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Let's Talk About: US Tax

Bitcoin Entrepreneur Banned from Entering USA After Expatriating

January 24, 2015

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 herehere,  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.

Bitcoin?

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]

Follow me on Twitter: @VLJeker

 

by Virginia La Torre Jeker J.D.,. Find out more about Virginia La Torre Jeker J.D., here.

Categories: Expatriation



3 Responses to “Bitcoin Entrepreneur Banned from Entering USA After Expatriating”

  1. Andy Grossman says:

    There’s more to the story than appears. Roger Ver has criminal convictions http://www.justice.gov/criminal/cybercrime/press-releases/2002/verPlea.htm — 9 FAM 40.22 http://www.state.gov/documents/organization/86947.pdf and underlying statutes render him excludable in the absence of a discretionary waiver from Washington agencies.

    Most of those who have renounced are able to visit the USA. The late Garry Davis was able to come back to live in America. https://en.wikipedia.org/wiki/Garry_Davis

    Every case rests on its own facts. More than one former Amcit has been excluded because s/he overstayed on a subsequent visit.

    I remember once, when I was a Foreign Service Officer, being asked by an Iranian contact (whom I had earlier advised never to lie to a consular officer) “What do I do now? My lawyer told me to lie to the consul; my family is in America.” I told him to go to British Columbia and meet his family at the border. Some unfortunate separated families used to meet at the Tijuana/Imperial Beach fence; now they can only wave from a distance: http://www.nytimes.com/2008/10/22/world/americas/22iht-22border.17155357.html?pagewanted=all

  2. Virginia La Torre Jeker J.D., says:

    Thanks Andy – I point out that Ver’s conviction was for selling firecrackers online and occurred well over 10 years ago. He was not denied entry based on the criminal conviction, but rather on the issue he might overstay his visa because he did not demonstrate he had a residence in /a strong enough connection to, a foreign country. The stated denial of entry had nothing to do with the prior criminal conviction. The point here is that I think the exclusion was because Ver had expatriated & had taken on an economic citizenship (SKN) which is markedly different (to my mind) from, for example, the person born with dual nationality or one who takes on the nationality of their spouse.

    While I know this case has to do with US Immigration law, I will add this:

    I believe we will see harsher tax & immigration rules coming into play as the number of expatriations rise. The unfortunate thing is that the original legislative intent w. the expatriation rules was to provide for tax neutrality. There was an express recognition that individuals have the right to give up their citizenship. See below Committee On Ways and Means Report on the expatriate tax bill of 2007 which never made it to the Senate. (It later became law in 2008 with the HEART Act.) The trend now, however, seems to be moving far away from this original intent. Expatriates are viewed as pariahs by those in Congress. Retribution appearss the order of the day. On the other hand, I am seeing that US persons abroad do not hold this view, even though they themselves, would never give up their own US citizenship. Living abroad broadens your mind and nay US persons living overseas can understand fully why some people take the decision to expatriate.

    [2007] “The Committee recognizes that citizens and long-term residents
    of the United States have a right not only to physically leave the
    United States to live elsewhere, but also to relinquish their citizenship
    or terminate their residency. The Committee does not believe
    that the Internal Revenue Code should be used to stop U.S. citizens
    and long-term residents from relinquishing citizenship or terminating
    residency; however, the Committee also does not believe
    that the Code should provide a tax incentive for doing so. In other
    words, to the extent possible, an individual’s decision to relinquish
    citizenship or terminate long-term residency should be tax-neutral…”

    https://www.congress.gov/110/crpt/hrpt281/CRPT-110hrpt281.pdf

  3. Andy Grossman says:

    As you may know, I was briefly a consular officer. The stated basis for rejection may not be the sole basis; Ver would have required a waiver which he might or might not have received. Generally a refusal for failure to prove intention to depart (i.e. to rebut the presumption of immigration) invites a re-application with additional proof. It seems that Ver acted on legal advice, presumably that of an immigration lawyer. There is more here than we know.

    State declined to apply the Reed Amendment based on the views of its Legal Advisor. Whether an amended statute can cure the problem I can’t say.

    There is a certain risk for renounced citizens in returning to the USA unless their tax affairs are in perfect order. The (few) instances of writs ne exeat republica come to mind. As does the Anderson case: http://www.uniset.ca/other/news/wp_ronaldanderson.html — with border officials at every entry point having access to EPIC and other databases, one never knows.