Maybe this is a response to the fact that Americans Renouncing U.S. Citizenship Increased 6X so far in 2013!
Under the failed amendment, a renouncing individual who was classified as a Covered Expatriate under § 877A, would have had to prove to the Department of Homeland Security by “clear and convincing” evidence that he or she did not renounce for tax avoidance purposes. The burden of proving this negative would have fallen on the renouncing Covered Expatriate if he or she desired to ever re-enter the US.
When questioned regarding the proposed amendment, Senator Reed stated:
“American citizenship is a privilege. But it seems that a privileged few are trying to game the system by accumulating wealth and benefiting from the greatness of the United States and then renouncing their citizenship to avoid paying their fair share of taxes. They are welcome to leave our country, but they should not be welcomed to return without playing by the rules and paying what they owe.”
While the failed passage of this amendment is a clear victory for those looking to renounce their US citizenship in the near future, the fact that Congress has already attempted to bring legislation before the floor in an effort to make the penalties associated with renouncing even more severe, should send a loud and clear message to all those looking to renounce their US citizenship…
The Reed-Schumer Amendment failed to become US law, but the danger of inadvertently being barred from the US while also being hit with the US exit tax may still be of real concern for those considering renouncing in the near future and beyond.
It is fairly safe to say that Congress is aware of the renunciation problem they are facing, and smart money would be on another amendment or bill attempting to become law in the near future. This fact, accompanied with the Foreign Account Tax Compliance Act (FATCA) set to go into effect in 2014, may make now the best time to renounce one’s US citizenship.
The magnitude of what could be at stake when an individual looks to renounce their US citizenship in the future has the potential to be exponentially greater if Congress continues on its path to curb the record number of renunciations in 2013 and beyond.
Marini & Associates, P.A.
Read more at: Tax Times blog