In mid-May, the company Greenback Expat Tax Services found that one in four American expatriates are weighing the possibility of renouncing their US citizenship as a result of the annual tax-filing requirements they must follow.
The number of wealthy Americans renouncing their citizenship in favour of a foreign country reached 6,707 in 2020, which is an all-time high, a report by the US Internal Revenue Service (IRS) has revealed.
The agency’s quarterly survey listed Americans with more than $2 million in assets, “who have chosen to expatriate” or give up their green cards.
According to the report, last year’s figure is a 237-percent increase as compared to 2019.
Approximately nine million Americans currently live overseas, with renunciations of US citizenship increasing sharply in the past decade.
The newspaper noted that a major driving force behind all this could be the enactment of the Foreign Account Tax Compliance Act (FATCA), a law passed in 2010 with the intention of frustrating both tax evasion and the financing of terrorist groups.
The law requires non-American financial institutions to identify their American customers to the IRS, the agency responsible for managing taxation.
The news outlet Axios quoted Andrew Mitchel, an international tax lawyer based in Connecticut, as claiming that FATCA “kind of flushed people out of the bushes”.