Denunciation of U.S. Citizenship – From the perspective from a U.S. Senator
.@SenGillibrand thinks Americans "Denounce" US citizenship in order to "escape taxes". As JFK once said the great enemy of the truth is NOT the lie but the "myth". #FATCA is #Americansabroad don't "Renounce" bc they want to, but bc they feel they have to! https://t.co/2NbVTUfTbh pic.twitter.com/WWcSXyQHCC
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) November 14, 2023
Renunciation of U.S. Citizenship – From the perspective of a U.S. journalist
.@AnaTeresaSola Please contact me if you are open to discussing your article about cit renunciation. It seems to be based on: 1. Retirees abroad with US income sources 2. Bad info about how tax treaties help US citizens. – Perhaps write a Part 2? https://t.co/l0wg4YAR95
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) November 13, 2023
It’s hard to have a discussion about why Americans abroad are renouncing U.S. citizenship. There are many different perspectives about renunciation. There is very little “shared reality”. Tax academics (who have the resources to know better), “pensioned intellectuals”, politicians and most journalists see this from a “U.S. resident perspective”. They don’t understand the reality of the lives of Americans abroad. But, Americans abroad are NOT a monolith. The ONLY thing they have in common is that they live outside the United States. Their circumstances vary widely. There is little “shared reality” among Americans abroad of what the issues are. AT the risk of oversimplification, I have attempted to divide “Americans abroad” into four categories (as defined below). The categorization will explain why different groups of “Americans abroad” experience the U.S. extra-territorial tax regime differently.
Hint: Americans abroad aren’t renouncing U.S. citizenship because they want to. They are renouncing U.S. citizenship because they feel they have to.
Politicians, tax academics, “pensioned intellectuals” and many journalists deal in the world of opinions. The opinions they hold are often “myths”. They are not “facts”. They are entitled to their opinions (as misguided and ignorant as they may be). They are NOT entitled to their “facts”.
This post is to describe the facts about how the extra-territorial application of the Internal Revenue Code and the Bank Secrecy Act pressure many Americans abroad to renounce U.S. citizenship. Interestingly a large percentage of those renouncing owe ZERO taxes to the U.S. government. They renounce anyway!
First, a bit of background to the problem – what is the problem and who is affected?
They do NOT meet the test of being “nonresident aliens” under the Internal Revenue Code
The people most affected by the U.S. extraterritorial tax system are not a monolithic group. Some left the United States recently, some left years or decades ago. Some left as adults (some young, some middle-aged, and some retirees), while others left as children (with their families), and some have never lived in the United States (they are U.S. citizens by virtue of the U.S. citizenship of at least one parent). Some intend to live in the United States (again) in the near or distant future, while others do not intend to ever live in the United States (again). Some identify as Americans while others do not. Many are also citizens of the country where they live (dual citizens) while others hold triple or even quadruple citizenships. In referring to this group, there is no one term that sufficiently reflects its full diversity. What unites them is that they do not meet the test of “nonresident alien” under the Internal Revenue Code. Depending upon the context, this series of papers will use terms such as “persons,” “individuals,” “affected individuals,” and “overseas Americans.” The latter term has a drawback, however: it emphasizes connections to the United States while minimizing the important connections that such persons have to the countries and communities where they live.
That said, what divides Americans abroad may be greater than what unites Americans abroad!