Are increased tax burdens leading citizens to leave the U.S.?

The United States Government Accountability Office (GAO) recently released a bulletin calling on the Internal Revenue Service (IRS), Congress and other government agencies to make changes to better address foreign asset reporting. The bulletin notes approvals of renunciations of United States citizenship have increased from 1,601 to 4,449 from 2011 to 2016. The agency suspects the increase in renunciations is the result of difficulties with reporting of foreign assets.

What has caused the problem? Lawmakers passed the Foreign Account Tax Compliance Act (FATCA) in 2010. Since its passage, government officials have noticed some problems. One example: almost 75 percent of taxpayers who need to report foreign assets unnecessarily report to both the IRS and the Financial Crimes Enforcement Network (FinCEN).

As a result, the agencies are dealing with unnecessary duplicative reporting. 

How can government agencies fix this problem? The GAO has made a number of recommendations to help solve these problems, including:

  • Congressional intervention: The agency recommends Congress make changes to the Bank Secrecy Act of 1970. The GAO contends this law, along with other statutes, should be updated to better address foreign financial asset reporting requirements.
  • Changes by the IRS: The GAO also calls the IRS to develop a plan to better review Taxpayer Identification Numbers of United States account holders as supplied by Foreign Financial Institutions (FFIs). The IRS currently has difficulty matching the FFI reported numbers to taxpayer’s Taxpayer Identification Numbers.

Additional recommendations include streamlining the Statement of Foreign Financial Assets Form 8938 to provide more clarity for taxpayers who need to file the form. If the changes are implemented, the GAO suspects the rate of renunciations will decrease. 

No Comments

Leave a comment
Comment Information
Email Our Team

Contact Us to Get Started Today

Located in the Washington, D.C area, we serve clients in the District of Columbia, Maryland and Northern Virginia, as well as across the country and overseas. For a free initial consultation, call 202-381-1261 or complete our brief online form.

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Six Convenient Office Locations in and around the DC Metropolitan Area

Washington, D.C.
1050 Connecticut Ave NW #500
Washington, D.C. 20036

Phone: 202-618-1873
Fax: 888-235-8405
Washington Law Office Map

Columbia Office
10440 Little Patuxent Parkway, Suite 300
Columbia, MD 21044

Phone: 202-618-1873
Phone: 410-497-5947
Fax: 888-235-8405
Columbia Law Office Map

Annapolis Office
839 Bestgate Road
Suite 400
Annapolis, MD 21401

Phone: 202-618-1873
Phone: 410-497-5947
Fax: 888-235-8405
Annapolis Law Office Map

Fairfax Office
8280 Willow Oaks Corporate Drive
Suite 600
Fairfax, VA 22031

Phone: 202-618-1873
Phone: 703-988-4817
Fax: 888-235-8405
Fairfax Law Office Map

Rockville Office
199 E. Montgomery Avenue
Suite 100
Rockville, MD 20850

Phone: 202-618-1873
Phone: 240-599-5009
Fax: 888-235-8405
Rockville Law Office Map

Baltimore Office
400 East Pratt Street
8th Floor
Baltimore, MD 21202

Phone: 202-618-1873
Phone: 443-743-3381
Fax: 888-235-8405
Baltimore Law Office Map