American citizens are choosing to renounce their citizenship in record numbers, the first quarter of 2015 showed. This is due to a crackdown on foreign tax rules, CNBC reported this weekend.
The upsurge slowed somewhat in the second quarter.
This is a result of the Treasury Department and the Internal Revenue Service (IRS) new enforcement of tax rules for Americans living abroad. The Foreign Bank Account Report law has actually been around since 1970, however it has not been aggressively enforced until now.
The law requires U.S. taxpayers to file if they hold one or more foreign bank accounts holding upwards of $10,000 over a year period.
Andrew Mitchel, an international tax lawyer who analyzes Treasury Department data, says: “Many people have been getting caught up on their U.S. tax filings and then renouncing.”
Now, U.S. citizens and resident aliens must account for worldwide income – whether in U.S. or foreign bank accounts.
US immigration lawyers in Thailand Chaninat and Leeds have a team of experienced Thai lawyers with years of experience filing successful U.S. Marriage Visas and other U.S. visa applications for Thais.
This enforcement comes following the 2009 claim that UBS was assisting Americans hide money overseas. Later, in 2014, Credit Suisse Group was accused of the same. UBS paid out $780 million to the US government and Credit Suisse paid $2.6 billion.
The Foreign Account Tax Compliance Act intends to make sure that the IRS has all relevant information regarding overseas bank accounts held by U.S. citizens.
Mitchel said: “I think that the rise in the number of people renouncing over the past few years has to do with people becoming more aware of their U.S. tax filing obligations and the potential penalties that can be imposed for failure to file certain disclosure forms.”
Those failing to file the FBAR may receive the standard penalty of $10,000 per year.
Now, taxpayers who have previously relied on “tax havens” are faced with the decision of protecting their assets and renouncing their U.S. citizenship, or formally leaving the U.S. altogether.
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