[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 1637 Introduced in Senate (IS)]

  2d Session
                                S. 1637

 To amend the Internal Revenue Code of 1986 to revise the tax rules on 
                 expatriation, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 21, 1996

  Mr. Harkin introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to revise the tax rules on 
                 expatriation, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    (a) Short Title.--This Act may be cited as the ``Expatriation Tax 
Reform Act of 1996''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.

SEC. 2. REVISION OF TAX RULES ON EXPATRIATION.

    (a) In General.--Subpart A of part II of subchapter N of chapter 1 
is amended by inserting after section 877 the following new section:

``SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.

    ``(a) General Rules.--For purposes of this subtitle--
            ``(1) Mark to market.--Except as provided in subsection 
        (f), all property of a covered expatriate to which this section 
        applies shall be treated as sold on the expatriation date for 
        its fair market value.
            ``(2) Recognition of gain or loss.--In the case of any sale 
        under paragraph (1)--
                    ``(A) notwithstanding any other provision of this 
                title, any gain arising from such sale shall be taken 
                into account for the taxable year of the sale unless 
                such gain is excluded from gross income under part III 
                of subchapter B, and
                    ``(B) any loss arising from such sale shall be 
                taken into account for the taxable year of the sale to 
                the extent otherwise provided by this title, except 
                that section 1091 shall not apply (and section 1092 
                shall apply) to any such loss.
            ``(3) Exclusion for certain gain.--The amount which would 
        (but for this paragraph) be includible in the gross income of 
        any individual by reason of this section shall be reduced (but 
        not below zero) by $600,000. For purposes of this paragraph, 
        allocable expatriation gain taken into account under subsection 
        (f)(2) shall be treated in the same manner as an amount 
        required to be includible in gross income.
            ``(4) Election to continue to be taxed as united states 
        citizen.--
                    ``(A) In general.--If an expatriate elects the 
                application of this paragraph--
                            ``(i) this section (other than this 
                        paragraph) shall not apply to the expatriate, 
                        but
                            ``(ii) the expatriate shall be subject to 
                        tax under this title, with respect to property 
                        to which this section would apply but for such 
                        election, in the same manner as if the 
                        individual were a United States citizen.
                    ``(B) Limitation on amount of estate, gift, and 
                generation-skipping transfer taxes.--The aggregate 
                amount of taxes imposed under subtitle B with respect 
                to any transfer of property by reason of an election 
                under subparagraph (A) shall not exceed the amount of 
income tax which would be due if the property were sold for its fair 
market value immediately before the time of the transfer or death 
(taking into account the rules of paragraph (2)).
                    ``(C) Requirements.--Subparagraph (A) shall not 
                apply to an individual unless the individual--
                            ``(i) provides security for payment of tax 
                        in such form and manner, and in such amount, as 
                        the Secretary may require,
                            ``(ii) consents to the waiver of any right 
                        of the individual under any treaty of the 
                        United States which would preclude assessment 
                        or collection of any tax which may be imposed 
                        by reason of this paragraph, and
                            ``(iii) complies with such other 
                        requirements as the Secretary may prescribe.
                    ``(D) Election.--An election under subparagraph (A) 
                shall apply to all property to which this section would 
                apply but for the election and, once made, shall be 
                irrevocable. Such election shall also apply to property 
                the basis of which is determined in whole or in part by 
                reference to the property with respect to which the 
                election was made.
    ``(b) Election To Defer Tax.--
            ``(1) In general.--If the taxpayer elects the application 
        of this subsection with respect to any property--
                    ``(A) no amount shall be required to be included in 
                gross income under subsection (a)(1) with respect to 
                the gain from such property for the taxable year of the 
                sale, but
                    ``(B) the taxpayer's tax for the taxable year in 
                which such property is disposed of shall be increased 
                by the deferred tax amount with respect to the 
                property.
        Except to the extent provided in regulations, subparagraph (B) 
        shall apply to a disposition whether or not gain or loss is 
        recognized in whole or in part on the disposition.
