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Even before the US tax authorities set in motion a proposed method to track down expatriate tax-dodgers, the expatriates found a way to completely foil the IRS effort, and to remain completely invisible to the U.S. revenuers in the process.

The Internal Revenue Service recently decided to be clever. Their theory was to check an expatriates' tax status when the expat went into a U.S. embassy to renew his or her U.S. passport.  However, unbeknownst to the IRS, the expats are no longer renewing their U.S. passports.  What the expatriates are now doing is getting second passports from another nation before their U.S. passport expires.

Thus far the IRS has decided to target expatriates in the UK, Canada, Mexico, Germany, Italy, Hong Kong, Australia, Israel and Switzerland. According to census data and estimates of unfiled tax returns and unpaid tax, more tax is being avoided by Americans living in those countries than elsewhere. Some 200,000 US expatriates live in London alone, making the UK home to one of the largest American communities outside the US.

The US and Libya are the only countries brutal enough to try to tax their citizens wherever they live on the planet.  Despite this lowly practice and the decidedly bad company they are keeping, the IRS knows that it isn't able to confiscate the several billion dollars a year in avoided tax from the millions of fleeing Americans worldwide who are no longer willing to file their US income tax returns.

US citizens have to provide their social security number when renewing their passports, making cross-checks with tax returns relatively easy.  With a second passport from a tax haven country, renewal of the U.S. passport becomes unnecessary. There is no record of Americans abroad because there is no way to track them unless they apply for a passport renewal.  There is no law against having dual citizenship and there is no law against traveling on another passport. One can remain living as an expatriate in most countries
indefinitely by using their second passport as their travel document.

One expatriate we talked to is living in the Dominican Republic and running a cigar company along with a tobacco plantation. He has a passport from Grenada, which is a tax haven nation that does not tax on foreign source income. His plantation and cigar company are registered as a Panamanian Offshore Corporation. He has dropped off of the radar.  He travels to Europe and the rest of the Caribbean on his second passport and lives a life many of us would envy.  "Why should I renounce my U.S. citizenship?" he asked. "I would just draw attention to myself.  The Dominicanos are happy with the Grenada passport, and they are happy with me.  I provide jobs for over two dozen locals. If I ever wanted to slip back inside of the U.S. I could do so through Canada or Mexico without a problem."

He is just one of a number of Americans who are seeking to escape the increasingly intolerable conditions inside the United States. Those escaping want to go where there is a ‘better quality of life’ and where there is ‘much less government intervention’ into their lives.

America, for many people has become intolerable. The taxes burdensome, the crime overwhelming, the violence rife, the ambiance impoverished and the future bleak. It is becoming a has-been nation with an increasingly warlike condition in it's streets. When expatriates are asked why they are leaving they cite social unrest, fear of violence, racial tensions, and the decline of moral standards in America as reasons for interest in settling elsewhere.

But there is also another factor: opportunity. For the first time in America's history it is easier to make more money outside of America than it is to make money inside of America. The new expatriates are going to smaller economies, that are moving faster. They are also going to peaceful pristine nations where real estate is still a bargain. In America most people now feel there is no longer any hope of ever staying financially
even, let alone getting financially ahead. However, more than any other reason for those who are going, is the simplest yet most enigmatic reason of all; people now want to have a life. Something that is becoming less and less possible in America. Sane Americans want out and it is apparent that they are getting out in record numbers.

Is the U.S. government going to shut the doors locking Americans in? Write legislation that could prevent Americans from leaving? Make American a prison?  It would be a very bad policy and to try to do so would cause a panic that could inspire a stampede. Nonetheless expatriates and those considering becoming expatriates are advised not to delay in taking the precaution of getting a second passport.  Don't wait for the last minute rush. If things turn bad they could turn bad overnight.

While the U.S. may not yet be prepared to go as far as preventing Americans from leaving there is little doubt that they do want to confiscate your money before you manage to flee. Although estimates of the level of avoided tax vary considerably, the IRS had recently conducted a study based on information from 1,000 overseas U.S. passport renewals. Of the 1,000 people contacted, 600 replied, and only 83 of the 600 had filed a tax return.  More and more Americans are moving abroad and opening businesses abroad. The U.S. embassies have no way to know of their whereabouts unless they make their whereabouts known by contacting the U.S. embassy for a passport renewal. Once a fleeing American has a foreign passport they drop off of the radar screen. The 1,000 people contacted by the IRS only represented individuals who had made their existence known by trying to renew a U.S. passport or by registering in some way with a U.S.
agency abroad. Bad idea.

It is doubtful that any government agency can keep track of every American who chooses to escape. Keeping a low profile is the key to living well for the long term. One can live indefinitely in a score of countries with a second passport. Getting a second passport is something that should not be delayed until there is a moment of crisis. It is probable that there will be a moment of crisis. One has only to read their newspaper to feel the pulse of conditions inside the United States. Things are going to turn ugly. Getting a second passport in a moment of crisis is many time more difficult than getting one in a calm organized fashion.  If you go about it the right way, a second passport is as easy to acquire as a bank account. Everyone should insure their long term survival with a second passport. In an uncertain world a second passport should be part of everyone's survival portfolio  Don't leave home without one and don't wait for the last minute rush.