According to the US Center for Immigration Studies, each year the USA deports over 700,000 immigrants they consider to be unwelcome. There are also around 1.8 million so-called ‘aliens’ awaiting removal at any time. However while America is quick to rid itself of non-nationals it seems they’re doing everything they can to retain US citizens – even those looking to formally renounce their citizenship.
The tax burden on US citizens living overseas has continued to grow under recent administrations. The recently-introduced FATCA aims to encourage foreign governments to report taxable income and assets of US expats to the IRS. Doing so should save the US government millions of dollars each year in lost tax revenue.
However the ever-growing influence of the IRS are causing many legitimate expats to lose sleep. The costs of reporting overseas income under new FATCA rules can cost expats considerable sums of money and take an estimated 50 hours to complete each year.
In addition, some US expats claim the rules are making it harder for them to receive the financial services they need overseas. Some banks are supposedly declining mortgage applications, loan requests and suchlike to US citizens with enviable credit scores, simply so they don’t have to comply with complex and expensive IRS regulations.
Now, with over 7 million US citizens living overseas, renunciation is becoming more popular than ever. It seems that the burden of tax reporting and investigation, together with the effects of FATCA on banking services for US expats, has now reached a tipping point. Ever more Americans are now renouncing their citizenship – and gaining freedom from the controls of the US government.
Ironically, just as the number of people renouncing US citizen is on the rise, so too is the cost of the actual renunciation process itself. In the past this process cost a mere $450 – but is now set to sky-rocket by almost five times to $2,350.
The Department of Consular Affairs claims that this has nothing to do with the number of Americans living overseas and renouncing their citizenship but more to do with the real costs of the process. The process of renunciation can take several weeks and requires a number of face-to-face meetings not to mention all manner of paperwork to be processed.
The new cost of renouncing US citizen allegedly is a more accurate reflection of the cost to the US government of processing these requests, though some cynics claim it is an attempt by the US government to retain as many citizens as possible and maximize their potential tax revenues.