In its Quarterly Publication of Individuals Who Have Chosen to Expatriate for Q1 2022, the US Internal Revenue Service (IRS) this week listed the names of 1,473 so-called “covered expatriates” – i.e. citizens, and in some cases, long-term residents whose net worth exceeds US$2m or whose average annual tax bill over the last five years has exceeded US$178,000 – who have successfully expatriated, typically by renouncing their US citizenships.
The figure represents a near-tripling compared to the 580 expatriations recorded in Q1 this year and is the highest number of published expatriations in two years.
In an email to IMI, international tax and immigration attorney David Lesperance of Lesperance & Associates, indicates the rise in reported expatriations is a reflection of the gradual resumption of renunciation interviews among US diplomatic missions.
"While today’s numbers reflect renunciations that occurred 12-18 months ago, i.e. Jan to July 2021, an increasing number of US missions are starting to grant interview dates," says Lesperance. "We constantly contact most of the US missions and are finding that some are starting to grant interviews in as short as a month away. Unfortunately, often when one mission opens up, they are quickly inundated with appointment requests and find themselves putting late comers on waiting lists. It is like playing whack-a-mole."
He explains that the expatriation figures of the last several quarters have been artificially low due to US embassies' and consulates' refusal to grant interviews in 2020, 2021, and even 2022. In his seminal May 2021 article, Under Cover of COVID, The US Is Preventing Citizens from Renouncing – On Purpose, Lesperance argued the government had used the pandemic merely as a pretext for preventing wealthy Americans from leaving the US tax pool:
Since the start of COVID in March 2020, the US State Department has opted to shut down nearly all consular services, including renunciation appointments, at US missions all over the globe. This is the case even for places where COVID is well under control or that were never in lockdown.
While many [consular] services are conducted on a mail-in basis in the US and could easily be done the same way abroad, renunciation requires the swearing in front of a consular officer. However, the officer stands behind a three-inch-thick glass wall. With basic precautions, there is no danger.
Lesperance has previously estimated that the backlog for renunciations numbers some 30-40,000 and that events in domestic politics, or the threat thereof, are driving what he characterizes as "an explosion" of demand from an ultra-polarized American electorate looking ahead to the November mid term elections.
"Half of my clients are concerned that the Democrats will keep the House of Representatives and strengthen their Senate position, which would result in rendering Senator Joe Manchin meaningless with the filibuster going out the door and significant tax increases being brought into law," remarks Lesperance.
"The other half of my clients are concerned that the Democrats will not be able to gain this electoral victory and are not sure they want to live in an America that they feel a Republican-controlled Congress would bring."