Peter Schiff on Fox Business (8/13/2013) Listen to The Peter Schiff Show Live Weekdays 10am to noon ET on http://www.SchiffRadio.com
A record number of Americans are giving up their U.S. citizenship. The Wall Street Journal reports that 1,130 Americans renounced their citizenship in the second quarter of 2013, more than did so in all of 2012.
A growing number of wealthy Americans in Asia—and others with green cards—are exploring whether to renounce their U.S. citizenship or give up their green cards to avoid onerous tax obligations.
A law enacted in 2010, the Foreign Account Tax Compliance Act, or Fatca, requires foreign financial institutions to certify they aren’t hiding U.S. taxpayer assets, which lawyers say is leading some to reject U.S. customers.
Taxpayer penalties for failing to report assets can be severe, including up to 50% of an account balance for each year.
The web of rules is “overly burdensome,” said Jeffrey Neiman, a former federal prosecutor who led the 2009 UBS case, which resulted in the bank’s agreeing to a $780 million settlement. He now is a lawyer in private practice in Fort Lauderdale, Fla. “You basically find yourself in this continuous nightmare.”
The cost of complying with various rules and regulations can be steep even for people with small tax bills.
Carol Tapanila, who moved to Canada more than 40 years ago and is now retired, renounced her citizenship in November and appeared on the current list. She says her U.S. taxes amounted to about $250 last year and she didn’t take the step to avoid paying them.
Legal and accounting fees and other costs of making sure she was in compliance in recent years have added up to nearly $40,000, says Ms. Tapanila. “It is nothing but stress.”
Expatriation can also be costly, requiring that taxpayers prove they have properly paid five years’ taxes, among other things.