For the US vistors to this site, or those of you from Britain resident in the US you may be interested in a new tax law passed and how it may affect you:


IRS Tax Problems Relief: Heroes Earnings Assistance and Relief Tax Act of 2008

Originally Posted by :
Revenue raising provisions. To offset the cost of the new tax breaks (and the cost of various SSI liberalizations for the military), the Act:

Tightens the expatriation rules. U.S. citizens and long-term U.S. residents are subject to tax on their worldwide income. Taxpayers can avoid taxes by renouncing their U.S. citizenship or terminating their residence. The Act tightens the expatriation rules to ensure that certain high net-worth taxpayers can't renounce their U.S. citizenship or terminate their U.S. residency in order to avoid U.S. taxes. Under this provision, high net-worth individuals are treated as if they sold all of their property for its fair market value on the day before they expatriate or terminate their residency. Gain is recognized to the extent that the aggregate gain recognized exceeds $600,000 (which will be adjusted for cost of living in the future). The provision, which applies for those who relinquish U.S. citizenship or terminate their U.S. residency on or after the enactment date, is estimated to raise $411 million over 10 years.
Treats foreign subsidiaries of U.S. companies performing services under a U.S. government contract as American employers for employment tax purposes. Under the new law, the domestic parent is jointly liable for employment taxes imposed on the foreign subsidiary. The new provision applies to services performed in calendar months beginning more than 30 days after the enactment date and is estimated to raise $846 million over ten years.
Increases the minimum penalty for a failure to file an individual tax return within 60 days of the due date to the lesser of $135 (up from $100) or 100 percent of the amount of tax required to be shown on the return, effective for tax returns required to be filed after 2008. The provision is estimated to raise $296 million over ten years.

I've heard a number of Americans disucss their plan to leave the US as the tax laws have become too complicated. It would seem now if they terminate their citizenship they will be hit with a fat tax bill. It also seems to apply to residence.

What do the American commenters here make of it?

Ea of dune
[Rep]

Originally Posted by :
I've heard a number of Americans disucss their plan to leave the US as the tax laws have become too complicated.

To add to the above this was online in banking sector forums so I presume it will be these folks in this sector who are going to whacked the worst?

Ea of dune
[Rep]

It's mainly going to hit US citizens. However, it also applies to green card holders who've been there for eight out of the fifteen years prior to them leaving (which is why the bankers are worried).

This is a very bad thing, since it's essentially a capital gains tax levied before you've sold the assets (and even if you've no intention of selling them).

Let's say you're a yank who's been planning to move to Monaco and give up your citizenship. That Monte Carlo apartment you purchased some years ago that you intend to move into will have gained in value since you bought it, so Uncle Sam wants his cut of the "profit". If you haven't got the readies to cover that demand then tough titties you're going to have to sell the apartment, pay Uncle Sam his pound of flesh, then buy a smaller place with the remains.

I've been following this for some time, courtesy of The Sovereign Society.

The US government are probably the biggest bunch of socialist tossers since Scargill.
[Rep]

JC> Thanks for the link and clarification! I'm off to do some research.

Cheers

Ea of dune
[Rep]

No worries Ea. :-)
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