            ``(2) Deferred tax amount.--
                    ``(A) In general.--For purposes of paragraph (1), 
                the term `deferred tax amount' means, with respect to 
                any property, an amount equal to the sum of--
                            ``(i) the difference between the amount of 
                        tax paid for the taxable year described in 
                        paragraph (1)(A) and the amount which would 
                        have been paid for such taxable year if the 
                        election under paragraph (1) had not applied to 
                        such property, plus
                            ``(ii) an amount of interest on the amount 
                        described in clause (i) determined for the 
                        period--
                                    ``(I) beginning on the 91st day 
                                after the expatriation date, and
                                    ``(II) ending on the due date for 
                                the taxable year described in paragraph 
                                (1)(B),
                        by using the rates and method applicable under 
                        section 6621 for underpayments of tax for such 
                        period.
                For purposes of clause (ii), the due date is the date 
                prescribed by law (determined without regard to 
                extension) for filing the return of the tax imposed by 
                this chapter for the taxable year.
                    ``(B) Allocation of losses.--For purposes of 
                subparagraph (A), any losses described in subsection 
                (a)(2)(B) shall be allocated ratably among the gains 
                described in subsection (a)(2)(A).
            ``(3) Security.--
                    ``(A) In general.--No election may be made under 
                paragraph (1) with respect to any property unless 
                adequate security is provided with respect to such 
                property.
                    ``(B) Adequate security.--For purposes of 
                subparagraph (A), security with respect to any property 
                shall be treated as adequate security if--
                            ``(i) it is a bond in an amount equal to 
                        the deferred tax amount under paragraph (2)(A) 
                        for the property, or
                            ``(ii) the taxpayer otherwise establishes 
                        to the satisfaction of the Secretary that the 
                        security is adequate.
            ``(4) Waiver of certain rights.--No election may be made 
        under paragraph (1) unless the taxpayer consents to the waiver 
        of any right under any treaty of the United States which would 
        preclude assessment or collection of any tax imposed by reason 
        of this section.
            ``(5) Dispositions.--For purposes of this subsection, a 
        taxpayer making an election under this subsection with respect 
to any property shall be treated as having disposed of such property--
                    ``(A) immediately before death if such property is 
                held at such time, and
                    ``(B) at any time the security provided with 
                respect to the property fails to meet the requirements 
                of paragraph (3) and the taxpayer does not correct such 
                failure within the time specified by the Secretary.
            ``(6) Elections.--An election under paragraph (1) shall 
        only apply to property described in the election and, once 
        made, is irrevocable. An election may be under paragraph (1) 
        with respect to an interest in a trust with respect to which 
        gain is required to be recognized under subsection (f)(1).
    ``(c) Covered Expatriate.--For purposes of this section--
            ``(1) In general.--The term `covered expatriate' means an 
        expatriate--
                    ``(A) whose average annual net income tax (as 
                defined in section 38(c)(1)) for the period of 5 
                taxable years ending before the expatriation date is 
                greater than $100,000, or
                    ``(B) whose net worth as of such date is $500,000 
                or more.
        If the expatriation date is in a calendar year after 1996, the 
        $100,000 and $500,000 amounts shall each be increased by an 
        amount equal to such dollar amount multiplied by the cost-of-
        living adjustment determined under section 1(f)(3) for such 
        calendar year by substituting `1995' for `1992' in subparagraph 
        (B) thereof. Any increase under the preceding sentence shall be 
        rounded to the nearest multiple of $1,000.
