Giving up your US citizenship or a US “green card” that has been held for at least 8 out of the past 15 tax years has very significant US tax implications, including the possibility of a so-called Exit Tax. If you wish to read more about the US tax consequences of expatriation or the latest legislative proposals heaping additional sanctions on certain expatriates, read my other blog postings here, here, here and here .
Possible Ban on Re-Entry to US
Aside from the tax consequences of expatriation, current US immigration laws provide that former US citizens who are deemed to have renounced their US citizenship for tax avoidance purposes may be banned from entering the US by including them in a class of “inadmissible” aliens. This law is commonly referred to as the “Reed Amendment” and was enacted in 1996. [Public Law 104-208, § 352; INA § 212(a)(10)(E); 8 USC § 1182(a)(10)(E)]. The law has never been enforced in part because Immigration guidelines have never been established for what is meant by “tax avoidance” and probably because doubts as to its constitutionality have been expressed by legal scholars. Furthermore, legislative proposals have cropped up very recently time and again to make the expatriation regime even harsher.
“Bitcoin Jesus” Not Allowed In
Even if the Reed Amendment is not being enforced, there are other ways to keep expatriates out of the country. Just a scant few weeks ago, former US citizen, Roger Ver, the virtual currency millionaire commonly known as “Bitcoin Jesus”, was denied re-entry to the US after taking on Saint Kitts’ citizenship and then expatriating. We understand that denial of entry was based on Section 214(b) of the Immigration and Nationality Act which is very ambiguous by its terms. The Section states, “Every alien shall be presumed to be an immigrant until he establishes to the satisfaction of the consular officer, at the time of application for admission, that he is entitled to a nonimmigrant status…”
Generally, this provision of the law assumes that an applicant for a US visa intends to eventually reside in America and the applicant bears the burden of proving that he does not intend to overstay. We also understand that the US embassy’s rejection letter stated that Mr. Ver could not demonstrate that he had a residence in a foreign country which he had no intention of abandoning. “ You have not demonstrated that you have the ties that will compel you to return to your home country after your travel to the United States.” Mr. Ver has stated the US Embassy in Barbados would not even look at paperwork supporting his case that demonstrate Ver’s strong ties and business connections to Japan.
Consular Officers’ ’Almost Unfettered Discretion’
Remember, it is within the discretion of the consular officer to grant a visa to enter the US or to permit entry to those holding passports entitled to the 90-visa waiver. Given the growing trend in expatriations, and (in the eyes of some) the taint associated with giving up one’s US citizenship, if the would-be entrant’s record shows he has “renounced”, I think we may be seeing more and more visa denials and refusal of entry requests at the border. A practitioner colleague has shared his view and stated that “[o]ne of the great ‘spots’ of almost unfettered discretion is the American consular officer in an Embassy. If he or she denies the visa, it will be very hard, time-consuming and expensive to reverse this. This is my experience.”
You can read more about Bitcoin Jesus and his denial of entry to the US here. It seems there is more to the story than meets the eye.
And, for those of you who don’t understand Bitcoin and how it works, 5 simple explanatory facts can be found here. Seems like it may become the way of the future.
[Updated Post March 20 2015]
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