How Americans becoming Jamaican citizens can evade IRS and FATCA Taxation

Americans, it seems are fed up with living in the Tax nightmare that is the United States of America.

So much so that a record 3,221 Americans are renouncing their citizenship based on CNN Money's analysis of Government Data as reported in the article “A record 1,426 Americans return their passports” published October 30, 2015 By Sophia Yan, CNN Money.  

This is an increase of 194 over the same period in 2014 as the graph dramatically shows!

 

Many of these Americans may be the extremely wealthy. But it may also be regular American that may be saying goodbye to Uncle Sam. But the US of A is a very comfortable place to live, especially as they are a Developed World country.

So what's the reason that's causing ordinary Americans to give up ties with the US?

How Americans becoming Jamaican citizens can evade IRS and FATCA Taxation

For Americans living abroad, paying taxes is a nightmare.

That's because all of their income is taxed, even if they work abroad, requiring them to fill out complex paperwork that's expensive to undertake and often requires the assistance of chartered accountants and lawyers. So Americans may be opting to come to countries like Jamaica not just for the warmer weather but to resettle and dodge the taxation nightmare of being an American.

Interestingly, American law doesn’t permit citizens to renounce their citizenship legally for the purposes of dodging taxes.  Also, the IRS (Internal Revenue Service) can still track Americans down to collect back taxes.

So many American resort to hiding their money in bank accounts in foreign banks or buying up property in Caribbean countries like Jamaica is a bid to cover their financial tracks before they jump the citizenship bandwagon. But even that won't work in the future.

Jamaican Banks and FATCA – How becoming a Jamaican can help Americans dodge the IRS

The IRS has implemented FATCA (Foreign Account Tax Compliance Act) to go after such tax-dodging Americans, which may explain the sudden increase in Jamaican passport applications as theorized in my blog article entitled “Why PICA sees increase in Jamaican Citizenship applications – Asians Work Permits and Americans FATCA dodgers”.

Already, Americans, wary of the coming of FATCA, have been renouncing their citizenship since 2014 at a rate fifteen (15) times higher than 2008 figures. The reason isn't absolutely clear as to why, but one can easily see the obvious logic. By becoming a citizen of another country, they can hold on to their bank accounts with money coveted to local currency, making it a lot harder for the IRS to locate them.

This as FATCA requires Americans to disclose all foreign accounts bank holdings above US$10,000. The US Government is cracking down on American tax dodgers, who often use offshore banks in Caribbean islands such as the Cayman Islands, Bahamas, Jamaica and Switzerland to hide their assets.

Which is ironic, as according to the TJN (Tax Justice Network), the United States of America as a country is itself the most attractive tax haven for 1%-ers and businesses as reported in the article “US overtakes Caymans and Singapore as haven for assets of super-rich”, published Monday 2 November 2015 by Simon Bowers, The UK Guardian. 

Often, Americans may enlist their Jamaican friends and Lawyers to set up bank accounts in the Jamaica as well as purchase land, vehicle and other tangible assets in a bid to convert their funds into a useful and less traceable form. This is usually the precursor to them giving up their citizenship as they prepare to resettle in Jamaica.

Local banks here in Jamaica have begun to comply since Wednesday September 30^th 2015 as reported in the article “FATCA Takes Effect September 30 For Jamaica”, Published Friday August 7, 2015, The Jamaica Gleaner, as they can face huge fines if they do not disclose the accounts of American citizens.

7.6 million Americans living abroad now face the prospect of having their bank accounts closed or assets frozen and other physical assets such as houses, cars and land seized as the IRS is coming to collect. That is, if the Jamaican Government can locate them, as they may have already changed citizenship and possibly even their names!

So becoming a Jamaican may suddenly not be such a bad idea!