Americans living and/or working Overseas are renouncing their U.S. Citizenship and Permanent Residence Status.
The US embassies have reported a sharp increase in the number of applications for U.S. Citizenship renunciations 2011. The U.S. Embassy in Australia has notified U.S. Citizens that the backlog of applications is now so long that staff is unable to keep up with the applications, which now has a backlog of over 18 months and growing. U.S. Ambassador for Switzerland Donald Beyer stated, “At the moment this phenomenon is bigger in Switzerland than anywhere else in the world,” Beyer told the Handelszeitung newspaper. “US passports are becoming less attractive due to the implementation of stricter US laws.”
The latest law causing the greatest concern is the Foreign Account Tax Compliance Act (FATCA) that requires banks worldwide to report the financial assets and transactions of their U.S. clients. FATCA may be the last straw for many foreign-based US citizens that are already required to file U.S. tax returns on overseas earnings even if they live abroad. Eritrea, bordered by Sudan, Ethiopia and Djibouti and occupying a strategic area in the Horn of Africa, is the only other country in the world that makes this demand of its citizens.
The ongoing robust tax evasion investigations by the US Treasury and Department of Justice has resulted in many European banks refusing to open bank accounts for new US clients. As a reciprocal move, many foreign citizens living and working in the United States have had their own foreign bank accounts closed because their own countries’ banks no long want the heavy and costly annual reporting requirements of their own citizens who may now be treated as “U.S. Residents”.
Foreign Banks Are Now Contacting Its Customer:
Non-U.S. Situs banks and financial institutions are now asking questions of its current accounts holders, whether long-term or not, that follow the I.R.S Regulations and if you answer in the affirmative then you have a very high chance of having the bank close your account within 30 days:
1. U.S. citizenship or lawful permanent resident (green card) status;
2. A U.S. birthplace;
3. A U.S. residence address or a U.S. correspondence address (including a U.S. P.O. box);
4. A U.S. telephone number (regardless of whether such number is the only telephone number associated with the account holder)
5. Standing instructions to pay any amounts from the account to an account maintained in the U.S.;
6. An “in care of” address or a “hold mail” address that is the sole address with respect to the client; or
7. A power of attorney or signatory authority granted to a person with a U.S. address.
If you have any one of these indicia does not mean that the account is owned by a U.S. person, only that it must be given closer scrutiny. To carry out the foreign bank’s due diligence and avoid massive penalties from the U.S., the bank will collect declarations from you with your signature attesting under penalty of perjury:
Indicia Documentation Required of U.S. Citizenship or lawful Permanent Resident Status (Green Card).
1. Obtain W-9 or a W-8BEN and
2. Non-U.S. passport or similar documentation evidencing citizenship in a country other than the U.S.
Indicia Documentation of a U.S. birth place
1. Obtain W-9 or W-8BEN; and
2. Non-U.S. passport or similar documentation evidencing citizenship in a country other than the U.S.; and
3. A copy of the individual’s Certificate of Loss of Nationality of the U.S. or a written explanation of the account holder’s renunciation of U.S. citizenship
Indicia Documentation of a U.S. address (residence, correspondence, or P.O. Box)
1. Obtain W-9 or W-8BEN; and
2. Non-U.S. passport or similar documentation establishing foreign citizenship or a certificate of residence or other documentation for identifying the client.
One or more U.S. telephone numbers and no other telephone numbers
1. Obtain W-9 or W-8BEN; and
2. Non-U.S. passport or similar documentation establishing foreign citizenship or a certificate of residence or other documentation for identifying the client.
One or more U.S. telephone numbers and at least one telephone number outside the U.S.
1. Obtain W-9 or W-8BEN; or
2. Non-U.S. passport or similar documentation establishing foreign citizenship or a certificate of residence or other QI documentation for identifying the client.
Instructions to transfer funds to U.S. accounts or directions regularly received from a U.S. address
1. Request W-9 or W-8BEN; and 4. Documentary evidence establishing non-U.S. status Only address on file is “in care of” or “hold mail” or U.S. P.O. Box Request W-9, W-8BEN; or
2. Documentary evidence establishing non-U.S. status Power of Attorney or signatory authority granted to person with U.S. address Request W-9, W-8BEN; or Documentary evidence establishing non-U.S. status
Ambassador Beyer also stated that most of the people handing in their US passports are those who had either been born abroad and had citizenship through their parents or moved away from the US at an early age.
Since 2013, these individuals have been required to pay a $2,350 fee to process their official change in status. According to the Federal Register, the number of individuals renouncing U.S. Citizenship or Long-Term Resident Status, “Green Card Holders” see https://www.federalregister.gov/articles/2016/05/05/2016-10578/quarterly-publication-of-individuals-who-have-chosen-to-expatriate-as-required-by-section-6039g, for just the first Quarter of 2016 is as follows:
U.S. Citizens Renouncing Citizenship
If you have any questions on the above matters of Citizenship, Permanent Resident Status, U.S. Resident Status or available options, please give me a call at your convenience for a no fee private consultation.
Michael B. Nelson, Esq.
Article written June 24, 2016