            ``(2) Exceptions.--An individual shall not be treated as a 
        covered expatriate if--
                    ``(A) the individual--
                            ``(i) became at birth a citizen of the 
                        United States and a citizen of another country 
                        and, as of the expatriation date, continues to 
                        be a citizen of, and is taxed as a resident of, 
                        such other country, and
                            ``(ii) has been a resident of the United 
                        States (as defined in section 
                        7701(b)(1)(A)(ii)) for not more than 8 taxable 
                        years during the 15-taxable year period ending 
                        with the taxable year during which the 
                        expatriation date occurs, or
                    ``(B)(i) the individual's relinquishment of United 
                States citizenship occurs before such individual 
                attains age 18\1/2\, and
                    ``(ii) the individual has been a resident of the 
                United States (as so defined) for not more than 5 
                taxable years before the date of relinquishment.
    ``(d) Property to Which Section Applies.--For purposes of this 
section--
            ``(1) In general.--Except as otherwise provided by the 
        Secretary, this section shall apply to--
                    ``(A) any interest in property held by a covered 
                expatriate on the expatriation date the gain from which 
                would be includible in the gross income of the 
                expatriate if such interest had been sold for its fair 
                market value on such date in a transaction in which 
                gain is recognized in whole or in part, and
                    ``(B) any other interest in a trust to which 
                subsection (f) applies.
            ``(2) Exceptions.--This section shall not apply to the 
        following property:
                    ``(A) United states real property interests.--Any 
                United States real property interest (as defined in 
                section 897(c)(1)), other than stock of a United States 
                real property holding corporation which does not, on 
                the expatriation date, meet the requirements of section 
                897(c)(2).
                    ``(B) Interest in certain retirement plans.--
                            ``(i) In general.--Any interest in a 
                        qualified retirement plan (as defined in 
                        section 4974(c)), other than any interest 
                        attributable to contributions which are in 
                        excess of any limitation or which violate any 
                        condition for tax-favored treatment.
                            ``(ii) Foreign pension plans.--
                                    ``(I) In general.--Under 
                                regulations prescribed by the 
                                Secretary, interests in foreign pension 
                                plans or similar retirement 
                                arrangements or programs.
                                    ``(II) Limitation.--The value of 
                                property taken into account under 
                                subclause (I) shall not exceed 
                                $500,000.
    ``(e) Definitions.--For purposes of this section--
            ``(1) Expatriate.--The term `expatriate' means--
                    ``(A) any United States citizen who relinquishes 
                his citizenship, or
                    ``(B) any long-term resident of the United States 
                who--
                            ``(i) ceases to be a lawful permanent 
                        resident of the United States (within the 
                        meaning of section 7701(b)(6)), or
                            ``(ii) commences to be treated as a 
                        resident of a foreign country under the 
                        provisions of a tax treaty between the United 
                        States and the foreign country and who does not 
                        waive the benefits of such treaty applicable to 
                        residents of the foreign country.
            ``(2) Expatriation date.--The term `expatriation date' 
        means--
                    ``(A) the date an individual relinquishes United 
                States citizenship, or
                    ``(B) in the case of a long-term resident of the 
                United States, the date of the event described in 
                clause (i) or (ii) of paragraph (1)(B).
            ``(3) Relinquishment of citizenship.--A citizen shall be 
        treated as relinquishing his United States citizenship on the 
        earliest of--
                    ``(A) the date the individual renounces his United 
                States nationality before a diplomatic or consular 
                officer of the United States pursuant to paragraph (5) 
                of section 349(a) of the Immigration and Nationality 
                Act (8 U.S.C. 1481(a)(5)),
                    ``(B) the date the individual furnishes to the 
                United States Department of State a signed statement of 
                voluntary relinquishment of United States nationality 
                confirming the performance of an act of expatriation 
                specified in paragraph (1), (2), (3), or (4) of section 
                349(a) of the Immigration and Nationality Act (8 U.S.C. 
                1481(a)(1)-(4)),
                    ``(C) the date the United States Department of 
                State issues to the individual a certificate of loss of 
                nationality, or
                    ``(D) the date a court of the United States cancels 
                a naturalized citizen's certificate of naturalization.
        Subparagraph (A) or (B) shall not apply to any individual 
        unless the renunciation or voluntary relinquishment is 
        subsequently approved by the issuance to the individual of a 
        certificate of loss of nationality by the United States 
        Department of State.
