A growing number of Americans working in foreign countries are renouncing their citizenship, the Federal Government has revealed.
Their reason? Apparently to avoid the new tax rules that will kick in as of next January — the US Foreign Account Tax Compliance Act, widely known as FATCA, which will require banks in a number of countries to report all accounts held by Americans.
On August 9, 2013, the Internal Revenue Service released the Quarterly Publication of Individuals who have chosen to Expatriate in the Federal Register. It had a list of 1,130 names of people it said had lost US citizenship during the second quarter of 2013 alone.
For the first quarter, which ended March 31, the list had 679, while that for the period ended December 31, 2012 registered 45.
French news service Agence France-Presse (AFP) reported that the total for all of last year was more than 1,500, and that it was 235 for all of 2008.
"This listing contains the name of each individual losing United States citizenship...with respect to whom the secretary received information during the quarter ending June 30, 2013. For purposes of this listing, long-term residents...are treated as if they were citizens of the United States who lost citizenship," the register reads.
This is in accordance with the Health Insurance Portability and Accountability Act (HIPAA) of 1996, section 877 of which specifies how individuals who lose their citizenship should be treated with respect to taxes.
It says that, in general, every non-resident alien who, within the 10-year period immediately preceding the close of the taxable year, lost US citizenship shall be taxable for that year, if the tax imposed under the section exceeds that imposed under section 871, unless the loss was not related to avoiding taxes.
Asked how many US expatriates in Jamaica were choosing to renounce their citizenship, and whether such move was related to FATCA, the US embassy in Kingston said it could not provide such figures as it wasn't the Department of State that maintains statistics on renunciations and relinquishment of citizenship.
It said, too, that it couldn't comment on the reasons people choose to renounce their citizenship as these were "individual and personal decisions".
"A person who renounces US citizenship may, but is not required to, disclose his/her motivation for doing so," the embassy told the Jamaica Observer by e-mail.
It explained that the Federal Register lists included persons who made renunciations in the presence of a consular officer, as well as those who lost citizenship by "performing another potentially expatriating act voluntarily and with the intent to relinquish US citizenship".
"For example, if a US citizen voluntarily naturalises in another country and affirmatively represents to a consular officer that this was his/her intent to relinquish US citizenship at the time he/she naturalised, he/she would lose his/her US nationality and would be listed in the Federal Register".
FATCA was designed to curb tax evasion and is expected to raise US$8 million over 10 years. It gives global financial institutions and investment entities a choice: Either collect and turn over data on US clients with accounts of at least US$50,000, or withhold 30 per cent of the interest, dividend and investment payments due those clients and send the money to the IRS. Refusal or failure to do so will result in the entities themselves being liable for 40 per cent of the amounts in question.
Swissinfo reported that the US embassy in Switzerland, the richest country in the world and renowned for its neutrality in international affairs, said it processed 411 renunciations in the first nine months of 2012, compared with 180 the year before.
In Kingston, the American representatives told the Observer that the Government doesn't take renunciations lightly.
"When US citizens located outside the United States contact a post and express an interest in renouncing their citizenship, consular officers counsel them about the serious and irrevocable consequences and give them time to reflect on their decision," the embassy said.