American expatriates who closely monitor the quarterly publication of renunciation data from the U.S. Treasury Department have become used to surprises, and the latest numbers once again are raising a few eyebrows.
For one thing, the number of renunciants’ names on the list for the first quarter of 2020 is 2,909 – the highest ever, according to renunciation data experts.
This compares with just 261 names in the final quarter of 2019, and 183 the quarter before that. On an annual basis, the number of those renouncing last year was the lowest of any year since 2012, in spite of reports of waiting lists to renounce at overseas consulates, and of names of individuals not appearing on the quarterly lists after their renunciation was official, as expected, for as long as a year or more.
The high quarterly renunciation number also comes as the U.S. government agencies responsible for handling renunciation applications have stopped accepting new applications or processing existing ones, due to the global coronavirus pandemic.
On the other hand, a high number of renunciants is consistent with a trend that began in 2010, when the American tax evasion prevention law known as FATCA was signed by President Obama, and the complications and costs of being an American citizens resident overseas began to multiply, (See table, below left). And because last year's numbers were on the low side, it's seen likely that a backlog of unpublished names from earlier quarters may account for a large percentage of the names on this quarter's list.
Indeed, as reported here last November, there's been a growing consensus that the quarterly data is an imperfect – almost to the point of irrelevance – measure of the numbers of individuals who have given up their U.S. citizenships during the three-month period it's supposed to represent.
Sri Lankan president's
name on list (finally)
One name that stood out for regular watchers of the "Quarterly Publication of Individuals, who have Chosen To Expatriate" list, when it came out on Friday, was that of Sri Lankan president Gotabaya Rajapaska, whose American citizenship had been an issue during his presidential campaign last year.
As reported, Rajapaska was among those who questioned why his name hadn't appeared on the Q2 list that was published last August.
Still not on the list yet, however, was the name of Canadian politician Andrew Scheer, who has also faced questions in his country about his possible dual loyalties as a result of having inherited American citizenship from his father.
Nor on the latest Federal Register list was the name of a government official in the South American state of Guyana, Joseph Harmon, where the courts have recently ruled that those who hold citizenship in any other countries in addition to Guyana are to be considered ineligile for election to government office.
In an article last October, Harmon was quoted as saying that he had "completed my renunciation process" more than a month earlier, and was at that point waiting to be officially informed that it had been finalized. Most recently, however, press reports have quoted the office of the Guyanese president as saying that Harmon's role in the government had recently changed, though there was no mention as to whether his dual U.S./Guyanese citizenship had been a consideration.
As reported, a spokesperson for the IRS last November downplayed the significance of the quarter-to-quarter fluctuations in the renunciation data, standing by a previous IRS statement that "we cannot publish the names in the Federal Register until we receive the information needed to make a determination of the expatriation".
As this and other media organizations have been reporting for years, the number of Americans who went through the formal process of renouncing their citizenships was a relatively un-noticed phenomenon until FATCA (the Foreign Account Tax Compliance Act) was signed into law in 2010, and Americans around the world almost immediately began to find their life as expatriates becoming more complicated and expensive.
After the law was signed but even before it came into force, American expats began hearing from their local banks and other non-U.S. financial institutions that they were no longer welcome as clients, and discovered that other institutions also wouldn't have them, for the same reason: too much cost, hassle and potential downside risk.
On top of this, many found themselves in trouble for failing to file tax returns and/or so-called foreign bank account reports (FBARs), which they didn't previously realize they had been expected to do.
Even a 422% increase in the fee charged by the U.S. for citizenship renunciation, to US$2,350, in 2014 – reportedly making it the highest renunciation fee in the world – didn't slow renunciations at first, at least to judge by the quarterly Federal Register data.
Because however poor a tally of current renunciation trends the Federal Register lists may be, after FATCA was signed into law, the numbers began to dramatically increase.
And since quarterly publication of the "renunciants" is required by law, American expat groups, journalists and renunciation experts soon began to focus on these lists, not only to see how the latest quarter's data compared with that of previous years and quarters, but also to see if any famous people had given up their citizenship, or, as noted above, whether the names of any famous people who had claimed to have renounced had at last appeared.
In 2016, for example, the name of Britain's former foreign secretary, Boris Johnson, was spotted among the year's renunciants, after he apparently made good on a vow to renounce that he'd made publicly years before. 2012 was the year when Eduardo Saverin, a Brazil-born naturalized American who was one of the founders of Facebook, made headlines by renouncing, reportedly to simplify his finances rather than to avoid having to pay taxes.
In renouncing, Johnson and Saverin joined a fairly long list of famous Americans who had handed back their passports over the past century, including pop singer Tina Turner, actor Yul Brynner, authors Henry James and T. S. Eliot, film director John Huston, performer Josephine Baker and emerging market fund manager Mark Mobius. The late socialite Christina Onassis and investor Sir John Marks Templeton also renounced.
Federal Register 'has
never been accurate snapshot'
Last year, John Wood, a London-based lawyer with the U.S.-headquartered law firm Butler Snow LLP, which advises Americans around the world on citizenship issues, told the American Expat Financial News Journal that people should avoid reading too much into the Federal Register data, noting that it "has never been an accurate snapshot of expatriates".
Now, he notes, the data appears likely to be even less meaningful going forward, since most U.S. embassies and consulates around the world have suspended renunciation appointments since mid-March.
"The U.S. Embassy in London is only providing 'emergency' services until further notice, and they have not yet been able to provide a specific date when they expect to resume normal operations," Wood added.
"There are valid safety reasons for not conducting renunciation appointments at this time, because the law requires renunciations of U.S. citizenship to happen 'in person' before a U.S. consular or diplomatic officer. For this reason, officials can't simply change their procedures in light of the current pandemic to conduct renunciation appointments electronically, by mail, or through other means, unless the law is amended.
"However, this obviously presents a problem for people who are eager to relinquish their U.S. citizenship, and for others where timing is of the essence.
"For example, there is an exception to the 'covered expatriate' exit tax regime that is only available to certain individuals who relinquish their U.S. citizenship before attaining age 18.5.
"And it remains unclear whether embassy officials would consider aging out of this exception as an 'emergency' that necessitates an in-person appointment, but it could trigger significant tax consequences for such an individual if they were unable to relinquish their U.S. citizenship before turning 18-and-a-half years old."
To see the latest list of renunciants on the Federal Register's website, click here.
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