Tag Archives: Tax citizen

The “plain language” of S. 877A – To whom does the U.S. Exit Tax apply?

The “Plain Language” of the S. 877A Rules – To Whom does S. 877A apply? What is the “Relinquishment Date?

Synopsis:

Many Americans abroad are confused by the difference between “relinquishment” and “renunciation”. I recently wrote a post explaining that:

1. Renunciation is one form of “relinquishment”; and

2. The issue is the “relinquishment date” and not the form of “relinquishment”.

This post will explain exactly why the date of relinquishment matters.

To put it simply:

Those with a “Relinquishment Date” after June 16, 2008 may be subject to the confiscatory provisions of the S. 877A Exit Tax.

This post will make the argument that the “plain language” of the combined effects of S. 7701(a)(50) and S. 877A(g)(4) compel the conclusion that those with a “Relinquishment Date” prior to June 3, 2004 are NOT subject to the S. 877A Exit Tax.

My analysis follows.

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The United States of America – One country two citizenships – Introducing the “Tax Citizen”

Dual Citizenship – American style – All Americans are both “Citizens” and “Tax Citizens”

One Country – Two Citizenships

First Citizenship – Citizenship for Nationality Purposes

Americans have always been proud of their U.S. citizenship. Most U.S. citizens regard their U.S. citizenship as the most valuable thing they have. Most Americans will fight for their citizenship. They will die for their citizenship. They believe that their U.S. citizenship gives them rights and privileges that citizens of other nations simply do not have. Whether true or not, this is how U.S. citizenship is regarded. Citizenship for “Nationality” is what gives people the “rights of citizenship”. At present, these rights include: the right to enter the United States (as long as you have a U.S. passport), the right to work and the right to vote (as long as you meet the voting requirements of your State). That’s all. No more and no less (as long as you have a U.S. passport).

Second Citizenship – Citizenship for Tax Purposes

What could be better than U.S. citizenship? Why not a second U.S. citizenship? The United States Congress rewarded U.S. citizens by giving them all a “Second U.S. Citizenship”. On June 3, 2004 the American Jobs Creation Act gave all U.S. citizens a second citizenship. To be specific, on June 3, 2004 all U.S. citizens became U.S. “Tax Citizens”.  Interestingly, the U.S. public never asked for “Tax Citizenship”. The status of “Tax Citizen” was simply conferred on them. “Tax Citizens” have no rights. They have only obligations. The obligation is pay taxes. I recently heard it said that:

“U.S. citizenship is the gift that keeps on taking.”

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