            ``(4) Long-term resident.--
                    ``(A) In general.--The term `long-term resident' 
                means any individual (other than a citizen of the 
                United States) who is a lawful permanent resident of 
                the United States in at least 8 taxable years during 
                the period of 15 taxable years ending with the taxable 
                year during which the expatriation date occurs. For 
                purposes of the preceding sentence, an individual shall 
                not be treated as a lawful permanent resident for any 
                taxable year if such individual is treated as a 
                resident of a foreign country for the taxable year 
                under the provisions of a tax treaty between the United 
                States and the foreign country and does not waive the 
                benefits of such treaty applicable to residents of the 
                foreign country.
                    ``(B) Special rule.--For purposes of subparagraph 
                (A), there shall not be taken into account--
                            ``(i) any taxable year during which any 
                        prior sale is treated under subsection (a)(1) 
                        as occurring, or
                            ``(ii) any taxable year prior to the 
                        taxable year referred to in clause (i).
    ``(f) Special Rules Applicable to Beneficiaries' Interests in 
Trust.--
            ``(1) In general.--Except as provided in paragraph (2), if 
        an individual is determined under paragraph (3) to hold an 
        interest in a trust--
                    ``(A) the individual shall not be treated as having 
                sold such interest,
                    ``(B) such interest shall be treated as a separate 
                share in the trust, and
                    ``(C)(i) such separate share shall be treated as a 
                separate trust consisting of the assets allocable to 
                such share,
                    ``(ii) the separate trust shall be treated as 
                having sold its assets immediately before the 
                expatriation date for their fair market value and as 
                having distributed all of its assets to the individual 
                as of such time, and
                    ``(iii) the individual shall be treated as having 
                recontributed the assets to the separate trust.
        Subsection (a)(2) shall apply to any income, gain, or loss of 
        the individual arising from a distribution described in 
        subparagraph (C)(ii).
            ``(2) Special rules for interests in qualified trusts.--
                    ``(A) In general.--If the trust interest described 
                in paragraph (1) is an interest in a qualified trust--
                            ``(i) paragraph (1) and subsection (a) 
                        shall not apply, and
                            ``(ii) in addition to any other tax imposed 
                        by this title, there is hereby imposed on each 
                        distribution with respect to such interest a 
                        tax in the amount determined under subparagraph 
                        (B).
                    ``(B) Amount of tax.--The amount of tax under 
                subparagraph (A)(ii) shall be equal to the lesser of--
                            ``(i) the highest rate of tax imposed by 
                        section 1(e) for the taxable year in which the 
                        expatriation date occurs, multiplied by the 
                        amount of the distribution, or
                            ``(ii) the balance in the deferred tax 
                        account immediately before the distribution 
                        determined without regard to any increases 
                        under subparagraph (C)(ii) after the 30th day 
                        preceding the distribution.
                    ``(C) Deferred tax account.--For purposes of 
                subparagraph (B)(ii)--
                            ``(i) Opening balance.--The opening balance 
                        in a deferred tax account with respect to any 
                        trust interest is an amount equal to the tax 
                        which would have been imposed on the allocable 
                        expatriation gain with respect to the trust 
                        interest if such gain had been included in 
                        gross income under subsection (a).
                            ``(ii) Increase for interest.--The balance 
                        in the deferred tax account shall be increased 
                        by the amount of interest determined (on the 
                        balance in the account at the time the interest 
                        accrues), for periods after the 90th day after 
                        the expatriation date, by using the rates and 
                        method applicable under section 6621 for 
                        underpayments of tax for such periods.
                            ``(iii) Decrease for taxes previously 
                        paid.--The balance in the tax deferred account 
                        shall be reduced--
                                    ``(I) by the amount of taxes 
                                imposed by subparagraph (A) on any 
                                distribution to the person holding the 
                                trust interest, and
                                    ``(II) in the case of a person 
                                holding a nonvested interest, to the 
                                extent provided in regulations, by the 
                                amount of taxes imposed by subparagraph 
                                (A) on distributions from the trust 
                                with respect to nonvested interests not 
                                held by such person.
