Inconsistencies in Official IRS Statistics on U.S. Expatriations
The official IRS statistics on Americans renouncing their US citizenship or permanent residency show some concerning inconsistencies.
- The number of expatriations increased from 45 in the last quarter of 2012 to 679 in the first quarter of 2013.
- In 2012, the IRS reported 932 Americans officially expatriated.
- But the IRS data has shown wild variations in the past, with expatriations dropping by over 50% from 2005 to 2006, then more than doubling from 2009 to 2010.
- Even quarter-to-quarter, the numbers vary greatly, from 460 expatriations in Q1 2012 to just 45 in Q4 2012.
Given these extremes, it seems reasonable that the official statistics compiled by the IRS don’t reflect the actual totals of Americans giving up their citizenship or long-term residence. Indeed, they appear to be much higher.
Potential Underreporting by the IRS
The official IRS statistics on Americans renouncing their US citizenship appear to significantly underestimate the true number of expatriations, based on data from other sources:
- FBI Data Shows Higher Expatriation Figures. According to the FBI, 4,385 Americans renounced their citizenship in 2012. This only counts those formally renouncing, not those relinquishing citizenship or abandoning long-term US residency.
- Media Reports State Expatriations from Single Countries Exceed IRS Totals. A South Korean news article states 2,158 of their citizens gave up US passports or green cards in 2011. This exceeds the entire IRS expatriation total for that year.
Swiss media reported 411 individuals expatriated at the US consulate in Bern, Switzerland in the first three quarters of 2012. This would account for over 40% of the IRS’s total expatriations for the full year.
- Notable Expatriates Missing from IRS Lists. Many high-profile individuals, such as Ukraine’s former first lady and various actors, have expatriated but do not appear on the official IRS lists.
These discrepancies strongly suggest the IRS data significantly underestimates the true scale of Americans giving up their citizenship or long-term US residency. The actual number appears to be much higher than the official statistics indicate.
We estimate the actual number of annual expatriations is likely 10 times higher than the IRS figures, potentially reaching 10,000 or even 50,000.
Why Americans Expatriate
US citizens and permanent residents living abroad face a heavy compliance burden with overlapping tax and reporting rules. Also, there are severe penalties for even minor violations.
Foreign banks are also pressured to enforce US tax laws. This often leads to them closing their American clients’ accounts rather than dealing with the reporting obligations.
You can read more expatriation reasons here.
Are You A Good Candidate for Expatriation
To expatriate is a big decision. One that has implications far beyond possibly paying an “exit tax” upon your permanent departure.
Expatriation means, for example, that you no longer have the automatic right to enter or live in the United States. You’ll need to get a visa to do so, unless your non-US passport qualifies you for visa-free entry.
Before making this decision, review several key factors to ensure it’s the right choice for you.
You can find more information here: Are you a good candidate for expatriation?
Need Help?
We can assist in every phase of giving up your US citizenship or long-term residence. This includes helping you get a second passport before giving up US citizenship.
And if you’re not ready to expatriate, we can help you take advantage of tax breaks in the Tax Code that apply to US citizens and permanent residents living overseas.
Schedule a free no-obligation consultation with a Nestmann Associate to see if expatriation is right for you.
