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More renounce US citizenship but deny stereotype

Inside the long-awaited package, six pages of government paperwork dryly affirmed Carol Tapanila's anxious request. But when Tapanila slipped the contents from the brown envelope, she saw there was something more.

Her U.S. passport now had four holes punched through it from cover to cover. Her departure from life as an American was stamped final on the same page: “Bearer Expatriated Self.”

With the envelope's arrival, Tapanila, who has lived in Canada since 1969, joined a largely overlooked surge of Americans rejecting what is, to millions, a highly sought prize: U.S. citizenship. Last year, the U.S. government reported a record 2,999 people renounced citizenship or terminated permanent residency; most are widely assumed to be driven by a desire to avoid paying taxes on hidden wealth.

The reality, though, is more complicated. The government's pursuit of tax evaders among Americans living abroad is indeed driving the jump in abandoned citizenship, experts say. But renouncers — whose ranks have swelled more than five-fold from a decade ago — often contradict the stereotype of the financial scoundrel. Many are from very ordinary economic circumstances.

Some call themselves “accidental Americans,” who recall little of life in the U.S., but long ago happened to be born in it. Others say they renounced because of politics, family or personal identity. Some say signing away citizenship was a huge relief. Others recall being sickened by the decision.

At the U.S. consulate in Geneva, “I talked to a man who explained to me that I could never, ever get my nationality back,” says Donna-Lane Nelson, who has lived in Switzerland 24 years. “It felt like a divorce. It felt like a death. I took the second oath, and I left the consulate and I threw up.”

One of the few times rejected U.S. citizenship has gotten significant attention was Facebook co-founder Eduardo Saverin's 2011 decision to turn in his American passport after moving to Singapore. Saverin likely avoided millions of dollars in taxes by doing so shortly before Facebook's initial stock offering.

Other wealthy Americans have relinquished U.S. citizenship. Denise Rich, the ex-wife of pardoned trader Marc Rich, expatriated in 2012 and lives in London. Last fall, singer Tina Turner, a resident of Switzerland since 1995, relinquished her U.S. passport.

In recent years, federal officials have increased pursuit of potential tax evaders, using the Foreign Account Tax Compliance Act, which requires that Americans overseas report assets to the IRS or pay stiff penalties. Those trying to comply complain of costly fees for accountants and lawyers, having to report the income of non-American spouses, and decisions by some European banks to close accounts of U.S. citizens or deny them loans.

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