Renouncing US Citizenship Renouncing US Citizenship

As much as many people throughout the world view the United States of America as a land of opportunity, quite a number of Americans have gone ahead to renounce US citizenship.

What this means in essence is that an individual voluntarily chooses to relinquish his or her nationality. It is important to differentiate the act of renunciation from de-naturalization. With the latter, the state actually strips the individual of his nationality usually for some reasons.

In the year 2013, it was noted that the numbers of expats choosing to relinquish their citizenship had increased significantly from the previous year. In just the second quarter of last year, about 1,131 cases of renunciation had already been reported. In 2012, during the same period, only 189 people had given up their citizenship. It is important to note that there are an estimated 6 million Americans living abroad. Hence, whereas the numbers of renunciations might be seen as not being very significant, the rise in the numbers of people giving up their US passports last year is definitely a cause of concern.

The Most Probable Cause of Renunciation of U.S. Citizenship

Given that the United States is a country that offers immense freedoms, opportunities and even security to its people is a factor that many people throughout the world appreciate. This makes it difficult to tell why anyone would go ahead and renounce US citizenship. However, many experts point to the surge in numbers of people giving up their citizenship to taxation matters.

Specifically, the Foreign Accounts Tax Compliance Tax, famously referred to as FATCA, is a new law that has been passed in the US and its aim is to reign in on expatriates’ taxable assets.

As per the provisions of the law, from July of 2014, it will be compulsory for financial institutions worldwide to report to the Internal Revenue Service in the US about the incomes as well as assets of citizens with $50,000 in their records. In fact, those financial institutions that fail to accomplish this might actually have their interest payments and dividends withheld by the government.

The aim of the government in passing and implementing this law is to recover the taxes that have yet to be paid on the assets of US citizens living out of the country. This amount is actually estimated to be about $100 billion.

Expats have in the past been required by the law to file their tax returns and even go ahead to disclose their assets through the form famously referred to as the FBAR. However, as may be expected, many have not been keen to keep their records up to date. Thus, with the new law, these expats envision a lot of fines being brought against them. For many people, this new law will imply that they have to go through the rigorous activities of filing tax returns for their mother country and the host nation. Filling forms for tax compliance is always time consuming and even expensive and many expatriates might be choosing to give up U.S. citizenship for this reason.

The wealthy tax dodgers who live out of the country are even more nerved by this latest tax law. Many people see the new regulation as being a means of targeting this group of Americans.

How to Renounce U.S. Citizenship

A person who wishes to give up his U.S. citizenship has to do this out of his own free will. He is expected to appear before a diplomat officer or another US consular.  This renunciation needs to be done in a different country and this means that it is done in a US Embassy or in some countries, Consulate. While here, he is expected to sign the oath of renunciation. In the event that one does not give up one’s citizenship in the manner described above, the renunciation is widely considered as not having any legal effect. As per the law, it is not possible to renounce US citizenship while still in the country or through mail or an agent.

In the event that you go ahead and renounce your citizenship, it is important to note that you will have given up any rights or privileges accorded to Americans. In fact, in the event that you do not have any other nationality, you may be rendered stateless and therefore, not with any country’s protection. In the event that children are involved in the matter, they are expected to personally demonstrate their wish to renounce their citizenship to the relevant authority. Not even a mentally challenged person can have his citizenship renounced by a different person on his behalf.

While it is possible to revoke a renunciation, this is done under extremely stringent regulations.

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