Reed Amendment – Page 2 – The Isaac Brock Society

Bipartisan attempts to exile former U.S. citizens, 2002–2008

Posted on December 9, 2014 by Eric

Posted in Issues regarding US persons abroad 41 Comments

Many “U.S. Persons” outside of the U.S. are aware of the Reed Amendment — an incoherent & unenforceable 1996 law which makes former U.S. citizens inadmissible to the U.S. if the Attorney General determines they renounced citizenship to avoid taxes — and Chuck Schumer (D-NY)’s attempt to make it worse in 2012 with the Ex-PATRIOT Act. But in the years between, there were nearly two dozen other attempts to pass a different law which also would have exiled former U.S. citizens:

Ineligibility for Visa or Admission To United States.—

(1) In general.— Section 212(a)(10)(E) of the Immigration and Nationality Act (8 U.S.C. 1182(a)(10)(E)) is amended to read as follows:

(E) Former citizens not in compliance with expatriation revenue provisions.— Any alien who is a former citizen of the United States who relinquishes United States citizenship (within the meaning of section 877A(e)(3) of the Internal Revenue Code of 1986) and who is determined by the Attorney General, after consultation with the Secretary of the Treasury, not to be in compliance with sections 877A and 2801 of such Code (relating to expatriation).

This provision appeared in something I’ll be referring to as the “Baucus Amendment”, after its author Senator Max Baucus. Another piece of the Baucus Amendment created the current 26 USC § 877A expatriation tax, which has been the subject of a great deal of popular and academic attention. But the above-quoted piece of the Baucus Amendment (which I hereby dub “Baucus’ Reed Amendment fix”) has no better-known name; as far as I can see, it’s generally gone unnoticed in the popular press and even tax scholarship (the only person I’ve seen mention it is Michael Kirsch, in his 2004 paper “Alternative Sanctions and the Federal Tax Law”).

Baucus is a Democrat from Montana; however, he wouldn’t have succeeded at getting this provision inserted into so many other bills without help from Republicans on the Senate Finance Committee, in particular Chuck Grassley (R-IA).
Continue reading →

Who voted for the Reed Amendment in 1995 and 1996?

Posted on July 9, 2013 by Eric

Posted in Issues regarding US persons abroad 15 Comments

IRSCompliantForever asked this question in a comment, and I thought the answer was interesting (and complicated) enough to deserve its own post. The Reed Amendment — which bans people determined by the Attorney-General to have “renounced citizenship for the purpose of avoiding taxation” — was an amendment to the Immigration in the National Interest Act of 1995 (which eventually morphed into the Illegal Immigration Reform and Immigrant Responsibility Act of 1996), moved while the bill was being considered by the House Committee on the Judiciary. The amendment passed with broad bipartisan support — you’ll notice plenty of familiar names among the committee voters, including Chuck Schumer — while the Republican control of the House and Senate ensured the passage of the bill in which it was contained. The detailed breakdown of the votes can be found after the jump.

Continue reading →

Jack Reed tries again

Posted on June 26, 2013 by Eric

Posted in Issues regarding US persons abroad 53 Comments

Undeterred by the failure of his previous attempts to legislate Exile and Punishment for Apoplectic Taxpayers Residing In Other Territories, on Monday Jack Reed (D-RI) introduced his third amendment to ban covered expatriates — people who found financial success overseas thanks to the countries to which they emigrated many years ago, or ordinary wage-earners who in the past five years missed some of the dozens of pages of confusing tax forms that Americans abroad must file and that Homelanders have never seen.

The number of this latest amendment is S.A. 1609. It appears at page S5075 of the Congressional Record for Monday, 24 June 2013; the text is identical to the earlier S.A. 1233 we discussed two weeks ago, including in its misspelling of “principal purpose” as “principle purpose”. However, it is not an amendment to the immigration reform bill itself, but rather a second-degree amendment to Patrick Leahy (D-VT)’s border security amendment S.A. 1183 — in a manner heavily reminiscent of Carl Levin’s FATCA, which after its repeated failure as a standalone bill was moved as an amendment once he finally finally find somewhere to sneakily insert it. The Senate already invoked cloture on S.A. 1183, and scheduled it for a final vote on Wednesday (tomorrow).

I’ll leave it to Tim or others to comment further on the parliamentary procedure implications of this. As he mentioned earlier, even if the amendment passes, the House might still “blue slip” the whole bill if they agree that permanent exile for ex-citizens or other provisions of the bill violate the Constitution’s Origination Clause requiring that all bills raising revenue come from the House. However, note that this version of the amendment, unlike S.A. 1252, does not include the provisions of the original Ex-PATRIOT Act that would hit covered expatriates with an additional 30% tax on U.S.-source capital gains (like that already imposed on non-resident aliens present in the U.S. for half the year or more).

Congress resumes attacks on emigrants: the Ex-PATRIOT Act is back

Posted on June 13, 2013 by Eric

Posted in Issues regarding US persons abroad 107 Comments

In a press release on his website, Jack Reed announces that he and Chuck Schumer have moved an amendment to the immigration reform bill to make “covered expatriates” — people who give up U.S. citizenship and meet certain asset thresholds, or who have missed some of the ridiculously time-consuming piles of tax paperwork required of citizens living abroad within the past five years — into permanent exiles from the United States, in similar terms as Schumer’s failed Ex-PATRIOT Act last year.

Contrary to Reed’s mendacious claims, this amendment does not just affect people who “accumulat[e] wealth and benefit from the greatness of the United States and then renounc[e] their citizenship to avoid paying their fair share of taxes”. As even a cursory glance at Wikipedia confirms, the overwhelming majority of people who give up citizenship have lived abroad for many years and became successful thanks to the countries in which they actually live, not the United States which they made a conscious choice to leave behind.

Continue reading →

Ex-PATRIOT Act full text released: you too could be a “specified expatriate”

Posted on May 22, 2012 by Eric

Posted in Issues regarding US persons abroad 85 Comments

The GPO has just published the full text of Schumer’s proposed Ex-PATRIOT Act (S. 3205). The act creates the new category of “specified expatriates” (a subset of 877A(g)(1)’s “covered expatriates”) and gives rules for determining who is a “specified expatriate”. It then imposes a tax of 30% on U.S. capital gains of “specified expatriates”, and makes them inadmissible to the United States. Continue reading →

Forget about form 8854: US law establishes a right to unilateral expatriation

Posted on December 19, 2011 by Petros

Posted in Issues regarding US persons abroad 21 Comments

A contradiction exists in United States law. On the one hand, the IRS requires former citizens to follow an exit procedure and the State Department requires a $450 fee. On the other hand, earlier law establishes and protects expatriation as a fundamental right.