Is FATCA Making U.S. Citizenship Too Taxing for Some?
Back in November we posted about the fact that entertainer Tina Turner had reportedly signed the paperwork to give up her U.S. Citizenship in favor of staying in Switzerland. The reason given at the time is that she had married her Swiss partner in July, but there was some speculation that the growing burden of Washington’s complicated tax rules, played a role, too.
Well, now there seems to be a little more fuel firing the latter argument. Not specifically as it relates to Turner, but in general. According to information posted in the Federal Register, some 3,000 Americans living overseas opted to give up their U.S. passports in 2013.
Considering that there are an estimated 6 million Americans working and living abroad, some might suggest that’s not a big number. But compared to the 993 people who abdicated their citizenship in 2012, it’s clearly a huge increase.
Then there’s the de Vere Group survey that was conducted late last year. The financial consulting company poll of U.S. expatriates found 68 percent of them have considered giving up citizenship because of FATCA and the tax issues it raises.
For many expats, FATCA and its counterpart, FBAR (Report of Foreign Bank and Financial Accounts), reportedly generate little but headaches. They complain that the laws increase the cost of filing returns. But worse, they say banks and other financial institutions in the countries where they live no longer want them as customers.
Then there is the New York-born expat who says he sees the issue as one of taxation without representation. He can’t vote for members of Congress, so he feels he effectively has no voice. As he puts it, “I am paying taxes for no other reason than my patriotism.”
Tax issues of any kind can be a source of deep frustration. Identifying and achieving the most favorable outcome is something to do in concert with an experienced attorney.
Source:USA TODAY, “Americans abroad find citizenship too taxing to keep,” Kim Hjelmgaard, March, 8, 2014
