Integrity Legal

Millions of people around the world wish to take up residence in the United States of America and often wish to become American Citizens. However, it would appear that some Americans are cutting ties with the USA and renouncing their United States Citizenship. Names of all those Americans who renounce their United States Citizenship are recorded and published in the United States Federal Register. These lists are generally not particularly newsworthy. However, in the most recent quarterly publication regarding US Citizenship renunciation it would appear that the number of Americans renouncing their United States Citizenship has jumped by over 60% when compared to previous quarters. In the last quarter 1,131 people renounced their United States Citizenship. This number is a large increase from the previous quarter which saw only 679 renunciation. Although, when compared against the same quarter of the previous year which saw only 188 renunciations the 1,811 figure is rather staggering. Is this simply a one-time anomaly or is this the sign of a growing trend?

While some are speculating as to what this trend means in a broad socio-economic context, I feel that some analysis is necessary to put some perspective on these numbers. A reader looking at the Federal Register’s official posting regarding these numbers will likely note the following information:

For purposes of this listing, long-term residents, as defined in section 877(e)(2), are treated as if they were citizens of the United States who lost citizenship.

The casual reader may wonder: what does this mean? Well to quote directly from the Cornell Law School’s website which lists sections 877 (e)(1) and 877(e)(2):

(1) In general

Any long-term resident of the United States who ceases to be a lawful permanent resident of the United States (within the meaning of section 7701 (b)(6)) shall be treated for purposes of this section and sections 2107, 2501, and 6039G in the same manner as if such resident were a citizen of the United States who lost United States citizenship on the date of such cessation or commencement.

Therefore, based upon the information provided by the Federal Register and the United States statutes noted above some of those listed in the Federal Register as those renouncing their Citizenship could be United States Lawful Permanent Residents (colloquially referred to as “Green Card” holders) who have chosen to give up their permanent resident status. This explanation probably does not account for all of the “Citizenship renunciations” listed in the recent Federal Register publication, but it may account for some of these numbers. In any event, the number of those expatriating from the United States remains high compared to previous points in American history. The question remains, why are higher numbers of Americans renouncing their citizenship?

There are some who contend that the recent spike in citizenship renunciation may stem from American policy regarding taxation of United States Citizens living abroad. American Citizens (as well as lawful permanent residents) are taxed on their worldwide income, regardless of where they physically reside. This situation is in stark contrast to the tax policies of virtually every other country in the world as most countries only tax those of their citizenry who reside in their country. There are exceptions to the previous statement as issues such as domicile play into many countries’ foreign taxation policies. Many feel that the recent increases in the number of renunciations is driven by Americans with high foreign derived incomes seeking to rid themselves of the need to pay American taxes. In a major story from last year it was noted that one of the founders of Facebook had renounced his United States Citizenship before the IPO of that company’s stock. It should be noted that some argue that his tax obligations at that time may not have actually decreased as a result of his decision to give up his citizenship (due to American tax laws such as the so-called “Expatriation Tax” or “Exit Tax”), although his future tax liabilities may be reduced as a result of that decision. Perhaps more Americans are taking the (somewhat drastic) step of renouncing their citizenship in order to save some money from the tax man. Without knowing each former-American’s motivations for renouncing United States Citizenship we are left to speculate.

There may be another impetus behind the recent increase in the number of Americans renouncing their Citizenship: the FATCA. The Foreign Account Tax Compliance Act (FATCA) compels financial institutions outside of the United States to report information about accounts maintained by American Citizens or lawful permanent residents to the Internal Revenue Service. Furthermore, foreign financial institutions are also required to report on accounts maintained by foreign corporations in which Americans or Lawful Permanent Residents own a significant interest. The FATCA’s implementation has been pushed back until July of 2014. Could the looming specter of the FATCA be the reason for the recent uptick in American’s renouncing their citizenship? One of the many upshots of the FATCA is the fact that the regulatory requirements imposed by the American government on foreign banking and financial institutions can be rather burdensome. One way that these foreign institutions can relieve themselves of these burdens is by refusing to accept American customers. If there are no Americans holding accounts at a given foreign bank, then the bank does not necessarily have to comply with the provisions of the FATCA. This has lead to a situation where more and more overseas banks are refusing to provide services to Americans living and working abroad. By renouncing United States Citizenship and naturalizing to the Citizenship of another country a former American could bank in much the same manner as other foreign nationals.

