Cheryl K. Chumley
The number of Americans who have been renouncing their citizenship in order to escape costly tax compliance penalties has skyrocketed in recent months, the Wall Street Journal found.
Between January and March, a total of 1,001 U.S. citizens gave up their American roots — a number that puts 2014 on a path of surpassing all of last year’s totals, at 2,999, Newsmax reported.“The increase is due to current and future changes in tax law and enforcement, said Freddi Weintraub, a New York attorney who specializes in immigration law, the Wall Street Journal reported. The United States — unlike most other nations — requires citizens pay income taxes, no matter where they live. Earners who live overseas are given an exemption of $100,000 a year, but the Internal Revenue Service also imposes steep penalties on violators, and those who fail to file a Foreign Bank Account Report in a timely manner. In some cases, the fines can hit as much as 50 percent of what’s in the account holder’s account, Newsmax said. The State Department said that of the 7.6 million U.S. citizens who live abroad, only a small fraction actually file the required reports and financial disclosure forms, the Wall Street Journal reported. Still, the reporting requirements are hitting up middle-class people the most. “We have reached the point where middle-class American citizens abroad are being foxed to renounce — especially if they have assets and are moving toward retirement — because of taxes, paperwork and huge potential penalties,” John Richardson, a Toronto attorney, told the Wall Street Journal.
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