New data released by the U.S. government yesterday shows that a record 1,337 Americans gave up their passports in the first three months of the year.
That number is nearly 40% of the 3,415 Americans that gave up their citizenship last year, which means we're on track for a record number of U.S. renunciations this year.
The stunning number makes for a troubling trend as in 2014 the number of Americans who renounced was 15 times higher than in 2008.
The surge can attributed to complex new U.S. tax laws for citizens residing abroad. The complicated paperwork and the IRS' tough talk has made it logical to renounce citizenship rather than deal with the taxes. The paperwork is so complex that most must hire tax professionals which mean the yearly cost is in the thousands of dollars.
Yet the situation is getting worse and not better. Thanks to the Foreign Account Tax Compliance Act, aimed at tax dodgers, individuals must now report certain foreign assets while banks must disclose all foreign accounts held by Americans.
Few banks even understand the complicated new rules, with many, fearing sanctions, kicking American customers out for fear they will breach compliance standards.
Funnily enough it is actually illegal to renounce your U.S. citizenship just to get out of paying taxes. The U.S. government will also track you down for back taxes regardless of your current citizenship status.