Fewer Americans gave up their citizenship in 2017 | New York Post

The latest numbers:

For the first time in five years, the number of Americans renouncing their citizenship decreased in 2017, government records show.

Renunciations for the year fell 5.1 percent, to 5,133 — after a four-year climb to a record 5,411 in 2016, according to the IRS.

But the real story lies in the fourth quarter, when the number of renunciations tumbled 71 percent from the same period in 2016.

While a direct cause for the decline is not known, it was in the fourth quarter that buzz began to build around a tax cut.

Taxes, and the fact that citizens living abroad still owe the IRS, are often cited by those giving up their citizenship as the reason for the move. President Trump signed the tax overhaul bill into law on Dec. 22.

Fewer Americans feel they must employ the life-altering tactics of Facebook co-founder Eduardo Saverin, pop star Tina Turner and socialite-songwriter Denise Rich — all of whom cut their US tax liabilities by renouncing their US citizenship.

The departures so angered Sen. Chuck Schumer (D-NY) that he introduced the Ex-Patriot Act in 2012, aka the Saverin Bill, in an unsuccessful attempt to keep tax dodgers from stepping on US soil again.

Marc J. Strohl of international tax firm Protax Consulting Services, sympathizes with Schumer.

“We have every right to be upset with Americans who walk out of here with millions in their pockets,” Strohl said.

The CPA also noted that since 2010 the number of expatriates exceeded 1,000 in every year but one.

“Most everyone who wanted to leave has already left,” he concluded.

via Fewer Americans gave up their citizenship in 2017 | New York Post

Trump tax reform leads U.S. entrepreneurs in Canada to consider giving up American citizenship

Interesting and complex. No hard handle on numbers potentially affected:

A growing number of American business owners in Canada are considering renouncing their U.S. citizenship following the recent overhaul of the U.S. tax system. The changes could mean a huge financial hit for some American business owners living abroad.

Some lawyers who specialize in helping Americans give up their U.S. citizenship are reporting a spike in interest from potential clients since the Trump administration’s Tax Cuts and Jobs Act was passed in late December.

“We have definitely seen an uptick” in outreach, said Alexander Marino, a U.S. tax lawyer at Calgary-based Moodys Gartner Tax Law, who heads the firm’s expatriation-practice group and specializes in U.S. citizenship renunciation.

While the U.S. tax changes – which include a cut in the corporate-tax rate to 21 per cent from 35 per cent – are considered good news for companies operating and doing business south of the border, U.S. citizens living and running privately held companies in other countries could face a one-time “transition tax” of up to 15.5 per cent. The retroactive tax is on corporate assets not taxed in the United States since 1986, which was the last time the country’s tax code was overhauled.

While it’s too late for Americans to give up their U.S. citizenship to avoid the transition tax, there is concern about a new annual tax, going forward, on assets of certain American-owned companies operating outside of the United States. The tax is on global, intangible low-taxed income and is known as the GILTI tax. It can be imposed on a U.S. citizen shareholder if, under the new law, more than 10-per-cent of the non-U.S. corporation’s earnings are deemed to come from intangible assets. The rules are very complicated and vary greatly in how they apply, “but have the potential to affect many Canadian-resident, U.S. citizens,” Mr. Marino said.

More than 230 people signed up for an information seminar on renunciation Mr. Marino’s firm held over the weekend in Toronto, which is more than double the attendance of their past events, even as the number of Americans revoking their citizenship has risen in recent years.

Citing data from the U.S. Internal Revenue Service’s Federal Register, Mr. Marino said 5,411 Americans worldwide renounced their citizenship in 2016, the highest annual number in the country’s history. That’s up 26 per cent from 4,279 in 2015 and nearly triple the 1,781 renouncers recorded in 2011. More Americans are giving up their U.S. citizenship amid stepped up enforcement of the Foreign Account Tax Compliance Act (FACTA), passed in 2010, which requires foreign financial institutions to report assets held by Americans living outside of the United States. It took effect in Canada in mid-2014.

For the first three months of 2017, the most recent data available the Federal Register list, 4,448 Americans surrendered their U.S. citizenship. When fourth-quarter results are released in the coming weeks, Mr. Marino expects it to be another record year for the number of Americans revoking their U.S. citizenship.

Max Reed, a cross-border tax lawyer with Vancouver-based SKL Tax, says his office has had nearly a dozen inquiries about renunciation since the tax changes passed about a month ago.

“Absolutely, we’ve had people who have started the process either because of the mandatory repatriation tax or the GILTI [tax],” Mr. Reed said. “Those new tax rules … will make life much more complicated and expensive for Americans in Canada.”

The downside of renunciation for some is no longer being able to easily move to or work in the United States, vote in U.S. elections or hold a U.S. passport. Some of the benefits include no longer having to file tax returns in more than one country, which saves time and money. Mr. Reed said there could also be other changes down the road that could make being an American citizen living outside of the United States more expensive. “Renouncing now insures against this risk,” he said.

There are U.S. rules governing renunciation. For instance, Americans looking to give up their U.S. citizenship must pay a fee of $2,350 (U.S.) and go through an in-person interview at a U.S. consul or embassy explaining why they wish to give up their passport.

They might also have to pay an “exit tax,” based on certain criteria. The exit tax can be triggered if an American citizen has a net worth of more than $2-million on the day they renounce, has an average net tax liability for the five preceding years of $165,000 (2018 amount adjusted for inflation) or if they haven’t met their U.S. tax obligations for the past five years.

With renunciation, there is also the risk of being banned from travelling to the United States under what’s known as the Reed Amendment (named after Rhode Island Democratic Senator Jack Reed). This can happen if the person renouncing is considered by the U.S. attorney-general to be “motivated by tax avoidance purposes,” according to the government.

While cases of renouncers being banned from the United States are rare, Mr. Marino said it’s a risk. “Professional advice, if you decide to renounce, is always recommended to avoid the exit tax, to get ready for the interview, or to not be barred,” from the United States, he said.

via Trump tax reform leads U.S. entrepreneurs in Canada to consider giving up American citizenship – The Globe and Mail