                    ``(D) Allocable expatriation gain.--For purposes of 
                this paragraph, the allocable expatriation gain with 
                respect to any beneficiary's interest in a trust is the 
                amount of gain which would be allocable to such 
                beneficiary's vested and nonvested interests in the 
                trust if the beneficiary held directly all assets 
                allocable to such interests.
                    ``(E) Tax deducted and withheld.--
                            ``(i) In general.--The tax imposed by 
                        subparagraph (A)(ii) shall be deducted and 
                        withheld by the trustees from the distribution 
                        to which it relates.
                            ``(ii) Exception where failure to waive 
                        treaty rights.--If an amount may not be 
                        deducted and withheld under clause (i) by 
                        reason of the distributee failing to waive any 
                        treaty right with respect to such 
                        distribution--
                                    ``(I) the tax imposed by 
                                subparagraph (A)(ii) shall be imposed 
                                on the trust and each trustee shall be 
                                personally liable for the amount of 
                                such tax, and
                                    ``(II) any other beneficiary of the 
                                trust shall be entitled to recover from 
                                the distributee the amount of such tax 
                                imposed on the other beneficiary.
                    ``(F) Disposition.--If a trust ceases to be a 
                qualified trust at any time, a covered expatriate 
                disposes of an interest in a qualified trust, or a 
                covered expatriate holding an interest in a qualified 
                trust dies, then, in lieu of the tax imposed by 
                subparagraph (A)(ii), there is hereby imposed a tax 
                equal to the lesser of--
                            ``(i) the tax determined under paragraph 
                        (1) as if the expatriation date were the date 
                        of such cessation, disposition, or death, 
                        whichever is applicable, or
                            ``(ii) the balance in the tax deferred 
                        account immediately before such date.
                Such tax shall be imposed on the trust and each trustee 
                shall be personally liable for the amount of such tax 
                and any other beneficiary of the trust shall be 
                entitled to recover from the covered expatriate or the 
                estate the amount of such tax imposed on the other 
                beneficiary.
                    ``(G) Definitions and special rule.--For purposes 
                of this paragraph--
                            ``(i) Qualified trust.--The term `qualified 
                        trust' means a trust--
                                    ``(I) which is organized under, and 
                                governed by, the laws of the United 
                                States or a State, and
                                    ``(II) with respect to which the 
                                trust instrument requires that at least 
                                1 trustee of the trust be an individual 
                                citizen of the United States or a 
                                domestic corporation.
                            ``(ii) Vested interest.--The term `vested 
                        interest' means any interest which, as of the 
                        expatriation date, is vested in the 
                        beneficiary. Such interest shall be determined 
                        by assuming the maximum exercise of discretion 
                        in favor of the beneficiary and the occurrence 
                        of all contingencies in favor of the 
                        beneficiary.
                            ``(iii) Nonvested interest.--The term 
                        `nonvested interest' means, with respect to any 
                        beneficiary, any interest in a trust which is 
                        not a vested interest.
                            ``(iv) Adjustments.--The Secretary may 
                        provide for such adjustments to the bases of 
                        assets in a trust or a deferred tax account, 
                        and the timing of such adjustments, in order to 
                        ensure that gain is taxed only once.
            ``(3) Determination of beneficiaries' interest in trust.--
                    ``(A) Determinations under paragraph (1).--For 
                purposes of paragraph (1), a beneficiary's interest in 
                a trust shall be based upon all relevant facts and 
                circumstances, including the terms of the trust 
                instrument and any letter of wishes or similar 
                document, historical patterns of trust distributions, 
                and the existence of and functions performed by a trust 
                protector or any similar advisor.
