HONG KONG, (UPI) — A record number of people have renounced their U.S. citizenship, an Internal Revenue Service list indicates, a result of a global crackdown on tax evaders.
More U.S. citizens have renounced their citizenship in the first and second quarters of 2013 than in all of 2012. A total of 1,130 names appear on the IRS’ second-quarter list, beating the previous record of 679 set in the first quarter, The Wall Street Journal reported Monday.
While those numbers are a fraction of the estimated 6 million American citizens living outside the country, the impetus for renunciation is the Foreign Account Tax Compliance Act, or FACTA, which requires foreign institutions to disclose overseas assets, of U.S. citizens and green-card holders, to the U.S. government.
FACTA’s objective is to identify those who may be evading taxes through offshore investment vehicles. Its effects are being most keenly felt in Asia, the newspaper said.
Some U.S. citizens seek citizenship in Hong Kong, where the individual tax rate is capped at 15 percent, but the motivation for others is the growing paperwork required of U.S. citizens living abroad.
“My decision was less about the actual amount of taxes I had to pay, and more about the system,” said an anonymous former U.S. citizen. “I’m not an ultra-wealthy dude. It was the hassle with all the paperwork.”
Jay Krause of the Withers law firm said his lawyers in Singapore and Hong Kong serve U.S. citizens and green-card holders who have not been on American soil in years. After filing taxes, many deem the tax liability to be too much after seeing their peers in Singapore and Hong Kong pay a far lower income tax, one not subject to capital gains taxes.