md95065

I am surprised that nobody seems to have mentioned H.R. 6081, also known by the much more catchy name of "Heroes Earnings Assistance and Relief Tax Act of 2008".

This bill which, as The Economist mentioned in a recent article, comes with a name almost as veto-proof as "The Patriot Act" seeks "To amend the Internal Revenue Code of 1986 to provide benefits for military personnel, and for other purposes."

One of the "other purposes" is set out in Section 301 which
Note that, while the Economist article only talks about US citizens, it appears from the abstract that the bill also targets people who have been US residents (presumably using the IRS definition of "resident") when they depart.

This was sufficient to send one of my colleagues, who has been a US permanent resident for just over 10 years, fleeing back to the UK last month and vowing never to set foot in the US again.

It doesn't bother me too much since I have no intention of ever leaving the US, but it does seem that it could be a problem for anyone who comes to the US for an extended period and then decides to leave.

Steerpike

"... high-income individuals who relinquish U.S. citizenship or residency to avoid U.S. taxation" - doesn't this suggest that the "intent" of your relinquishment would have to be proven to be tax avoidance? Couldn't you just say, as some of my friends who have moved to Canada recently have said, "I don't want to live in a country run by George Bush and his war-mongering cronies"?

md95065

Unfortunately back in 1996 Congress tacked some provisions onto a Health Reform bill (which became the Health Reform Act of 1996) the purpose of which was "To presume a tax avoidance purpose for certain wealthy or high-income individuals".

So if you fit the profile you have to prove that your purpose was not tax avoidance.

AdobePinon

Yep, you'll find it all in your friendly Pub 519, Tax Guide for Aliens, which should be residing on the coffee table of any self-respecting British expat.