                    ``(B) Other determinations.--For purposes of this 
                section--
                            ``(i) Constructive ownership.--If a 
                        beneficiary of a trust is a corporation, 
                        partnership, trust, or estate, the 
                        shareholders, partners, or beneficiaries shall 
                        be deemed to be the trust beneficiaries for 
                        purposes of this section.
                            ``(ii) Taxpayer return position.--A 
                        taxpayer shall clearly indicate on its income 
                        tax return--
                                    ``(I) the methodology used to 
                                determine that taxpayer's trust 
                                interest under this section, and
                                    ``(II) if the taxpayer knows (or 
                                has reason to know) that any other 
                                beneficiary of such trust is using a 
                                different methodology to determine such 
                                beneficiary's trust interest under this 
                                section.
    ``(g) Termination of Deferrals, Etc.--On the date any property held 
by an individual is treated as sold under subsection (a), 
notwithstanding any other provision of this title--
            ``(1) any period during which recognition of income or gain 
        is deferred shall terminate, and
            ``(2) any extension of time for payment of tax shall cease 
        to apply and the unpaid portion of such tax shall be due and 
        payable at the time and in the manner prescribed by the 
        Secretary.
    ``(h) Imposition of Tentative Tax.--
            ``(1) In general.--If an individual is required to include 
        any amount in gross income under subsection (a) for any taxable 
        year, there is hereby imposed, immediately before the 
        expatriation date, a tax in an amount equal to the amount of 
        tax which would be imposed if the taxable year were a short 
        taxable year ending on the expatriation date.
            ``(2) Due date.--The due date for any tax imposed by 
        paragraph (1) shall be the 90th day after the expatriation 
        date.
            ``(3) Treatment of tax.--Any tax paid under paragraph (1) 
        shall be treated as a payment of the tax imposed by this 
        chapter for the taxable year to which subsection (a) applies.
            ``(4) Deferral of tax.--The provisions of subsection (b) 
        shall apply to the tax imposed by this subsection to the extent 
        attributable to gain includible in gross income by reason of 
        this section.
    ``(i) Coordination With Estate and Gift Taxes.--If subsection (a) 
applies to property held by an individual for any taxable year and--
            ``(1) such property is includible in the gross estate of 
        such individual solely by reason of section 2107, or
            ``(2) section 2501 applies to a transfer of such property 
        by such individual solely by reason of section 2501(a)(3),
then there shall be allowed as a credit against the additional tax 
imposed by section 2101 or 2501, whichever is applicable, solely by 
reason of section 2107 or 2501(a)(3) an amount equal to the increase in 
the tax imposed by this chapter for such taxable year by reason of this 
section.
    ``(j) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary or appropriate to carry out the purposes of this 
section, including regulations--
            ``(1) to prevent double taxation by ensuring that--
                    ``(A) appropriate adjustments are made to basis to 
                reflect gain recognized by reason of subsection (a) and 
                the exclusion provided by subsection (a)(3), and
                    ``(B) any gain by reason of a deemed sale under 
                subsection (a) of an interest in a corporation, 
                partnership, trust, or estate is reduced to reflect 
                that portion of such gain which is attributable to an 
                interest in a trust which a shareholder, partner, or 
                beneficiary is treated as holding directly under 
                subsection (f)(3)(B)(i), and
            ``(2) which provide for the proper allocation of the 
        exclusion under subsection (a)(3) to property to which this 
        section applies.
    ``(k) Cross Reference.--

                                ``For income tax treatment of 
individuals who terminate United States citizenship, see section 
7701(a)(47).''
    (b) Inclusion in Income of Gifts and Inheritances From Covered 
Expatriates.--Section 102 (relating to gifts, etc. not included in 
gross income) is amended by adding at the end the following new 
subsection:
    ``(d) Gifts and Inheritances From Covered Expatriates.--Subsection 
(a) shall not exclude from gross income the value of any property 
acquired by gift, bequest, devise, or inheritance from a covered 
expatriate after the expatriation date. For purposes of this 
subsection, any term used in this subsection which is also used in 
section 877A shall have the same meaning as when used in section 
877A.''.
