For the fourth year in a row, a record number of Americans and green-card holders renounced their U.S. citizenship or legal permanent residency in 2016, according to Treasury Department data slated for publication Thursday.
At the end of each quarter, the Treasury Department publishes the names of people who renounced their citizenship during the prior three months. Last quarter, 2,365 individuals expatriated, according to an analysis of the data by international tax attorney Andrew Mitchel, who has been tracking expatriations on his website since 2008.
Last quarter’s tally mean the total number of published expatriates in 2015 was a record 5,411 — 26 percent higher than 2015, when 4,279 individuals renounced their citizenship, and 58 percent higher than in 2014, when 3,415 expatriated, according to Mitchel’s analysis.
Taxes, and penalties for citizens abroad not paying taxes, are a key reason for the record levels of expatriations, according to Mitchel. The 2010 Foreign Account Tax Compliance Act, a statute intended to fight tax evasion by Americans with accounts abroad — Mitchel explained to The Daily Caller — has caused many American living outside the U.S. to escape the IRS’ grasp by leaving the system entirely.
“Once they come to terms with the fact that the IRS may now catch them if they don’t file, and realize how large the penalties can be for not filing, they get caught up with their necessary U.S. tax filings,” Mitchel said in an email. “They usually use one of the various voluntary disclosure programs that the IRS has. Once they are caught up, the renounce their citizenship and get out of the U.S. tax system.”
The IRS says that since 2009, it has collected $10 billion in “taxes, interest, and penalties” from over 100,000 taxpayers with accounts abroad through its offshore disclosure programs.
Mitchel speculated that the recent trend of increased levels of expatriations would continue but noted that he expects “most of the people that have been noncompliant will eventually come into compliance and then expatriate (or merely continue filing U.S. tax returns.)”
Further, Mitchel highlighted, that while other countries tax based on residency, the U.S. taxes based on citizenship. And anyone born on U.S. soil is automatically a citizen.
When asked if he expected the expatriation trend to continue under President Donald Trump, Mitchel responded, “I believe that President Trump is against U.S. ‘birthright’ citizenship.”