The number of Americans who decided to renounce their citizenship in the second quarter of 2013 increased sixfold the same period in 2012, a number the federal government attributes to strict impending financial disclosure rules.<\/p>\n
The United States is the only country out of 34 in the
\nOrganization for Economic Co-operation and Development (OECD)
\nthat continues to tax citizens regardless of where they live
\naround the world.<\/p>\n
Now, facing a high national debt and drastic cuts in government
\nspending, US tax enforcers are employing stricter
\nasset-disclosure laws under the Foreign Account Tax Compliance
\nAct (FACTA). For that reason, more Americans living abroad are
\nweighing whether it is worth holding on to their US passport.<\/p>\n
In the three months through June, 1,131 American expatriates
\nturned over their passports at US embassies around the world. It
\nwas a drastic surge from the same time span in 2012, when just
\n189 people renounced their citizenship, according to the Federal
\nRegistry. The first six months of 2013 alone has seen 1,810 such
\ninstances, compared to 235 in all of 2008.<\/p>\n
\u201cWith the looming deadline for FACTA, more and more US
\ncitizens are becoming aware that they have US tax reporting
\nobligations,\u201d<\/i> Matthew Ledvina, a US tax attorney in Zurich,
\nSwitzerland, told Bloomberg. \u201cOnce aware, they decide to
\nrenounce their US citizenship.\u201d<\/i><\/p>\n
In 2012 there were between 5 and 6 million Americans who resided
\noverseas.<\/p>\n
Under FACTA, foreign banks are required to notify the US Internal
\nRevenue Service (IRS) about accounts held by US taxpayers. That
\ndisclosure rules, according to the congressional Joint Committee
\non Taxation, was estimated to generate an additional $8.7 billion
\nover the next 10 years for the US budget.<\/p>\n
A primary goal of the rules is to cut the power of US nations the
\nUS considers to be tax havens. Countries like Switzerland earn
\nthat designation by protecting an individual\u2019s finance
\ninformation, requiring only nominal taxes, or a general lack of
\ntransparency.<\/p>\n
\n\u201cThe United States wishes to ensure that all income earned
\nworldwide by US taxpayers on accounts held abroad can be taxed by
\nthe United States,\u201d<\/i> the Swiss government stated earlier this
\nyear.<\/p>\n