    (c) Definition of Termination of United States Citizenship.--
Section 7701(a) is amended by adding at the end the following new 
paragraph:
            ``(47) Termination of united states citizenship.--An 
        individual shall not cease to be treated as a United States 
        citizen before the date on which the individual's citizenship 
        is treated as relinquished under section 877A(e)(3).''
    (d) Conforming Amendments.--
            (1) Section 877 is amended by adding at the end the 
        following new subsection:
    ``(f) Application.--This section shall not apply to any individual 
who relinquishes (within the meaning of section 877A(e)(3)) United 
States citizenship on or after February 6, 1995.''
            (2) Section 2107(c) is amended by adding at the end the 
        following new paragraph:
            ``(3) Cross reference.--For credit against the tax imposed 
        by subsection (a) for expatriation tax, see section 877A(i).''
            (3) Section 2501(a)(3) is amended by adding at the end the 
        following new flush sentence:
        ``For credit against the tax imposed under this section by 
        reason of this paragraph, see section 877A(i).''
            (4) Paragraph (10) of section 7701(b) is amended by adding 
        at the end the following new sentence: ``This paragraph shall 
        not apply to any long-term resident of the United States who is 
        an expatriate (as defined in section 877A(e)(1)).''
    (e) Clerical Amendment.--The table of sections for subpart A of 
part II of subchapter N of chapter 1 is amended by inserting after the 
item relating to section 877 the following new item:

                              ``Sec. 877A. Tax responsibilities of 
                                        expatriation.''
    (f) Citizens Becoming Covered Expatriates To Be Taxed as Residents 
Upon Return to United States.--Paragraph (3) of section 7701(b) is 
amended by adding at the end the following new subparagraph:
                    ``(E) Special rule for covered expatriates.--
                Notwithstanding any other provision of this paragraph, 
                in the case of an individual who is treated as a 
                covered expatriate under section 877A by reason of 
                relinquishing the individual's United States 
                citizenship, such individual shall be treated as 
                meeting the substantial presence test of this paragraph 
                with respect to any calendar year if the individual is 
                present in the United States for more than 30 days 
                during the calendar year. The preceding sentence shall 
                not apply to the extent that the Secretary determines 
                its application would contravene any treaty of the 
                United States.''
    (g) Effective Dates.--
            (1) In general.--Except as provided in this subsection, the 
        amendments made by this section shall apply to expatriates 
        (within the meaning of section 877A(e) of the Internal Revenue 
        Code of 1986, as added by this section) whose expatriation date 
        (as so defined) occurs on or after February 6, 1995.
            (2) Gifts and bequests.--Section 102(d) of the Internal 
        Revenue Code of 1986 (as added by subsection (b)) shall apply 
        to amounts received from expatriates (as so defined) whose 
        expatriation date (as so defined) occurs on and after February 
        6, 1995.
            (3) Special rules relating to certain acts occurring before 
        february 6, 1995.--In the case of an individual who took an act 
        of expatriation specified in paragraph (1), (2), (3), or (4) of 
        section 349(a) of the Immigration and Nationality Act (8 U.S.C. 
        1481(a)(1)-(4)) before February 6, 1995, but whose expatriation 
        date (as so defined) occurs after February 6, 1995--
                    (A) the amendment made by subsection (c) shall not 
                apply,
                    (B) the amendment made by subsection (d)(1) shall 
                not apply for any period prior to the expatriation 
                date, and
                    (C) the other amendments made by this section shall 
                apply as of the expatriation date.
            (4) Due date for tentative tax.--The due date under section 
        877A(h)(2) of such Code shall in no event occur before the 90th 
        day after the date of the enactment of this Act.

SEC. 3. INFORMATION ON INDIVIDUALS EXPATRIATING.

