[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 3205 Introduced in Senate (IS)]
112th CONGRESS
2d Session
S. 3205
To amend the Internal Revenue Code of 1986 to provide that persons
renouncing citizenship for a substantial tax avoidance purpose shall be
subject to tax and withholding on capital gains, to provide that such
persons shall not be admissible to the United States, and for other
purposes.
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IN THE SENATE OF THE UNITED STATES
May 17, 2012
Mr. Schumer (for himself, Mr. Casey, Mr. Blumenthal, and 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 provide that persons
renouncing citizenship for a substantial tax avoidance purpose shall be
subject to tax and withholding on capital gains, to provide that such
persons shall not be admissible to the United States, 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.
This Act may be cited as the ``Expatriation Prevention by
Abolishing Tax-Related Incentives for Offshore Tenancy'' or the ``Ex-
PATRIOT Act''.
SEC. 2. TAXATION OF CAPITAL GAINS OF NONRESIDENT ALIEN EXPATRIATES.
(a) In General.--Paragraph (2) of section 871(a) of the Internal
Revenue Code of 1986 is amended to read as follows:
``(2) Capital gains.--
``(A) In general.--In the case of--
``(i) a nonresident alien individual
present in the United States for a period or
periods aggregating 183 days or more during the
taxable year, or
``(ii) a specified expatriate,
there is hereby imposed for such year a tax of 30
percent of the amount by which his gains, derived from
sources within the United States, from the sale or
exchange at any time during such year of capital assets
exceed his losses, allocable to sources within the
United States, from the sale or exchange at any time
during such year of capital assets. For purposes of
this paragraph, gains and losses shall be taken into
account only if, and to the extent that, they would be
recognized and taken into account if such gains and
losses were effectively connected with the conduct of a
trade or business within the United States, except that
such gains and losses shall be determined without
regard to section 1202 and such losses shall be
determined without the benefits of the capital loss
carryover provided in section 1212. Any gain or loss
which is taken into account in determining the tax
under paragraph (1) or subsection (b) shall not be
taken into account in determining the tax under this
paragraph. For purposes of this paragraph, a
nonresident alien individual or specified expatriate
not engaged in trade or business within the United
States who has not established a taxable year for any
prior period shall be treated as having a taxable year
which is the calendar year.
``(B) Coordination with section 877a.--For purposes
of subparagraph (A), in determining the amount of any
gain or loss on the sale or exchange of any asset which
is held by a specified expatriate and which was subject
to section 877A, the basis in such asset shall be
considered to be the fair market value of such asset on
the day before the expatriation date (as defined in
section 877A(g)(3)).
``(C) Specified expatriate.--
``(i) In general.--For purposes of
subparagraph (A), the term `specified
expatriate' means, with respect to any taxable
year, any covered expatriate (as defined in
section 877A(g)(1)) whose expatriation date (as
defined in section 877A(g)(3)) occurs after the
date which is 10 years prior to the date of the
enactment of this subparagraph.
``(ii) Exception.--An individual shall not
be considered a specified expatriate if such
individual establishes to the satisfaction of
the Secretary that the loss of such
individual's United States citizenship did not
result in a substantial reduction in taxes.''.
(b) Withholding.--Subsection (b) of section 1441 of the Internal
Revenue Code of 1986 is amended by inserting ``gains subject to tax
under section 871(a)(2) by reason of subparagraph (A)(ii) thereof,''
after ``section 871(a)(1)(D),''.
(c) Effective Dates.--
(1) Taxation.--The amendment made by subsection (a) shall
take effect on the date of the enactment of this Act.
(2) Withholding.--The amendment made by subsection (b)
shall apply to payments made after the date of the enactment of
this Act.
SEC. 3. FORMER CITIZENS WHO RENOUNCED CITIZENSHIP TO AVOID TAXATION.
(a) Inadmissibility of Former Citizens.--Section 212(a)(10)(E) of
the Immigration and Nationality Act (8 U.S.C. 212(a)(10)(E)) is amended
to read as follows:
``(E) Former citizens who renounced citizenship to
avoid taxation.--
``(i) In general.--Any alien who is
determined by the Secretary of the Treasury to
be a specified expatriate is inadmissible.
``(ii) Specified expatriate.--In this
subparagraph, the term `specified expatriate'
has the meaning given that term in section
871(a)(2)(C) of the Internal Revenue Code of
1986.
``(iii) Notification of excepted
individuals.--The Secretary of the Treasury
shall notify the Secretary of State and the
Secretary of Homeland Security of the name of
each individual who the Secretary of the
Treasury has determined is not a specified
expatriate under section 871(a)(2)(C)(ii) of
the Internal Revenue Code of 1986.''.
(b) Prohibition on Waiver of Inadmissibility.--
(1) In general.--Section 212(d)(3) of the Immigration and
Nationality Act (8 U.S.C. 212(d)(3)) is amended--
(A) by striking ``Attorney General'' each place
that term appears and inserting ``Secretary of Homeland
Security''; and
(B) in subparagraph (A)--
(i) in clause (i), by striking ``and
clauses (i) and (ii) of paragraph (3)(E)'' and
inserting ``(3)(E)(i), (3)(E)(ii), or
(10)(E)''; and
(ii) in clause (ii), by striking ``and
clauses (i) and (ii) of paragraph (3)(E)'' and
inserting ``(3)(E)(i), (3)(E)(ii), or
(10)(E)''.
(2) Report.--Not later than 1 year after the date of the
enactment of this Act, the Secretary of the Treasury, or the
Secretary's delegate, shall submit to Congress a report with
recommendations (made in consultation with the Secretary of
State and the Secretary of Homeland Security) for implementing
a policy under which an individual who is a specified
expatriate (as defined in section 871(a)(2)(C) of the Internal
Revenue Code of 1986) may be granted a waiver of
inadmissibility under the Immigration and Nationality Act (8
U.S.C. 1101 et seq.) if such individual satisfies requirements
relating to such individual's tax status, such as a tax or
penalty equal to the loss in tax revenue to the United States
resulting from such individual's loss of United States
citizenship.
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