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[h=1]Why are Americans giving up their citizenship?[/h]By Tom GeogheganBBC News, Washington
Continue reading the main story[h=2]In today's Magazine[/h]
The number of Americans giving up their citizenship has rocketed this year - partly, it's thought, because of a new tax law that is frustrating many expats.
Goodbye, US passport.
That's not a concept that Americans contemplate lightly. But it's one that many of them seem to be considering - and acting on.
The number of expatriates renouncing their US citizenship surged in the second quarter of 2013, compared with the same period the year before - 1,131 cases to 189 in 2012. It's still a small proportion of the estimated six million Americans abroad, but it's a significant rise.
The list is compiled by the Federal Register and while no reasons are given, the big looming factor seems to be tax.
A new law called the Foreign Accounts Tax Compliance Act (Fatca) will, from 1 July next year, require all financial institutions around the world to report directly to the US Internal Revenue Service (IRS) all the assets and incomes of any US citizens with $50,000 (£31,000) on their books. The US could withhold 30% of dividends and interest payments due to the banks that don't comply.
Continue reading the main story[h=2]Are you an ex?[/h]
It's an attempt by the US authorities to recover an estimated $100bn a year in unpaid taxes on US citizens' assets overseas. Unlike other countries, Americans are taxed not only as residents of the US but also as citizens, wherever they live.
Suddenly, some expats are waking up in a cold sweat. They have always had to file tax returns and disclose foreign accounts on a form called the FBAR, although in practice many didn't. But now Fatca means they have to be more rigorous or face huge fines, in the knowledge that the US authorities could know a lot more than they have in the past.
Bridget, who asked the BBC not to use her real name, gave up her US citizenship in 2011, 32 years after leaving for a new life in Scandinavia.Continue reading the main story
[h=2]Start Quote[/h]
"I've enjoyed being an American even though I haven't lived there since I was young. I identified with America so I felt angry that I had to get to this point where it wasn't viable to keep my citizenship anymore.
"When you're an American living in America, it's one thing but when you live abroad in another country, in certain ways that feeling becomes even stronger because you realise that things that you think are individual characteristics are actually national ones so you identify even more strongly with your nationality.
"I used to always introduce myself as American but not now, although I will always be American in my heart even though I won't carry the passport. I will still celebrate Thanksgiving and 4 July."
She says the tax issue is the biggest topic of conversation among the expat Americans she knows. And tax lawyers in the US who deal with people living abroad say it has become a huge issue.
Continue reading the main story[h=2]'I'm thinking about it'[/h]
"I'm all for people paying their taxes, but it's very expensive to follow the letter of the law," says David Kuenzi, founder of Thun Financial Advisors, which specialises in helping Americans abroad with tax issues.
"Some people are spending $4,000-$5,000 a year to do their tax return only to find out they don't owe anything to the US."
"You have very wealthy people hiding their assets and not paying their taxes and that's an outrage. Something should be done about it, but this reaction has created a terrible imposition on every American living abroad and it's way over the top," he says.
Foreign banks do not seem happy about it either, and Senator Rand Paul, a libertarian Republican, has introduced a bill seeking to remove aspects of the law related to data-sharing.
Continue reading the main story[h=2]Start Quote[/h]
But the US Treasury is standing firmly behind the new law. In astatement on its website, Robert Stack, deputy assistant secretary for international tax affairs, rebuts certain "myths".
"Fatca provisions impose no new obligations on US citizens living abroad... US taxpayers, including US citizens living abroad, are required to comply with US tax laws," he says​.
"Individuals that have used offshore accounts to evade tax obligations may rightly fear that Fatca will identify their illicit activities. Yet a decision to renounce US citizenship would not relieve these individuals of prior US tax obligations."
Those who have joined the ex-American club, or are thinking about it, say this is not about tax evasion.
Victoria Ferauge, 47, is married to a Frenchman and has lived abroad for nearly 20 years, primarily in France. If her adopted country finally agrees to Fatca then she wonders what the implications will be.
"Are my bank accounts going to be closed? Is my husband going to be forced to take my name off the accounts?"
Ferauge is unemployed and recovering from breast cancer so she doesn't have any income. She has paid nearly $1,000 to accountants this year but will have to get more expensive help next year.
With strong ties to the Pacific Northwest, and two parents to visit there, the Seattle-born 47-year-old would rather not renounce her citizenship.
"I don't know any Americans abroad who aren't thinking about giving it up but what I say to myself is that I will fight as long and as hard as I can.
"And it's only when I've exhausted all options that I will make that appointment with the US embassy."
But others said no matter what the tax hardship, they would never switch nationalities. Being an American, said one, was more important.
Continue reading the main story[h=2]In today's Magazine[/h]
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- Is Breaking Bad's Walter White one of TV's truly evil characters?
The number of Americans giving up their citizenship has rocketed this year - partly, it's thought, because of a new tax law that is frustrating many expats.
Goodbye, US passport.
That's not a concept that Americans contemplate lightly. But it's one that many of them seem to be considering - and acting on.
The number of expatriates renouncing their US citizenship surged in the second quarter of 2013, compared with the same period the year before - 1,131 cases to 189 in 2012. It's still a small proportion of the estimated six million Americans abroad, but it's a significant rise.
