The estimated 8 million Americans abroad are being urged by the CEO of one of the world’s largest independent financial advisory organizations not to renounce their U.S. citizenship due to FATCA before they have considered all the available options.
The message from Nigel Green, deVere Group chief executive and founder, comes as the latest U.S. Treasury data reveals that a record number of people have handed back their American passports or green cards in the last year.
Mr Green states: “More Americans than ever are cutting their official ties with the United States. For the third consecutive year, a record number of people have handed back their U.S. passports or green cards. This year the number is up by more than 20 per cent.
“It is widely recognised that this increase is largely due to the burden of the Foreign Account Tax Compliance Act, or FATCA, that was passed in 2010 and came into full effect in 2014.
“This highly controversial piece of legislation has had the unintended consequence of turning millions of hard-working, law-abiding Americans based outside the States into financial pariahs.
“Foreign financial institutions now routinely refuse to handle American clients – even if they have been clients for years – as it is too much trouble and too costly to comply with FATCA’s onerous rules.”
He continues: “Most Americans abroad are proud of their citizenship and indeed many find it an integral part of their identity when living overseas. Therefore, giving up citizenship is a distressing idea and something they wouldn’t do unless they felt there was no alternative.
“As such, and because of the other financial implications of doing so, such as exit taxes, I would urge anyone who is considering giving up their U.S. passports for financial reasons and without wanting to, to seek specialist advice.
Mr Green concludes: “Don’t feel forced by Uncle Sam to give up your citizenship until all the options have been fully explored.
“The authorities are taking this project very seriously and Americans must ensure that they are FATCA-compliant. The penalties are hefty.
“However, there are several well-established, bona fide, compliant ways that U.S. expats can mitigate the often unbearable burden of FATCA. These include an additional overseas pension contract that’s specifically designed for U.S. taxpayers with assets in their country of residence.”
A little over 16 months ago, soon after FATCA’s implementation, deVere Group carried out a survey that revealed that 73 per cent of American expatriates were considering relinquishing their U.S. passports as a direct result of the law.
Last summer, Nigel Green, who has been a public critic of FATCA, called on U.S. presidential candidates to “come clean” on where they stand on the issue of FATCA.
He said: “ FATCA adversely affects millions of hardworking, middle class Americans around the world, plus U.S. companies that operate internationally – and, therefore, it impacts U.S. jobs and the American economy.
“Presidential candidates who support this tax act now need to justify to America why they support it; whilst those who want it repealed now need to articulate to voters why they believe it is fundamentally flawed and why they will move to repeal it.
“It is an issue that must play a major part in the national conversation ahead of the election.”