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Old 28.02.2017, 20:58
Medea Fleecestealer's Avatar
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ACA Looking for views on proposed Departure Tax

American Citizens Abroad wants your comments on its new February 7 2017 proposal, especially the “departure tax” provisions, to “replace” (?) U.S. citizenship-based taxation

http://isaacbrocksociety.ca/2017/02/...ased-taxation/
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Old 28.02.2017, 21:04
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Re: ACA Looking for views on proposed Departure Tax

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American Citizens Abroad wants your comments on its new February 7 2017 proposal, especially the “departure tax” provisions, to “replace” (?) U.S. citizenship-based taxation

http://isaacbrocksociety.ca/2017/02/...ased-taxation/
I read a bunch of words but really don't understand the content.
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Old 28.02.2017, 21:47
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Re: ACA Looking for views on proposed Departure Tax

Maybe the charts in their document show it better. Have a look (past page 6)

https://www.americansabroad.org/medi...eid=37e8dfc529

The proposals for the Departure Tax are outlined here:

"Departure Tax Provision

General Rule.
Individuals who obtain a Departure Certificate and meet the threshold test of current section 877 (Expatriation to Avoid Tax), would be subject to tax on income as if property was sold on the day before the date of the Departure Certificate. The concern is that if there is not some form of Departure Tax, individuals could accumulate wealth while being a US citizen living in the US, and then avoid any US tax by simply moving abroad. Not only might this be the wrong result from a tax policy standpoint, it would greatly increase the revenue costs of instituting RBT. [Comments on this subject would be appreciated.]

Threshold tests for application of the Departure Tax would be the same as those in section 877, except the $2 million or more figure in section 877(a)(2)(B) would be increased to $5 million and US real estate subject to FIRPTA rules would be excluded. Rules similar to those in sections 877 and 877A would apply to pensions and other forms of deferred compensation. [Comments on this subject would be appreciated.]

Special Rule for Americans Abroad.
Individuals meeting the residency test for RBT for at least 3 years prior to date of enactment of these rules and who certify under penalty of perjury that they have been tax compliant, would not be subject to the Departure Tax. [Comments on this subject would be appreciated.]

IRS User Fee.
Under current law, there is a State Department fee of $2,350 charged for renunciation of US citizenship. Under the RBT approach, there would be a one-time IRS User Fee for issuance of a Departure Certificate equal to the State Department’s then applicable renunciation fee. Americans abroad qualifying for the special 3-year rule, above, would not be subject to this User Fee. [Comments on this subject would be appreciated.]

Special Rule-“Covered Expatriates”.
Under current law, there are special rules taxing bequests and gifts to US persons from a so-called “covered expatriate” (in general, certain US citizens who relinquish citizenship and certain long-term US residents who cease to be a lawful permanent resident). These are taxed to the recipient at the highest estate tax or gift tax rate then applicable. The RBT approach contains no comparable provision. Non-resident Americans are not treated as a “US person” for purposes of these rules."
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