The list is compiled by the Federal Register and while no reasons are given, the big looming factor seems to be tax.
A new law called the Foreign Accounts Tax Compliance Act (Fatca) will, from 1 July next year, require all financial institutions around the world to report directly to the US Internal Revenue Service (IRS) all the assets and incomes of any US citizens with $50,000 (£31,000) on their books. The US could withhold 30% of dividends and interest payments due to the banks that don't comply.
Continue reading the main story[h=2]Are you an ex?[/h]
- Have you given up the citizenship of any country?
- Tell us why, using the form at the bottom of the story
- We will publish a selection
It's an attempt by the US authorities to recover an estimated $100bn a year in unpaid taxes on US citizens' assets overseas. Unlike other countries, Americans are taxed not only as residents of the US but also as citizens, wherever they live.
Suddenly, some expats are waking up in a cold sweat. They have always had to file tax returns and disclose foreign accounts on a form called the FBAR, although in practice many didn't. But now Fatca means they have to be more rigorous or face huge fines, in the knowledge that the US authorities could know a lot more than they have in the past.
Bridget, who asked the BBC not to use her real name, gave up her US citizenship in 2011, 32 years after leaving for a new life in Scandinavia.Continue reading the main story
[h=2]Start Quote[/h]
I used to be a flag-waving, patriotic citizen
Genevieve BesserAmerican in Germany
"I've enjoyed being an American even though I haven't lived there since I was young. I identified with America so I felt angry that I had to get to this point where it wasn't viable to keep my citizenship anymore.
"When you're an American living in America, it's one thing but when you live abroad in another country, in certain ways that feeling becomes even stronger because you realise that things that you think are individual characteristics are actually national ones so you identify even more strongly with your nationality.
"I used to always introduce myself as American but not now, although I will always be American in my heart even though I won't carry the passport. I will still celebrate Thanksgiving and 4 July."
She says the tax issue is the biggest topic of conversation among the expat Americans she knows. And tax lawyers in the US who deal with people living abroad say it has become a huge issue.
Continue reading the main story[h=2]'I'm thinking about it'[/h]
- "I used to be a flag-waving patriot who tried to be an informal ambassador of goodwill to her country," says Genevieve Besser, who has lived in Germany for 25 years and owes no US tax. "No longer. Thanks to Fatca, I'm wondering if I should renounce my US citizenship. The US must repeal Fatca and join the rest of the civilised world by switching to residence-based taxation."
- Besser, who is self-employed, says her investment options are restricted, because most German banks will no longer open brokerage accounts for US citizens. She can't be joint owner of the house she shares with her German husband. Nor can she have signature authority over their retirement savings account because, she says, the bank would close the account.
- "A property that was bought and sold at the same euro price during a period when the euro strengthened relative to the dollar would generate a 'phantom' profit - and a tax liability to the US government, even though I would have no benefit from it," she says. "Fatca is an arrogant piece of legislation that penalises US citizens for living abroad and violates the two principles of law: 'innocent until proven guilty' and 'the punishment should fit the crime'."
"I'm all for people paying their taxes, but it's very expensive to follow the letter of the law," says David Kuenzi, founder of Thun Financial Advisors, which specialises in helping Americans abroad with tax issues.
"Some people are spending $4,000-$5,000 a year to do their tax return only to find out they don't owe anything to the US."
"You have very wealthy people hiding their assets and not paying their taxes and that's an outrage. Something should be done about it, but this reaction has created a terrible imposition on every American living abroad and it's way over the top," he says.
Foreign banks do not seem happy about it either, and Senator Rand Paul, a libertarian Republican, has introduced a bill seeking to remove aspects of the law related to data-sharing.
Continue reading the main story[h=2]Start Quote[/h]
I don't know any Americans abroad who aren't thinking about giving it up
Victoria FeraugeAmerican in France
But the US Treasury is standing firmly behind the new law. In astatement on its website, Robert Stack, deputy assistant secretary for international tax affairs, rebuts certain "myths".
"Fatca provisions impose no new obligations on US citizens living abroad... US taxpayers, including US citizens living abroad, are required to comply with US tax laws," he says​.
"Individuals that have used offshore accounts to evade tax obligations may rightly fear that Fatca will identify their illicit activities. Yet a decision to renounce US citizenship would not relieve these individuals of prior US tax obligations."
Those who have joined the ex-American club, or are thinking about it, say this is not about tax evasion.
Victoria Ferauge, 47, is married to a Frenchman and has lived abroad for nearly 20 years, primarily in France. If her adopted country finally agrees to Fatca then she wonders what the implications will be.
"Are my bank accounts going to be closed? Is my husband going to be forced to take my name off the accounts?"
Ferauge is unemployed and recovering from breast cancer so she doesn't have any income. She has paid nearly $1,000 to accountants this year but will have to get more expensive help next year.
With strong ties to the Pacific Northwest, and two parents to visit there, the Seattle-born 47-year-old would rather not renounce her citizenship.
"I don't know any Americans abroad who aren't thinking about giving it up but what I say to myself is that I will fight as long and as hard as I can.
"And it's only when I've exhausted all options that I will make that appointment with the US embassy."
But others said no matter what the tax hardship, they would never switch nationalities. Being an American, said one, was more important.
