More Americans handed their citizenships back to Uncle Sam in 2020 than during any other single year to date, in spite of the fact that U.S. embassies and consulates around the world – which are needed to process such citizenship renunciations – were closed or offering reduced services for most of the year, data published today reveals.
The total number for 2020 was 6,705, more than three times as many as in 2019, and 1,295 more than the previous record-breaking year, 2016, when renunciations totalled 5,410.
However, only 660 names appeared on the latest list, published, as they are every quarter, on the Federal Register. This compares with 732 last quarter, making the three months to the end of December the smallest number since the fourth quarter of 2019, when only 261 names were published.
The reason renunciations have been soaring is attributed, even by the U.S. Government, to the introduction of the Foreign Account Tax Compliance Act, an anti-tax evasion law that was signed into law by President Obama in 2010. It went live in most countries around the world in 2014.
FATCA obliges non-U.S. banks and financial institutions to report to the IRS on the assets of those of their account-holders who have American citizenship, and it has had the effect of shining a spotlight on millions of American expats, many of whom were unaware that they were expected to file U.S. tax returns annually, and in some cases, pay U.S. taxes on certain income.
It has also made life extraordinarily difficult for many, and, as mentioned, driven thousands to renounce their citizenships.
Record-breaking year predicted
As long ago as August some renunciation-list watchers said 2020 would be a record-breaking year, based on the second-quarter data, which brought the total for the first six months to 5,313 names – just 97 names from the 2016 full-year record total of 5,410, with two quarters still left to go.
As reported, the Q3 2020 list only had 732 names, which the list-watchers (and renunciation experts) attributed to the closed embassies and consulates.
As then, it's assumed that the latest list, like the one before it, is at least in some part if not entirely comprised of a backlog of names that had built up in previous quarters.
One recent renunciant who has no doubt that this is the case told the American Expat Financial News Journal today that her name finally appeared on today's list, even though she "officially received my Certificate of Loss of Nationality in early 2019, after renouncing in December 2018".
This former American, who requested anonymity, said that "on the one hand I feel a small celebration is in order, as I won't have to keep watch for every quarterly list of renunciants' names to see if mine is there."
On the other hand, she added, "I think, as I always have, that it’s unspeakably sad that the U.S. basically forces people like me to renounce, and then doxxes them on a public ’name and shame’ list without their consent. In this day and age, that is just so wrong.”
This former American and others said that once embassies and consulates begin processing renunciation applications again, the waiting times, which in some countries can be months long, are likely to be significant, particularly given mounting frustrations among so-called accidental Americans who are struggling to maintain bank accounts in the countries in which they live, because they lack Social Security Numbers or Tax Identification Numbers, which banks are increasingly insisting on from anyone whom the U.S. considers to be American.
In October, the Wall Street Journal quoted the IRS as saying that, "of the 2,907 names published in the Federal Register for the first quarter of 2020" – when many U.S. embassies and consulates would still have been open, as this was before the seriousness of the Covid-19 pandemic had been widely realized – "only three actually expatriated" in 2020.
"Of the remainder, 941 expatriated in 2019, 441 in 2018, 736 in 2015 and 713 in 2014.
"An additional 76 were sprinkled across other years."
Biden effect cited
One observer of the renunciation data, meanwhile, Alistair Bambridge of the New York-based enrolled agents Bambridge Accountants, said he saw the data released today as reflecting the fact that fewer Americans have been looking to renounce their citizenships in the wake of Joe Biden having been elected president in November.
“The thought that Donald Trump would have another four years [in office] has seen a huge spike in 2020 for Americans overseas looking to renounce their citizenship, where the figures had been in steep decline since 2017," he said, in a press release posted on the AP News website.
“Actually, the record numbers of Americans giving up their citizenship in the first nine months of 2020 was just the tip of the iceberg, and if the U.S. embassies and consulates were all open, there would have been much higher levels for 2020.
“From our experience, Americans abroad are overjoyed in the change in administration.
"For those individuals, the election of President Biden is enough to reconsider giving up their citizenship, and many Americans abroad are now talking about returning to the U.S.”
Some expats who have renounced expressed scepticism at this theory, however, noting that because renunciation takes so long, even when embassies and consulates are open, the numbers would always lag any news events that might cause people to renounce, or not, by at least a year.
'Renunciation floodgates could open'
Fabien Lehagre, the outspoken founder and president of the Paris-based Association of Accidental Americans, believes that the U.S. citizenship-renunciation floodgates would open if his organization, and its co-plaintiffs, win their legal complaint against the U.S. State Department for what they claim is the unconstitutional and illegal fee that the U.S. charges for those seeking to give up their U.S. citizenship.
As reported, the AAA filed a complaint in U.S. District Court in Washington last December, along with 20 individual accidental Americans of 10 different nationalities, in which they allege that the US$2,350 fee the U.S. currently charges those wishing to renounce their American citizenship violates the U.S. Constitution and international law.
To see all the years' U.S. renunciation data, back to 2000, see table below.
To see this year's data on the Federal Register's website, along with the data for previous years, click here.
To read a comment piece posted last November on the website of the recently-launched Stop Extrateratorial American Taxation advocacy group, entitled "Renunciations of US citizenship: Correcting the myths perpetuated in recent media coverage", click here.
While a record number of Americans were heading for the exits in 2020, meanwhile, one Canadian citizen finally won a years-long battle to gain U.S. citizenship. Neil Young, who publicly-stated that his U.S. citizenship application had been held up because of his use of marijuana, finally obtained his dual Canadian-American citizenship in January, according to an Instagram he posted on Jan. 23.
His post (pictured left) featured a photo of himself saluting next to an American flag and a sign which said, "Democrats, register to vote here."
As reported here in November, 2019, the 74-year-old rock star went public with his struggle in a posting on his website, NeilYoungArchives.com, in which he said that he was keen "to be a dual citizen [of the U.S. and Canada] and vote", but that his application was being delayed by the U.S. authorities "due to my use of marijuana".
As a result of that posting, the story of his quest for a U.S. passport was covered by major media organizations around the world, including the BBC, the UK's Guardian newspaper, Rolling Stone and The New York Times.
- The Schroders podcast, featuring Heale and Saxer: 2010's 'Fear and Total Confusion Act,' and other U.S. expat challenges
- BBC World Service takes a 4th of July look at U.S. 'taxation' and 'representation' of its expats
- Switzerland's tax authority again issues reminder on disclosure of U.S.-client account details
- Setback for FATCA reciprocity advocates in France, as Assembly fails to approve amendment
- Looming confrontation seen between U.S. and its FATCA signatories, as 'FATCA II' takes shape in Washington