A person born abroad to a U.S. citizen parent or parents will acquire U.S. citizenship at birth provided the statutory requirements of the Immigration and Nationality Act for transmission of U.S. citizenship are met, and regardless of whether the person is ever documented as a U.S. citizen (by obtaining a Consular Report of Birth Abroad of a U.S. Citizen, a U.S. passport, and/or a Certificate of Citizenship).
U.S. citizens born abroad are technically liable for taxes even if their parents don’t register their birth with American authorities, according to Gregory Wald, principal at Squire Patton Boggs.
Many Americans abroad—especially those without plans to return to America—worry that if their children acquire U.S. citizenship and never set foot in America, they will still be required to report all earnings to the IRS and pay American taxes for their entire lives.
Editor's Note: Citizenship-based taxation is a horrendous policy that is only practiced by two countries in the entire world. For more on this topic see this IM article.