Expatriation -

Expatriation: Opportunities in a Mist of Uncertainty -

Almost six years after the tax rules on expatriation were materially changed, a lack of official guidance has left several issues that are both unsettled and unsettling.

In 2013, a record 2,999 people expatriated from the United States. When the final numbers were released, expatriation became a story in the general press, and additional articles have continued to appear. For tax attorneys, however, this story has been building for years, largely due to the increased reporting obligations on US persons living abroad or with foreign assets. In 2008, the HEART Act materially changed the tax rules associated with expatriation. Since then, the only official guidance on these new rules has been Notice 2009-85, 2009-45 IRB 598 , together with the publication of Form 8854 (Initial and Annual Expatriation Statement) and its instructions. Many articles have explained the new regime but the lack of official guidance in this area has left several issues that are both unsettled and unsettling. This article explores a selection of important but less discussed issues regarding expatriation.

Originally Published in Checkpoint Contents, International Tax Library, WGL Journals, Journal of International Taxation (WGL), Journal of International Taxation 2014, Volume 25, Number 12 - December 2014 Articles.

Earlier this morning, rumors starting flying that Democratic Senate Majority Leader Harry Reid and House Minority Leader Nancy Pelosi were negotiating a deal with House Republicans that would protect DCs marijuana decriminalization law in exchange for blocking Initiative 71 for taking effect.

But now, multiple outlets are reporting that a new deal has been reached between Democrats and Republicans that, in fact, would allow the legalization of marijuana as its written in Initiative 71 (possession of up to two ounces of pot, home cultivation of up to three mature plants), but instead block the District from passing any additional legislation to tax and regulate the sale of legal marijuana.

Thats of course referencing a bill introduced by Councilmember David Grosso (I-At Large) last fall, which has since become a priority of the DC Council ever since Initiative 71 was overwhelmingly passed in November. The day after she won the election, mayor-elect Muriel Bowser said that, while she supports Initiative 71, she had reservations about legalizing marijuana without a proper taxation and regulation system in place.

Under Grossos bill, the District would introduce a taxation and regulation system of legalized marijuana so that grow centers could grow pot that the city can tax and use the money for things like proper drug education.

But if the rumors are true, then the likelihood of that bill passing anytime soon is very unlikely. From Roll Call:

A source close to the negotiations said the deal reached by Democrats and Republicans does not prevent DC from implementing legalization. Instead, language in the amendment prohibits the District from passing additional legislation to future regulate and tax marijuana or permit the sale of marijuana.

Around the country were seeing the tide turning, Grosso told DCist over the phone, and I think the residents of the District of Columbia need to stand up and say no and let them know were not going to take this.

When DC residents voted to legalize medical marijuana, Congress held up that law from taking effect for more than a decade and Grosso fears that theyll use similar measures to prevent his taxation and regulation bill from taking effect, if it passes through the DC Council.

But while many Democratic leaders have said they support marijuana legalization or, at least, the will of the DC voters, Grosso isnt confident theyll come through. The Democratic party is willing, when they have a little bit of power, to shell the District down the river, he said. I dont know what its going to take to get some respect from Congress or from the Democratic party. The District of Columbia needs be taken more seriously.


More than 6,000 pubs have closed due totaxation and red tape since 2006, according to a study.

The report, Closing Time Whos killing the British pub, released by the Institute of Economic Affairs, claims that the rapid acceleration of pub closures could not be explained by factors such as changing tastes and the shift towards home drinking.

The reports author Christopher Snowdon says the alcohol duty escalator, policies such as the smoking ban and declining real wages as a result of the recession were to blame for the number of pubs plummeting from just over 58,000 in 2006 to 48,000, a drop of nearly 20%.

He said Government policy had actively discouraged people from spending time in the pub, suggesting that alcohol duty and VAT must be lowered and one-size-fits-all policies such as the smoking ban must be reconsidered to end the downward spiral.

While there had been a 16% fall in beer purchases in the off trade since 2003, a 54% fall in beer purchases in pubs meant they were selling half as much as they did 11 years ago.

The report said the past seven years had been characterised by a flurry of policies which had severely damaged the pub industry, such as the increase in alcohol duty and the introduction of the duty escalator and the rise in VAT, combined with falling real wages during the recession making drinking less affordable.

The report suggests a halving of alcohol duty, a reduction of VAT to 15% and a lower rate of VAT for food sold in pubs and restaurants, a relaxation of the smoking ban and the abolition of cumulative impact zones.

Mr Snowdon said: British pubs may be suffering from long-term cultural shifts, but Government policies have hugely exacerbated this trend. Taxation and regulation have been the leading causes of the decimation of the UK pub industry since 2006.

The level of alcohol duty in the UK is hugely regressive, hitting the poorest the hardest. Taxes must be lowered, and one-size-fits-all policies like the current smoking ban must be reconsidered if we are to temper the rate of decline of the British pub.

One Brainerd resident raised questions over the steep increase on his proposed taxes for next year.