Andrew Mitchel LLC

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Is the IRS Missing Names From Its Quarterly Publication of Expatriates?



We believe that the IRS is likely missing a significant number of names from its quarterly publication of expatriates.

First, based on data recently released by the State Department and the FBI, the estimated number of Certificates of Loss of Nationality (“CLNs”) applied for or issued during the fiscal year ending September 30, 2015 (the “2015 Fiscal Year”) is roughly 6,000. However, for the first 3 quarters of 2015 Fiscal Year, the IRS has only published 2,857 names.  Annualized, the IRS would publish only 3,809 names for the full 2015 Fiscal Year. Based on this factor alone, the IRS would appear to be missing roughly 2,000 names.

Second, the IRS list should also include former green card holders who have had their green cards for at least 8 years.  We suspect that the IRS is not including any of these individuals on the quarterly expatriate list, even though it is required to by law.

State Department Data

On September 8, 2015 the State Department announced that it would begin charging a $2,350 fee for individuals seeking a CLN based on “relinquishment” of U.S. citizenship (under 8 USC §1481(a)(1) to (a)(4)). The relinquishment fee will now be the same as the “renunciation” fee (under 8 USC §1481(a)(5)).

In the announcement of this new fee, the State Department disclosed that it estimated the number of applications for CLNs for the 2015 Fiscal Year based on renunciation to be 5,986 and the estimated number based on relinquishment to be 559, for a total of 6,545 individuals seeking CLNs for the 2015 Fiscal Year.

FBI Data

The FBI maintains a database (National Instant Criminal Background Check System (NICS)) of individuals who cannot purchase firearms. Under 18 USC §922(g)(7), former citizens of the U.S. who have renounced their citizenship are prohibited from purchasing firearms in the U.S.

Each month, the FBI publishes the total number of active records in the NICS index. As of December 31, 2013, the number of individuals in the NICS index by reason of renouncing their U.S. citizenship was 23,807. As of December 31, 2014, the number was 27,240. Thus, the FBI data suggest that number of individuals renouncing citizenship in the calendar year 2014 was 3,433 (27,240 - 23,807). [The IRS listed the names of 3,415 individuals in the Federal Register for this same period.]

The FBI data for first 11 months of the 2015 Fiscal Year indicates that 5,045 individuals have been added to its database by reason of renouncing citizenship (31,525 at 8/31/2015 less 26,480 at 9/30/2014). On average, 459 individuals were added to the database per month. Assuming that this average amount is added to the database during September 2015, approximately 5,504 will have been added during the 2015 Fiscal Year. This value is reasonably close to what the State Department estimated (5,986) for the number of applications it expects to receive for renunciation CLNs.

We credit the Isaac Brock Society for beginning to track the FBI data in 2013.

IRS Data

Pursuant to Code §6039G(d), the IRS is required to quarterly:

publish in the Federal Register the name of each individual losing United States citizenship (within the meaning of section 877(a) or 877A) with respect to whom the Secretary receives information under the preceding sentence during such quarter.

Code §877(e)(1) provides that former long-term green card holders are “treated for purposes of section * * * 6039G in the same manner as if such resident were a citizen of the United States who lost United States citizenship * * *.” Consequently, when the IRS lists the names in the Federal Register, it should not only include former U.S. citizens, but it should also include former long-term green card holders.

Pursuant to a Freedom of Information Act request in 2013, USCIS disclosed that the number of individuals abandoning their green cards averaged approximately 18,000 per year from 2008 to 2012. The USCIS data did not disclose what portion of the former green card holders had held their green cards for at least 8 years. If it is assumed that 90% of the individuals annually abandoning their green cards held them for less than 8 years, that would still leave approximately 1,800 (10%) "long-term" green card holders annually abandoning, and who should be included on the IRS list.

Based on the State Department and FBI data (relating to CLNs), one would anticipate that the 2015 Fiscal Year number of names included on the IRS list should be in the range of 6,000. There are two differences between the State Department and FBI data. First, the State Department data includes CLN “applications” and the FBI data includes CLNs “issued.” Second, the FBI data only includes “renunciations” and not “relinquishments.”

The IRS should be including CLNs issued both for renunciations and for relinquishments. With total CLN applications estimated to be 6,545 (State Department) and renunciation CLNs issued estimated to be 5,500 (FBI), we estimate total renunciation and relinquishment CLNs issued for the 2015 Fiscal Year to be approximately 6,000.

The number of former long-term green card holders who abandoned their green cards during the 2015 Fiscal Year should also be included. If you estimate (or speculate) that the annual number of long-term green card holders abandoning their green cards is 1,800, one would expect the number of names to be published by the IRS for the 2015 Fiscal Year to be approximately 7,800 (6,000 + 1,800).

For the first three quarters of the 2015 Fiscal Year, the IRS has published the names of 2,857 individuals in the Federal Register (1,062 + 1,335 + 460). The IRS would need to publish nearly 5,000 names in the Federal Register for the September 30, 2015 quarter in order to arrive at our estimated number for the fiscal year. To be clear, we do not expect this to happen.

Why the Discrepancy?

We are not sure why the IRS numbers come out lower than anticipated. Over time, it appears that the FBI data is similar to the IRS data.
Link to Patrick Cain article.

It is possible that the IRS is only including the names of individuals who have renounced their U.S. citizenship. Perhaps the IRS is not including the names of individuals who have relinquished and not including the names of former long-term green card holders.

In any case, the IRS data for the most recent quarter (Q2 of calendar year 2015) only included 460 names. In contrast, the FBI data for the same quarter showed an increase of 1,471. If the IRS is playing “catch-up” for Q3 of 2015, the number of the names listed for the upcoming quarter may be higher than ever.

Tags: 877A Individual Expatriation