--mores signs of time
http://www.nasdaq.com/aspx/stock-ma...p-citizenship-as-irs-gets-aggressive-overseas
More Americans Give Up Citizenship As IRS Gets Aggressive Overseas
By Martin Vaughan, Of DOW JONES NEWSWIRES
The number of American citizens and green-card holders severing their ties with the U.S. soared in the latter part of 2009, amid looming
<INS style="COLOR: #0f93dd" class=KonaIns>U.S. </INS><INS style="COLOR: #0f93dd" class=KonaIns>tax</INS> increases and a more aggressive posture by the
<INS style="COLOR: #0f93dd" class=KonaIns>Internal </INS><INS style="COLOR: #0f93dd" class=KonaIns>Revenue </INS><INS style="COLOR: #0f93dd" class=KonaIns>Service</INS> towards Americans living overseas.
According to public records, just over 500 people worldwide renounced U.S. citizenship or permanent residency in the fourth quarter of 2009, the most recent period for which data are available. That is more people than have cut ties with the U.S. during all of 2007, and more than double the total expatriations in 2008.
An Ohio-born entrepreneur, now based in Switzerland, told Dow Jones he is considering turning in his U.S. passport. Mounting U.S. tax and reporting requirements are making potential business partners hesitate to do business with him, he said.
"I still do dearly love the U.S., and renouncing my citizenship is not something I take lightly. But more and more it is seeming like being part of a dysfunctional family," said the businessman, who asked that his name not be used for fear of retribution.
"The tax itself is only a small part of the issue," the Swiss-based entrepreneur said. "It's the overall regulatory environment."
A minority of the recent expatriates are U.S. natives who have started a new life overseas. Most are people with family ties outside the U.S.: foreign professionals who acquired a green card while working in the U.S., or people who have received higher education in the U.S.
"Fifteen or 20 years ago there was a big rush to make sure your kids became U.S. citizens, for access to U.S. schools for example," said Timothy Burns, a tax lawyer at Withers law firm in Hong Kong. "Now we're seeing just the opposite."
Last month, the Treasury Department announced more rigorous requirements for Americans living abroad to report information on foreign bank accounts. The reporting requirement has been in place for years, but only in the most recent couple of years has the
<INS style="COLOR: #0f93dd" class=KonaIns>IRS</INS> gotten tough about enforcing penalties.
The information return must be filed by any U.S. citizen or resident whose balance in all foreign accounts combined exceeds $10,000 at any time during the year. Stiff penalties, up to 50% of the annual account balance, punish failure to file.
Others are giving up their U.S. nationality to avoid tax hikes in the U.S., as the government struggles under huge budget deficits. The top marginal tax rate is set to rise to 39.6% from 35% at the end of this year. A proposal to tax fund manager pay at ordinary income rates, instead of the 15% capital gains rate, is gaining currency in Congress.
"Everybody sees the tax rates are going up. At a certain point, it gets beyond people's pain threshold," said Anthony Tong, a tax partner at accounting firm PricewaterhouseCoopers in Hong Kong.
Unlike most jurisdictions, the U.S. taxes the income of citizens and green- card holders no matter where in the world it is earned.
In order to give up U.S. citizenship, a person must obtain or have citizenship in another country. The person surrenders their passport or green card during an interview with a consular officer in their new home country. He or she must also submit a form, including a list of assets, to the IRS to complete the process.
Chris Kavanagh of the American Institute in Taiwan, which represents U.S. interests in Taiwan, said 43 people gave up their U.S. citizenship in Taiwan in 2009, the highest that figure has been since 2003. He cautioned against drawing conclusions from that data, however.
The IRS says some of the swelling of numbers of expatriations towards the end of 2009 occurred because the agency made a push to notify people that had already surrendered their passport, but had not completed the process by submitting the IRS form. Until that form is received by the IRS, these people are still subject to U.S. tax. "There is some catch-up going on," said IRS spokesman Bruce Friedland.
The stock market plunge of late 2008 and early 2009 may also have played a role in the spike in expatriations. Since 2008, Americans with net worth greater than $2 million have had to pay an exit tax assessed on their assets. With gains reduced or wiped out by the market collapse, those seeking to give up their U.S. citizenship had an opportunity to do so with less exit tax required.
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O's quote of the day-- on increased social benefits in his 1st year and a half--
"No one I've met is looking for a handout."
Sheeez--His own family been looking for/living on handouts/amnesty from his parents to Aunt currently.
