This Globe and Mail story of a mass citizenship renunciation recently came to my attention and it serves as a stark illustration of the reality of the sharp spike in renunciations over the past few years. According to the Globe and Mail, “Last year, 1,534 Americans renounced their U.S. citizenship – more than twice as many as in 2009 and a sevenfold increase from 2008.”
We have held large ceremonies to confer citizenship for generations and these have been joyous occasions, but now, sadly, on at least this occasion, Americans have gathered for a mass renunciation.
The renunciations seem to stem from the burdens and penalties under the IRS’ Report of Foreign Bank and Financial Accounts, the so-called FBAR.
The IRS’ inflexible application (PDF) of FBAR penalties is a worldwide problem for Americans abroad and for Americans who may have lived abroad and still have assets overseas. There have been numerous press accounts of Americans all over who owed little or no U.S. taxes and who entered recent voluntary disclosure programs in good faith, but who have nevertheless been penalized for failing to files FBARs.
Beyond the tragedy of so many of our fellow patriots feeling compelled to take such drastic measures to avoid indiscriminate and unjust prosecution by our own government, is the draining effect it will have on the power of soft diplomacy to advance American interests abroad. If our fellow citizens give up their citizenship because of abusive enforcement measures, how can we convince the rest of the world of our fundamental fairness and reliance on the rule of law and due process?
