II 

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. 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 


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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Expatriation Preven3 tion by Abolishing Tax-Related Incentives for Offshore 

4 Tenancy’’ or the ‘‘Ex-PATRIOT Act’’. 

5 SEC. 2. TAXATION OF CAPITAL GAINS OF NONRESIDENT 

6 ALIEN EXPATRIATES. 

7 (a) IN GENERAL.—Paragraph (2) of section 871(a) 

8 of the Internal Revenue Code of 1986 is amended to read 

9 as follows: 

10 ‘‘(2) CAPITAL GAINS.— 

11 ‘‘(A) IN GENERAL.—In the case of— 

12 ‘‘(i) a nonresident alien individual 

13 present in the United States for a period 

14 or periods aggregating 183 days or more 

15 during the taxable year, or 

16 ‘‘(ii) a specified expatriate, 

17 there is hereby imposed for such year a tax of 

18 30 percent of the amount by which his gains, 

19 derived from sources within the United States, 

20 from the sale or exchange at any time during 

21 such year of capital assets exceed his losses, al22 locable to sources within the United States, 

23 from the sale or exchange at any time during 

24 such year of capital assets. For purposes of this 

25 paragraph, gains and losses shall be taken into 

26 account only if, and to the extent that, they 


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1 would be recognized and taken into account if 

2 such gains and losses were effectively connected 

3 with the conduct of a trade or business within 

4 the United States, except that such gains and 

5 losses shall be determined without regard to 

6 section 1202 and such losses shall be deter7 mined without the benefits of the capital loss 

8 carryover provided in section 1212. Any gain or 

9 loss which is taken into account in determining 

10 the tax under paragraph (1) or subsection (b) 

11 shall not be taken into account in determining 

12 the tax under this paragraph. For purposes of 

13 this paragraph, a nonresident alien individual 

14 or specified expatriate not engaged in trade or 

15 business within the United States who has not 

16 established a taxable year for any prior period 

17 shall be treated as having a taxable year which 

18 is the calendar year. 

19 ‘‘(B) COORDINATION WITH SECTION

20 877A.—For purposes of subparagraph (A), in 

21 determining the amount of any gain or loss on 

22 the sale or exchange of any asset which is held 

23 by a specified expatriate and which was subject 

24 to section 877A, the basis in such asset shall be 

25 considered to be the fair market value of such 


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1 asset on the day before the expatriation date 

2 (as defined in section 877A(g)(3)). 

3 ‘‘(C) SPECIFIED EXPATRIATE.— 

4 ‘‘(i) IN GENERAL.—For purposes of 

5 subparagraph (A), the term ‘specified ex6 patriate’ means, with respect to any tax7 able year, any covered expatriate (as de8 fined in section 877A(g)(1)) whose expa9 triation date (as defined in section 

10 877A(g)(3)) occurs after the date which is 

11 10 years prior to the date of the enactment 

12 of this subparagraph. 

13 ‘‘(ii) EXCEPTION.—An individual shall 

14 not be considered a specified expatriate if 

15 such individual establishes to the satisfac16 tion of the Secretary that the loss of such 

17 individual’s United States citizenship did 

18 not result in a substantial reduction in 

19 taxes.’’. 

20 (b) WITHHOLDING.—Subsection (b) of section 1441 

21 of the Internal Revenue Code of 1986 is amended by in22 serting ‘‘gains subject to tax under section 871(a)(2) by 

23 reason of subparagraph (A)(ii) thereof,’’ after ‘‘section 

24 871(a)(1)(D),’’. 

25 (c) EFFECTIVE DATES.— 


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1 (1) TAXATION.—The amendment made by sub2 section (a) shall take effect on the date of the enact3 ment of this Act. 

4 (2) WITHHOLDING.—The amendment made by 

5 subsection (b) shall apply to payments made after 

6 the date of the enactment of this Act. 

7 SEC. 3. FORMER CITIZENS WHO RENOUNCED CITIZENSHIP 

8 TO AVOID TAXATION. 

9 (a) INADMISSIBILITY OF FORMER CITIZENS.—Sec10 tion 212(a)(10)(E) of the Immigration and Nationality 

11 Act (8 U.S.C. 212(a)(10)(E)) is amended to read as fol12 lows: 

13 ‘‘(E) FORMER CITIZENS WHO RENOUNCED

14 CITIZENSHIP TO AVOID TAXATION.— 

15 ‘‘(i) IN GENERAL.—Any alien who is 

16 determined by the Secretary of the Treas17 ury to be a specified expatriate is inadmis18 sible. 

19 ‘‘(ii) SPECIFIED EXPATRIATE.—In 

20 this subparagraph, the term ‘specified ex21 patriate’ has the meaning given that term 

22 in section 871(a)(2)(C) of the Internal 

23 Revenue Code of 1986. 

24 ‘‘(iii) NOTIFICATION OF EXCEPTED

25 INDIVIDUALS.—The Secretary of the 


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1 Treasury shall notify the Secretary of 

2 State and the Secretary of Homeland Se3 curity of the name of each individual who 

4 the Secretary of the Treasury has deter5 mined is not a specified expatriate under 

6 section 871(a)(2)(C)(ii) of the Internal 

7 Revenue Code of 1986.’’. 

8 (b) PROHIBITION ON WAIVER OF INADMIS9 SIBILITY.— 

10 (1) IN GENERAL.—Section 212(d)(3) of the Im11 migration and Nationality Act (8 U.S.C. 212(d)(3)) 

12 is amended— 

13 (A) by striking ‘‘Attorney General’’ each 

14 place that term appears and inserting ‘‘Sec15 retary of Homeland Security’’; and 

16 (B) in subparagraph (A)— 

17 (i) in clause (i), by striking ‘‘and 

18 clauses (i) and (ii) of paragraph (3)(E)’’ 

19 and inserting ‘‘(3)(E)(i), (3)(E)(ii), or 

20 (10)(E)’’; and 

21 (ii) in clause (ii), by striking ‘‘and 

22 clauses (i) and (ii) of paragraph (3)(E)’’ 

23 and inserting ‘‘(3)(E)(i), (3)(E)(ii), or 

24 (10)(E)’’. 


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1 (2) REPORT.—Not later than 1 year after the 

2 date of the enactment of this Act, the Secretary of 

3 the Treasury, or the Secretary’s delegate, shall sub4 mit to Congress a report with recommendations 

5 (made in consultation with the Secretary of State 

6 and the Secretary of Homeland Security) for imple7 menting a policy under which an individual who is 

8 a specified expatriate (as defined in section 

9 871(a)(2)(C) of the Internal Revenue Code of 1986) 

10 may be granted a waiver of inadmissibility under the 

11 Immigration and Nationality Act (8 U.S.C. 1101 et 

12 seq.) if such individual satisfies requirements relat13 ing to such individual’s tax status, such as a tax or 

14 penalty equal to the loss in tax revenue to the 

15 United States resulting from such individual’s loss 

16 of United States citizenship. 

Æ 


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