I was approached recently by a member of our Sovereign Man community who filed the paperwork to relinquish US citizenship some time ago. Long story short, after an incomprehensibly long wait, the US government finally sent him a reply: Application DENIED.
Absolutely shocking. That you even have to ‘apply’ to relinquish
what you never signed up for is intellectually insulting. That you
cannot do so freely, and immediately, is nothing short of totalitarian.
It’s still an embryonic movement, though more and more US citizens
are being driven to divorce their country. Last year nearly 1,600
people gave up US citizenship, up from 1,485 in 2010, 731 in 2009, and
226 in 2008.
While some renunciants have philosophical misgivings about
being American, most do it for tax reasons. There’s a growing number of
expats who, despite living abroad for years, are still paying huge
portions of their income to Uncle Sam.
What’s more, the filing requirements are getting more and more
onerous. US citizens living overseas have to keep up with all sorts of
changes to the tax code that they may not be privy to, and the penalties
for noncompliance are severe.
I can’t tell you how many friends I have who are US citizens
living abroad that had no idea they were supposed to file the Report of
Foreign Bank Account (FBAR) form every year; or the new FATCA form 8938;
or those with businesses that must file form 8858 or 5471.
Usually these things come with pretty nasty penalties, possibly up to $10,000 per instance of failure to file.
Then there’s the latest, greatest tax target: accidental US
citizens. This group consists of foreigners who happen to be dual
nationals because they were born in the US or have an American parent.