2024-05-01
Yesterday 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 first quarter of 2024.
The number of published expatriates for the first quarter was 344. See the chart below for the quarterly expatriates from 2014 to the first quarter of 2024.
The 8-quarter moving average continues to be below 1,000 names per quarter.
I recently added some notes to the annual expatriation chart (see below). The increase in the number of individuals expatriating was largely due to the enactment of FATCA in 2010. The FATCA foreign financial institution (“FFI”) rules were phased in over several years. Many dual citizens were permanently living outside the U.S. and were not filing U.S. tax returns. When foreign banks informed their U.S. citizen-customers that the banks would soon be reporting the individuals’ foreign bank accounts to the IRS, many of these individuals decided that being a U.S. citizen was more of a liability than an asset. Therefore, they decided to renounce their U.S. citizenship.
This balancing of the costs and benefits continues to this day. Several thousand individuals each year decide that the costs of filing U.S. tax returns, and at times paying U.S. tax, is greater than the benefit of retaining their U.S. citizenship.
During 2016, over 5,400 names were published in the Federal Register. The 3-year moving average of the number of names published has trended downward since 2017.
The high number in 2020 was an aberration. The number of names published in the last two quarters of 2019 was very low (183 and 261, respectively). In contrast, the number of names published in the first two quarters of 2020 was very high (2,909 and 2,406, respectively). The 2019 numbers were artificially low, and the 2020 numbers were artificially high.
The pandemic began in early 2020, and many IRS personnel began working from home. My speculation is that the IRS person responsible for creating the list of names was able to work on this from home, and he or she worked through a backlog while working from home.
For our prior coverage of expatriation, see all posts tagged Expatriation.