'3000 Americans renounce citizenship over intrusive tax laws'

Tired of dealing with intrusive US tax laws and complicated tax filings, 3,000 Americans have renounced their citizenship last year, triple the average for the previous five years.
3,000 lined up at US embassies around the world to renounce their citizenship in 2013.
The numbers for 2013 represent a dramatic spike -- triple the average for the previous five years, according to a CNNMoney analysis of US government data.
In 2008, a total of 231 Americans renounced their citizenship. The next year, the figure rose to 742 while in 2010, the figure touched 1,534. In 2011, the number of Americans renouncing US citizenship reached 1,781 and in 2012, the figure went down to 933 before touching 3,000 last year.

Some of the rush may be caused by Americans hoping to avoid the new disclosure requirements. Others living abroad say they are giving up their US passport because they are tired of dealing with overly complicated tax filings.
Unlike most countries, the US continues to tax citizens on all income, regardless of where it is earned or where they reside. For expats, filing taxes in two countries often means wrestling with a huge mountain of paperwork.

Reporting taxes can be so difficult that expats are often forced to seek expert help, which can cost thousands of dollars, the report said.

Brad Westerfield, a tax lawyer at Butler Snow, said that renunciations have increased following the implementation of a new disclosure law -- the Foreign Account Tax Compliance Act -- that targets overseas tax evasion.
The measure, approved by Congress in 2010, is aimed at recouping some of the hundreds of billions the government says it loses each year in unpaid taxes.
"They've become so complicated -- the increased filing obligations over the years," Westerfield said.
He said that the first wave of renunciations in 2010 coincided with a part of the law that requires individuals to report foreign assets worth as little as USD 50,000. That was in addition to a separate provision that forces Americans to disclose foreign bank holdings larger than USD 10,000.

Renunciations dipped in 2012, but now another part of the law is kicking in. The new provision requires financial institutions to report all foreign accounts held by Americans.
"People find that intrusive," Westerfield said. "Just because you live your life outside of the US, most of your assets are foreign assets. [Americans are] saying enough is enough."
The law has prompted some banks to kick out their American clients rather than comply. Penalties can be high if banks make a mistake reporting US-held accounts, even if they are basic checking and savings accounts, the report said.