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.

Summary: Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy or the Ex-PATRIOT Act - Amends the Internal Revenue Code to impose a 30% tax and withholding on capital gains income realized by a nonresident alien individual present in the United States for periods aggregating 183 days or more or an expatriate who has renounced his or her U.S. citizenship for tax avoidance purposes (specified expatriate).

Amends the Immigration and Nationality Act to: (1) render a specified expatriate inadmissible to the United States, and (2) prohibit any waiver of such inadmissibility. Directs the Secretary of the Treasury, in consultation with the Secretaries of State and Homeland Security (DHS), to develop a policy for granting a waiver of inadmissibility to a specified expatriate who satisfies a tax liability related to such expatriate's renunciation of of U.S. citizenship.

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.