Proposal To Enhance Implementation, Enforcement Of Exit Tax

This report, as originally published in the November 13, 2017 issue of Tax Notes, offers proposals to enhance the implementation and enforcement of section 877A, including methods for putting individuals on notice of the requirements under section 877A; coordinating communication between Treasury, the State Department, and the Department of Homeland Security; and providing for continued jurisdiction over expatriating individuals even after they renounce their US citizenship or terminate their long-term US-residency status.

Section 877A sets forth the current expatriation tax regime for US citizens and long-term residents who relinquish their US citizenship or terminate their long-term US residency status. Although individuals expatriate for different reasons, some of which could be construed as tax-motivated, the purpose of section 877A is to provide an objective system for collecting what is colloquially called an "exit tax" for those wanting to cut ties with the