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Monday, August 19, 2013

WSJ: Is It Time to Say 'Goodbye' to Uncle Sam?

Wall Street Journal Tax Report:  Overseas Americans: Time to Say 'Bye' to Uncle Sam?, by Laura Saunders:

WSJ

Here is a sign that life is getting complicated for U.S. taxpayers with assets abroad: More of them are deciding they are better off cutting official ties with America.

In the first half of 2013, 1,809 people renounced their American citizenship or permanent-resident status, according to a tally by Andrew Mitchel, a tax lawyer who tracks U.S. data. At that pace, the 2013 total would double the previous high of 1,781 renunciations in 2011. ...

The increase in renunciations is one sign that ordinary Americans who have lived and worked abroad for years, as well as green-card holders in the U.S. and overseas, believe they are at growing risk because of the intensifying government pursuit of undeclared foreign assets. ...

Although the U.S. State Department doesn't keep official statistics, it estimates that 7.2 million U.S. citizens live abroad. ... Despite the campaign against undeclared accounts, U.S. taxpayers filed only 825,000 foreign-account reports last year—meaning that millions of people likely aren't complying with the law. "It's clear that compliance is dismal, and also why the IRS is being aggressive in its enforcement efforts," says Jeffrey Neiman, a former federal prosecutor now practicing law in Ft. Lauderdale, Fla.

So many people could be affected by the crackdown that mass-market tax preparer H&R Block has expanded services for taxpayers with international ties. In May, the company launched a tax-preparation service via the Internet that is targeted at expatriates and highlights the firm's ability to help taxpayers with unfiled prior-year returns.

U.S. laws and rules provide few options for people who are in a showdown with Uncle Sam. Here is some of what U.S. taxpayers need to know. ...

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Comments

True Americans stay and fight
Faux Americans are in flight.

Posted by: PacRim Jim | Aug 19, 2013 10:07:16 PM

Any chance the US government would abolish taxation of the worldwide income of its subjects - er citizens - to do away with the "dismal" compliance with the intrusions of privacy it requires? Sadly unlikely. Instead, these folks can be investigated and charged an exit tax like so many East Germans. And, some senator can sponsor a stupid law that would bar them from seeing their stateside families and friends again within the borders of that country.

Posted by: jamesbbkk | Aug 19, 2013 11:40:44 PM

PacRim Jim, that's just stupid.

I moved to Canada last year not out of some pique of, "screw you guys, I'm leaving," but for family reasons. I have no desire to renounce and am years away from renouncing if I do one day decide to, but the reality is, it's unfair to subject my family to the burden of my citizenship. Jim, my Americanness (as is yours if you are a proper patriot) is unrelated to my status vis a vis a group of bureaucrats in a city on the Potomac.

Posted by: tim maguie | Aug 20, 2013 6:29:09 AM

There's nothing more American than avoiding stupid taxes. It is literally what our country was founded on (stamp tax, tea tax, whiskey tax, etc).

Posted by: Phelps | Aug 20, 2013 11:30:04 AM

What country has lower taxes, native English speakers, plenty of tech jobs, and equal or better rights than the US, including gun rights? Pre-1913 USA doesn't count, unless you have a time machine I can use.

Because that's the country I'd like to live in.

Posted by: Dr. Kenneth Noisewater | Aug 20, 2013 12:04:28 PM

Wow, a couple of thousand out of 7.2 million. An epidemic or a statistically insignificant number?

Posted by: David R | Aug 20, 2013 7:56:57 PM