Wednesday, March 20, 2013

Are US renunciations five times higher than reported?

We the People
Image by Chuck Coker
Back in February, the final quarterly figures for Americans giving up their citizenship were released.  For 2012, 932 Americans were reported as giving up their citizenship, leading to one Web site claiming that there was a 48% Decrease in Number of Expatriates in 2012. Had the article referred to reported number of expatriates, it would be correct: the reported number of expatriates is indeed 48% lower than in 2011.

For those not aware of the background, section 6039G of the Health Insurance Portability and Accountability Act has a bizarre provision about reporting US renunciants in the Federal Register. Thus, for those of us who are interested in such matters, we can download reports of Americans who have given up their citizenship. These reports have been widely criticized for a variety of reasons, not the least of which is their terrible inaccuracy. Names are omitted, misspelled, double-reported and so on.

But just how inaccurate are these reports? One year ago I wrote a post entitled More Americans Giving Up Citizenship Than Reported (read the comments, they're hilarious). In the replies to a follow-up to that post, an anonymous commenter has been leaving some rather interesting information and I've started to dig a little bit.

Given news reports that the US Embassy in Switzerland states they processed 411 renunciations in the first nine months of 2012, the official Treasury Department numbers seem low. If the renunciations are evenly distributed throughout the year (a questionable assumption), then Switzerland likely had over 500 renunciations, or over half of US renunciations I worldwide.

Tina Turner is no longer an American
Photo by Helge Øverås
If you think about, it's possible that Switzerland has a disproportionately higher number of renunciants. First, Switzerland is expensive and you're more likely to have high-earning expats there, meaning that they're more likely to be impacted by US taxation of expats and FATCA. Further, US expats in Switzerland must wait 12 years to claim citizenship, meaning that if everyone renouncing in Switzerland has Swiss citizenship, they, like Tina Turner, are probably more acclimated to living abroad than in countries which will give you citizenship in a much shorter time.

But over half of all renunciants in Switzerland? I don't buy it.  Given the numerous reports of US renunciants claiming they've had to wait months for appointments (and the US Embassy in Bern has redeployed people to keep up with the backlog of Americans trying to renounce), the number of renunciants being reported seems wrong. People have reported gone from waiting a few days for a renunciation appointment to five months. Enter NICS data.

The National Instant Criminal Background Check System, or NICS, is a system which requires Federal Firearms Licensees (FFLs) to consult it prior to selling many types of firearms. According to the NICS fact sheet:
The FFLs conducting business in these states will contact the NICS either by telephone, via one of the contracted call centers, or electronically by the NICS E-Check via the Internet. The FFLs will provide the descriptive information requested on the ATF Form 4473, which is required by law to be completed and signed by every prospective firearm transferee. The FFL will receive a response that the transfer may proceed or is delayed. This response is typically provided within 30 seconds.
So, to sell a gun to someone, you can usually find out within 30 seconds whether or not you can legally sell them the gun.

Interestingly, you can deny someone the right to purchase a gun if they've renounced their US citizenship. However, in the entire history of this NICS, only 58 people have been denied the right to purchase a gun based on having renounced citizenship (pdf). In other words, about five people a year fall into this category. However, if you dig further, you'll find out that the FBI publishes a report entitled "Active Records In The NICS Index".

Their January 2013 report (updated at the end of February, 2013), lists 21,308 people as being ineligible for buying firearms based on their having renounced citizenship. The January 2012 report lists 16,269 renunciants, for a total of 5,039 renunciations in 2012, or more than five times the official figures.

Where is the FBI getting these numbers from? I believe they are provided with CLNs (Certificate of Loss of Nationality) from the State Department as those are the only way of proving (that I know of) who are renunciants. However, I've not been able to prove this.

Hmm ... and in researching this, I find that Eric has reported about this over at the Isaac Brock Society web site. About 3,000 of the above renunciants were reported in October of last year. Did they get a large batch of CLNs from State? Who knows?

Interestingly, the Department of Treasure has filed a comment request about eliminating the publication expats names entirely. The comment period has closed. Let's hope it gets adopted.