6/12/2013 — 

WASHINGTON, DC - In an effort to prevent expatriate tax dodgers from reentering the United States, U.S. Senators Jack Reed (D-RI) and Chuck Schumer (D-NY) today filed an amendment to the immigration reform bill ensuring the U.S. Department of Homeland Security may “exclude from reentry into the United States former United States citizens who renounce their citizenship to avoid taxation.”  

In 1996, Senator Reed wrote the law to help ensure that Americans who officially renounce their U.S. citizenship for tax purposes can’t freely return to the United States.  The Reed amendment granted the Executive branch the authority to determine who has renounced their citizenship primarily for tax purposes and to deny those people from re-entering the United States.  Reed was spurred in part by cases like that of Mr. Kenneth Dart, a billionaire who, in the early 1990’s, renounced his American citizenship to avoid paying U.S. taxes, became a citizen of Belize, and was then appointed by the Belizean government to be a consular officer in Sarasota, Florida (Mr. Dart’s hometown).

The Reed-Schumer amendment updates the law to:

•           Automatically exclude any expatriate that triggers the expatriate exit tax (Section 877A of the I.R.C). 

•           Create a mechanism to allow the covered expatriate to petition the U.S. Department of Homeland Security (DHS) for a determination that tax avoidance was not one of their principle purposes for expatriation. 

•           DHS may make that determination if the expatriate can establish through clear and convincing evidence that tax avoidance was not one of their principle purposes for expatriation.

“American citizenship is a privilege.  But it seems that a privileged few are trying to game the system by accumulating wealth and benefiting from the greatness of the United States and then renouncing their citizenship to avoid paying their fair share of taxes.  They are welcome to leave our country, but they should not be welcomed to return without playing by the rules and paying what they owe,” said Reed.