The IRS published today the list of former U.S. citizens for the first quarter of 2014 and it can be reviewed here. It’s a record for any first quarter by 47%.
This is a record pace from any prior year, considering the entire year of 2013 had a record pace of 2,999 former U.S. citizens for the entire year. The 1,001 listed persons in the first quarter of 2014 is a 47% increase over the 679 former citizens published in the same period a year ago. No other first quarter list had more than 500.
There are a number of interesting questions that are created by this trend.
- Does the IRS have access to the data for former lawful permanent residents? That information is not published under the statute (Section 6039G), which only covers U.S. citizens. Does the Department of Homeland Security track former LPR – names, addresses, etc.?
- Will the IRS simply select the list of published former citizens for audits? The complete set of lists going back to the mid-1990s can be reviewed here. Quarterly Publications.
- Will the IRS try to locate former long-term lawful permanent residents (LPR) to select for audit? See, What could be the focal point of IRS Criminal Investigations of Former U.S. Citizens and Lawful Permanent Residents? Posted on March 5, 2014.
- How many former citizens are not included in this quarterly list? The statute provides the names are compiled from data received from the U.S. Department of State and the federal agency principally responsible for immigration, among others..
- How many of these individuals met, or will meet, the certification requirements set forth in Section 877(a)(2)(C)? If the former citizen does not comply with this provision, they will necessarily be a “covered expatriate” with the accompanying adverse U.S. tax consequences. See,Revisiting the consequences of becoming a “covered expatriate” for failing to comply with Section 877(a)(2)(C). Posted on April 16, 2014
- Related to the above question: How many have filed (or will file) IRS Form 8854? See, Does IRS Notice 2009-85 regarding expatriation have the “force of law”? Posted April 14, 2014.
- How many of these former citizens will be subject to the US$10,000 penalty under Section 6039G(c)?
- How will the IRS collect tax and penalty assessments against individuals who live exclusively outside the U.S.?
There has been a clear trend of a growing list of former U.S. citizens. As more “Accidental Americans” learn they are U.S. tax residents by virtue of their U.S. citizenship, I think the trend will continue. The longer term consequences will be interesting as they unfold.