    (a) In General.--Subpart A of part III of subchapter A of chapter 
61 is amended by inserting after section 6039E the following new 
section:

``SEC. 6039F. INFORMATION ON INDIVIDUALS EXPATRIATING.

    ``(a) Requirement.--
            ``(1) In general.--Notwithstanding any other provision of 
        law, any expatriate (within the meaning of section 877A(e)(1)) 
        shall provide a statement which includes the information 
        described in subsection (b).
            ``(2) Timing.--
                    ``(A) Citizens.--In the case of an expatriate 
                described in section 877(e)(1)(A), such statement shall 
                be--
                            ``(i) provided not later than the 
                        expatriation date (within the meaning of 
                        section 877A(e)(2)), and
                            ``(ii) provided to the person or court 
                        referred to in section 877A(e)(3).
                    ``(B) Noncitizens.--In the case of an expatriate 
                described in section 877A(e)(1)(B), such statement 
                shall be provided to the Secretary with the return of 
                tax imposed by chapter 1 for the taxable year during 
                which the event described in such section occurs.
    ``(b) Information To Be Provided.--Information required under 
subsection (a) shall include--
            ``(1) the taxpayer's TIN,
            ``(2) the mailing address of such individual's principal 
        foreign residence,
            ``(3) the foreign country in which such individual is 
        residing,
            ``(4) the foreign country of which such individual is a 
        citizen,
            ``(5) in the case of an individual having a net worth of at 
        least the dollar amount applicable under section 877A(c)(1)(B), 
        information detailing the assets and liabilities of such 
        individual, and
            ``(6) such other information as the Secretary may 
        prescribe.
    ``(c) Penalty.--Any individual failing to provide a statement 
required under subsection (a) shall be subject to a penalty for each 
year during any portion of which such failure continues in an amount 
equal to the greater of--
            ``(1) 5 percent of the additional tax required to be paid 
        under section 877A for such year, or
            ``(2) $1,000,
unless it is shown that such failure is due to reasonable cause and not 
to willful neglect.
    ``(d) Information To Be Provided to Secretary.--Notwithstanding any 
other provision of law--
            ``(1) any Federal agency or court which collects (or is 
        required to collect) the statement under subsection (a) shall 
        provide to the Secretary--
                    ``(A) a copy of any such statement, and
                    ``(B) the name (and any other identifying 
                information) of any individual refusing to comply with 
                the provisions of subsection (a),
            ``(2) the Secretary of State shall provide to the Secretary 
        a copy of each certificate as to the loss of American 
        nationality under section 358 of the Immigration and 
        Nationality Act which is approved by the Secretary of State, 
        and
            ``(3) the Federal agency primarily responsible for 
        administering the immigration laws shall provide to the 
        Secretary the name of each lawful permanent resident of the 
        United States (within the meaning of section 7701(b)(6)) whose 
        status as such has been revoked or has been administratively or 
        judicially determined to have been abandoned.
Notwithstanding any other provision of law, not later than 30 days 
after the close of each calendar quarter, the Secretary shall publish 
in the Federal Register the name of each individual relinquishing 
United States citizenship (within the meaning of section 877A(e)(3)) 
with respect to whom the Secretary receives information under the 
preceding sentence during such quarter.
    ``(e) Exemption.--The Secretary may by regulations exempt any class 
of individuals from the requirements of this section if the Secretary 
determines that applying this section to such individuals is not 
necessary to carry out the purposes of this section.''
    (b) Clerical Amendment.--The table of sections for such subpart A 
is amended by inserting after the item relating to section 6039E the 
following new item:

                              ``Sec. 6039F. Information on individuals 
                                        expatriating.''
    (c) Effective Date.--The amendments made by this section shall 
apply to individuals to whom section 877A of the Internal Revenue Code 
of 1986 applies and whose expatriation date (as defined in section 
877A(e)(2)) occurs on or after February 6, 1995, except that no 
statement shall be required by such amendments before the 90th day 
after the date of the enactment of this Act.
                                 <all>