Today the Treasury Department published the names of individuals who renounced their U.S. citizenship or terminated their long-term U.S. residency (“expatriated”) during the fourth quarter of 2013.
The number of published expatriates for the quarter was 630, bringing the total number of published expatriates in 2013 to 2,999. The total for the year shatters the previous record high of 1,781 set in 2011 and is a 221% increase over the 2012 total of 932.
We do not believe that the primary reason for the increase in expatriations is for political purposes or for individuals to reduce taxes. Instead, we believe that there are likely three principal reasons for the recent increases in the number of expatriations:
Increased awareness of the obligation to file U.S. tax returns by U.S. citizens and U.S. tax residents living outside the U.S.;
The ever-increasing burden of complying with U.S. tax laws; and
The fear generated by the potentially bankrupting penalties for failure to file U.S. tax returns when an individual holds substantial non-U.S. assets.
The increase in expatriations may also be partly due to a 2008 change in the expatriation rules.