The dream of being a U.S. citizen may not be as dearly held or as high a privilege for some, as 2011 saw a record number of individuals who have U.S. citizenship and are living overseas choose to drop their status for tax purposes.
According to the Internal Revenue Service, more than 1,800 people gave up their citizenship or green cards in 2011, with most of these cases being for financial reasons. Currently, the United States requires individuals living overseas to have at least $10,000 in the bank accounts, and must file additional paperwork on their current foreign accounts.
These regulations have been around for more than 40 years, yet only recently have the rules been more strictly enforced with fines and/or criminal charges placed on the individuals living overseas, mainly by the Foreign Account Tax Compliance Act, passed in 2010. The law forced foreign banking institutions to provide the IRS with information that individuals were not forced to share previously. Those who do not report their foreign assets of $50,000 or more will be fined $10,000, according to the IRS, and will be added to a list published by the IRS that is considered to act as a mark of shame for those who are included on the list, Reuters reported.
ABC commented that foreign banks are frustrated with this added responsibility for their U.S. citizen customers, with some even threatening to drop them as a customer, which creates added stress for the U.S. individuals.
“Americans abroad are terrified,” Marylouise Serrato, of American Citizens Abroad, said in a recent interview with Reuters. “We’ve had people pay tens of thousands of dollars in fines.”
According to Reuters, the United States is one of the few countries in the world with these types of laws.