouncers in 2014 (so far 2,353) is close to last year’s record of 2,999 people who returned their U.S. citizenship, Mitchel said.
The list, published mandatory by the Treasury department contain only the list of names but not the reason why they decided to do that. It also doesn’t say weather a renouncer has another citizenship or if they returned the green card or is a born American who renounces U.S. citizenship and end their long-term U.S. residency.
According to experts, the growing number of renunciations by U.S. citizens and permanent residents has to do with the campaign against U.S. taxpayers who have undeclared offshore accounts, mainly in Swiss banks which admit they systematically encouraged U.S. businessmen to transfer the money to their offshore accounts and void taxes.
The 73 out of 100 Swiss financial institutions are complaining that the U.S. Department of Justice program designed to uncover secret accounts is too harsh. Unlike other countries, the U.S. taxes citizens on income they earn anywhere in the world, so that could be the reason why more U.S. citizens renounce their citizenship, experts say.
The rule of taxing U.S. citizens abroad, dates to the Civil War. Tax liabilities can also cover children born to Americans abroad, extending the reach of the Internal Revenue Service across generations as well as oceans.
For people who owe taxes both to the foreign country and the U.S., there are only partial offsets and the reporting rules are inconvenient, experts say.
For decades, these laws were rarely enforced. However, due to a growing number of Americans abroad, Congress passed in 2010 Foreign Account Tax Compliance Act, or FATCA, that took effect in July.
The law obligates foreign financial institutions to report income of their U.S. customers to the IRS.