The decision to renounce one’s U.S. Citizenship is a significant one and should not me made lightly. There are many benefits to being an American Citizen so those thinking of renouncing their Citizenship should review not only their tax situation, but also the intangible and tangible benefits of their American citizenship (including the US Passport). Will this trend continue? It remains to be seen, but there are many who feel that as American oversight of global taxation matters becomes more ubiquitous there will be more American’s who question the value of their citizenship.

–Benjamin W. Hart is an American attorney who resides in Bangkok, Thailand.

For related information please see: Citizenship Renunciation.

Tags: American Citizenship, American Citizenship Renunciation, American Passport, American Tax, American Taxation, Exit Tax, Expatriation Tax, FATCA, FATCA 2014, Federal Register, Foreign Account Tax Compliance Act, Green Card, Internal Revenue Service, Lawful Permanent Resident, long term resident, Renounce American Citizenship, Renounce US Citizenship, Renouncing American Citizenship, Renouncing US Citizenship, United States Citizenship, United States Federal Register, US Citizenship, US Citizenship Renunciation, us passport, US Tax, US Taxation
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It recently came to this blogger’s attention that the United States Citizenship and Immigration Service (USCIS) has implemented a new policy regarding the I-130 petition for visas such as the CR-1 visa and the IR-1 visa. To provide further insight it may be prudent to quote directly from the official website of the USCIS, USCIS.gov:

WASHINGTON – U.S. Citizenship and Immigration Services (USCIS) today announced that effective Aug. 15, 2011, petitioners residing in countries without USCIS offices will be able to file a Petition for an Alien Relative (Form I-130), with the USCIS Chicago Lockbox facility. This will increase the efficiency of the relative petition filing process and give USCIS more flexibility in managing its workload. Previous regulations permitted these petitioners, who comprise about 5 percent of all I-130 petitioners, to file with USCIS or the U.S. Department of State at their local U.S. embassy or consulate. Under the new regulation, published today in the Federal Register, petitioners residing in countries without USCIS offices may file a Petition for an Alien Relative based on the addresses provided in the revised form instructions…

Clearly, this new policy could have significant ramifications for those seeking a United States visa on behalf of a foreign loved one. Concurrently, those familiar with the American visa process may note that this new policy effectively ends the Direct Consular Filing option for petitioners in certain Consular jurisdictions. In the past, it may have been possible for petitioners to file their visa petition directly with a US Embassy or US Consulate if the petitioner resided in the Consular District. These recent regulatory changes would appear to bring this era of Consular Processing to an end.

Meanwhile, in news related to Southeast Asia and the ASEAN (Association of Southeast Asian Nations) community, it appears that Malaysia is poised to engage in a Free Trade Agreement with India. To provide further insight into these developments it may be best to quote directly from the website MoneyControl.com:

The free trade agreement (FTA) between India and Malaysia will come into force from July 1, giving Indian professionals like accountants, engineers and doctors access to the key South-East Asian nation. In addition, exports of items of considerable interest to India, like basmati rice, mangoes, eggs, trucks, motorcycles and cotton garments, will attract lower or no duty in Malaysia with the implementation of the Comprehensive Economic Cooperation Agreement (CECA), according to a statement of the Commerce Ministry issued today…

The administration of this web log strongly encourages readers to click upon the relevant hyperlinks noted above to learn more on this developing story.

As nations in ASEAN, such as Malaysia, continue to become more integrated into broader markets it stands to reason that new trade arrangements will be forged. The ASEAN community (Brunei Darussalam, Cambodia, Indonesia, Laos, Myanmar, Philippines, Singapore, Thailand, Malaysia, and Vietnam) has been the topic of a great deal of recent discussion regarding future free trade agreements as many nations around the world try to make headway into this important and increasingly lucrative regional market.

For information related to legal services in ASEAN, please see: Legal.

