US Expats Giving Up Passports To Avoid Tax Obligations

By ExpatBriefing.com Editorial 13 August, 2013

There was a sixfold increase in the number of American citizens living abroad who gave up their United States passports in the second quarter of this year, compared to the same three months in 2012, as the Administration gets more strident in its search for undeclared foreign assets.

American expatriates who renounced their citizenship during the three months to end-June 2013 rose sharply to 1,130, from 679 in the previous quarter and only 189 in the same period last year, according to figures provided by the Internal Revenue Service (IRS) and published recently in the Federal Register.

Their renunciation came as actions being taken by the US Treasury and the IRS to trace American undeclared assets and income held abroad gather pace, particularly as the deadlines within the Foreign Account Tax Compliance Act (FATCA) approach and the US negotiates more agreements with foreign jurisdictions. More Americans living abroad are becoming aware of their unwanted US tax reporting obligations.

FATCA is intended to ensure that the IRS obtains information on accounts held abroad at foreign financial institutions (FFIs) by US taxpayers. Failure by an FFI to disclose information on their US clients, including account ownership, balances and amounts moving in and out of the accounts, will result in a requirement to withhold 30 percent tax on US-source income.

In addition, individuals are still required to file the Report of Foreign Bank and Financial Accounts (FBAR) if they have a financial interest in or signature authority over financial accounts, including bank, securities or other types of financial accounts, in a foreign country, and if the aggregate value of the financial accounts exceeds USD10,000 at any time during the calendar year.

A comprehensive report in our Intelligence Report series devoted to a study of the ways in which expatriate executives and employees can optimise their remuneration and taxation situations in a number of the main English-speaking countries is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report10.asp

Tags: Individuals | Expatriates | Compliance | Foreign Account Tax Compliance Act (FATCA) | Tax | Tax Compliance | FATCA | Internal Revenue Service (IRS) | Ministry Of Finance | Tax Authority | Withholding Tax | United States | Compliance | Expats | Tax |

 





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