> Record 1,800 people renounced U.S. citizenship last year alone, up eight
> times the number of those who did in 2008
> US one of few countries to tax its citizens on income earned while
> Taxes for ex-patriots are notoriously difficult; income up to $95,100
> isn't taxed under Foreign Earned Income Exclusion, but wealthy must also
> pay 'exit tax' to leave States
> Many expats are unaware of complicated laws and often have to pay
> thousands of dollars in in fines
> As millions of Americans are scrambling to get their tax returns
> postmarked by this evening, a smaller sect did something much more
> drastic and renounced their US citizenship.
> Last year alone, almost 1,800 people renounced their U.S. citizenship or
> handed in their Green Cards – and many of them said it was because of
> tax reasons.
> That's a record number since the Internal Revenue Service began
> publishing a list of those who renounced in 1998. It's also almost eight
> times more than the number of citizens who renounced in 2008, and more
> than the total for 2007, 2008 and 2009 combined.
> In fact, Superman declared plans to renounce his U.S. citizenship a year
> ago, in Action Comics.
> 'Truth, justice, and the American way' - it's not enough anymore,' the
> comic book superhero said, after both the Iranian and American
> governments criticized him for joining a peaceful anti-government
> protest in Tehran.
> But those of more modest means renounce, too. They say leaving America
> is about more than money; it's about privacy and red tape.
> Two filing requirements affect Americans abroad: the Report of Foreign
> Bank and Financial Accounts - which has been around since 1970 but now
> carries penalties for noncompliance - and the Foreign Account Tax
> Compliance Act, passed in 2010 with the aim of reducing offshore tax
> The first regulation requires all Americans, including those living
> abroad, with at least $10,000 in overseas bank accounts, to file a
> supplementary form disclosing all of their foreign accounts.
> That includes any accounts in which the U.S. citizen has a financial
> interest. That could include a joint account with a spouse or child,
> accounts for corporations in which the American owns more than 50 per
> cent of the value of shares of stock, or any trust or estate that
> benefits the U.S. citizen.
> The tax compliance act - the newer law - asks foreign financial
> institutions such as banks, hedge funds, and private equity funds to
> provide the IRS with information on U.S. clients.
> Institutions that do not comply will be subject to a 30 per cent
> withholding tax on certain U.S.-sourced payments and proceeds of
> property sales beginning in the 2013 tax year - for instance, dividends
> on investments in U.S. companies.
> Some expatriates say they were unaware of the first regulation for years
> and even decades. In 2008, the IRS received only 218,840 such filings.
> American nationality law grants citizenship to almost everyone born in
> the United States or born abroad to American parents, regardless of how
> much time they've spent in the United States. Many may not even know the
> extent of their U.S. ties.
> In 2004, the stakes for noncompliance rose. Failure to file meant
> potential fines and criminal charges. Americans abroad can be punished
> for noncompliance even if they owed no income tax - and IRS data show
> that most of them don't owe money.
> Income up to $95,100 isn't taxed under a rule called the Foreign Earned
> Income Exclusion. In 2009, the income cap was $91,400, and 88 per cent
> of all taxpayers claiming the foreign earned income exclusion owed
> Since 2008, the IRS has offered several voluntary-disclosure grace
> periods during which expatriates can file back taxes without facing
> criminal charges - but with the possibility of incurring penalties.
> 'Americans abroad are terrified. We've had people pay tens of thousands
> of dollars in fines. We've had people … pay huge amounts of back taxes,'
> she says. 'Up to this point, we never heard of anyone renouncing, or if
> they did, they didn't talk about it,' says Ms Serrato, who says her
> group does not advocate renunciation.