Tags: American Consulate, American Embassy, American Visa Process, ASEAN, ASsociation of Southeast ASian Nations, Brunei Darussalam, Cambodia, CECA, Comprehensive Economic Cooperation Agreement, CR-1 Visa, CR1 Visa, Direct Consular Filing, Federal Register, Form I-130, Free Trade Agreement, FTA, I-130, India, Indonesia, IR-1 Visa, IR1 Visa, Laos, Malaysia, Malaysian Commerce Ministry, Myanmar, Petition for an Alien Relative, Philippines, Singapore, Thailand, U.S. Citizenship and Immigration Services, United States Citizenship and Immigration Service, US Consulate, US Embassy, US Visa, US Visa Process, USCIS, USCIS Chicago Lockbox, Vietnam
Posted in ASEAN Business, CR1 Visa, IR1 Visa, Malaysia Business, US Embassy Kuala Lumpur, US Embassy Malaysia, USCIS | No Comments »

Those who read this blog frequently would likely notice that we sometimes quote text, either directly or indirectly, from American “rules, proposed rules, and notices of Federal agencies and organizations, as well as executive orders and other presidential documents“. Regulations in the United States are often noted in the Federal Register. In the past, the public service of keeping the public informed about pending regulations and policies was provided in print form. As the world becomes increasingly digital, more and more informational resources are being provided on virtual platforms. It would appear that this is also true for the Federal Register as the following quote from an announcement issued by the Government Printing Office would indicate:

WASHINGTON—The U.S. Government Printing Office (GPO) and the National Archives’ Office of the Federal Register (OFR) launch the Federal Register 2.0 prototype, a user-friendly online version of the Federal Register. This daily journal of government has provided the public with access to government information and federal regulations for the past 75 years. Federal Register 2.0 features a new layout that organizes the content by topics similar to a newspaper Web site. The site displays individual sections for Money, Environment, World, Science and Technology, Business and Industry, and Health and Public Welfare. The Web site has improved search and navigation tools to guide readers to the most popular topics and relevant documents. Users can submit comments and stay connected through social media.

Although this news is quite interesting and evidences a strong commitment on the part the American government to keep the public informed about those regulatory matters which may have an impact upon the lives of US Citizens and/or lawful permanent residents, it should also be noted that the Federal Register has a distinguished history of providing information to the public in print form. To quote the aforementioned publication further:

The first copy of the Federal Register came off GPO presses on March 14, 1936. GPO partners with OFR to provide the information in the Federal Register to the American people in both print and electronic form. GPO coordinated the development aspects of the new Web site in collaboration with OFR. GPO’s Federal Digital System (FDsys), a content management system and preservation repository, feeds content into Federal Register 2.0 and acts as the holder of the official content and archived information.

“Federal Register 2.0 is a landmark achievement for the National Archives, OFR and GPO,” said Public Printer Bob Tapella. “This is an example of how the legislative branch and executive branch work together to make government information available and easily accessible for the American people. For 75 years, GPO has never missed a print deadline for the Federal Register and now we look forward to working with OFR to support Federal Register 2.0.”

“Federal Register 2.0 is an advance in the open government initiative of the Obama administration by being able to make the  Federal Register readily available and easily understood,” said Director of the Federal Register Ray Mosley. The GPO is the federal government’s primary centralized resource for gathering, cataloging, producing, providing, authenticating, and preserving published U.S. government information in all its forms. GPO is responsible for the production and distribution of information products and services for all three branches of the federal government.

In the information age, knowledge truly equates to power. Therefore, it is admirable that the government took the initiative in attempting to provide a user friendly platform for those seeking information about pending, as well as enacted, Federal rules. Although there are some who believe that the Federal Register should remain exclusively in print form, it seems prudent and far-thinking for the government to provide online services to Americans as well as other interested parties. With that in mind, there are those who feel that there could be a possible “information overload” scenario in which Americans, inundated by a constant barrage of news and media, will not be receptive to initiatives such as this. It is this author’s opinion that increasing information for public consumption will generally have a net positive impact upon the American population as a whole.

Tags: American law, American legislation, Federal Register, Federal Register 2.0, Federal Register online, Government Printing Office, GPO, the government printing office
Posted in General Legal Information, Legal Opinion, News | No Comments »