Uncle Sam (and the Taxman)

2016 was another record-breaking year for the number of US citizens and its long-term residents expatriating, giving up their US citizenship and passport or green card.

According to a February 9 announcement in the Federal Register, 2,364 expatriated in the fourth quarter of 2016, bringing the tally for last year to 5,409. That’s a 26% increase over 2015. It’s more than 13 times as high as it was less than two decades ago, as this chart reveals.

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As high as these numbers are, I think they’re only the tip of the iceberg. That’s because of the way that the numbers published in the Federal Register are counted. Only those who formally notify the IRS that they’ve expatriated by filing Form 8854 – “Initial and Annual Expatriation Statement” – are counted.

You’re supposed to file this form if you expatriate, but many former US citizens and green card holders don’t bother. Why not? I think it’s because the form requires that you certify whether or not you have been tax-compliant for the preceding five years. There are millions of Americans – especially those living outside the US – who aren’t.

The numbers also don’t jibe with some older reports I’ve compiled.

  • The South Korean media reported that 2,158 of its citizens gave up US citizenship or green cards in 2011. In other words, more people expatriated from a single country in 2011 than appeared on the official IRS list for the entire world for that year (1,781).
  • The Swiss media reported that in the first nine months of 2012, 411 individuals expatriated at the US embassy in Bern, Switzerland. This would mean that Switzerland accounted for over 40% of the total expatriations in 2012 (932).
  • Numerous public…

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