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incurred (whether by suit, agreement, or otherwise)
to, or at the direction of, a government or entity de-
scribed in paragraph (4) in relation to the violation
of any law or the investigation or inquiry by such
government or entity into the potential violation of
any law.
‘‘(2) EXCEPTION
FOR
AMOUNTS
CONSTITUTING
RESTITUTION OR PAID TO COME INTO COMPLIANCE
WITH LAW.—Paragraph (1) shall not apply to any
amount which—
‘‘(A) the taxpayer establishes—
‘‘(i) constitutes restitution (including
remediation of property) for damage or
harm caused by or which may be caused by
the violation of any law or the potential
violation of any law, or
‘‘(ii) is paid to come into compliance
with any law which was violated or in-
volved in the investigation or inquiry, and
‘‘(B) is identified as restitution or as an
amount paid to come into compliance with the
law, as the case may be, in the court order or
settlement agreement.
A taxpayer shall not meet the requirements of sub-
paragraph (A) solely by reason an identification
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under subparagraph (B). This paragraph shall not
apply to any amount paid or incurred as reimburse-
ment to the government or entity for the costs of any
investigation or litigation.
‘‘(3) EXCEPTION
FOR
AMOUNTS
PAID
OR
IN-
CURRED
AS
THE
RESULT
OF
CERTAIN
COURT
OR-
DERS.—Paragraph (1) shall not apply to any
amount paid or incurred by order of a court in a suit
in which no government or entity described in para-
graph (4) is a party.
‘‘(4) CERTAIN NONGOVERNMENTAL REGULATORY
ENTITIES.—An entity is described in this paragraph
if it is—
‘‘(A) a nongovernmental entity which exer-
cises self-regulatory powers (including imposing
sanctions) in connection with a qualified board
or exchange (as defined in section 1256(g)(7)), or
‘‘(B) to the extent provided in regulations,
a nongovernmental entity which exercises self-
regulatory powers (including imposing sanc-
tions) as part of performing an essential govern-
mental function.
‘‘(5) EXCEPTION FOR TAXES DUE.—Paragraph
(1) shall not apply to any amount paid or incurred
as taxes due.’’.
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(b) REPORTING OF DEDUCTIBLE AMOUNTS.—
(1) IN GENERAL.—Subpart B of part III of sub-
chapter A of chapter 61 is amended by inserting after
section 6050V the following new section:
‘‘SEC. 6050W. INFORMATION WITH RESPECT TO CERTAIN
FINES, PENALTIES, AND OTHER AMOUNTS.
‘‘(a) REQUIREMENT OF REPORTING.—
‘‘(1) IN GENERAL.—The appropriate official of
any government or entity which is described in sec-
tion 162(f)(4) which is involved in a suit or agree-
ment described in paragraph (2) shall make a return
in such form as determined by the Secretary setting
forth—
‘‘(A) the amount required to be paid as a
result of the suit or agreement to which para-
graph (1) of section 162(f) applies,
‘‘(B) any amount required to be paid as a
result of the suit or agreement which constitutes
restitution or remediation of property, and
‘‘(C) any amount required to be paid as a
result of the suit or agreement for the purpose of
coming into compliance with any law which was
violated or involved in the investigation or in-
quiry.
‘‘(2) SUIT OR AGREEMENT DESCRIBED.—
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‘‘(A) IN GENERAL.—A suit or agreement is
described in this paragraph if—
‘‘(i) it is—
‘‘(I) a suit with respect to a viola-
tion of any law over which the govern-
ment or entity has authority and with
respect to which there has been a court
order, or
‘‘(II) an agreement which is en-
tered into with respect to a violation of
any law over which the government or
entity has authority, or with respect to
an investigation or inquiry by the gov-
ernment or entity into the potential
violation of any law over which such
government or entity has authority,
and
‘‘(ii) the aggregate amount involved in
all court orders and agreements with respect
to the violation, investigation, or inquiry is
$600 or more.
‘‘(B) ADJUSTMENT OF REPORTING THRESH-
OLD.—The Secretary may adjust the $600
amount in subparagraph (A)(ii) as necessary in
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order to ensure the efficient administration of the
internal revenue laws.
‘‘(3) TIME
OF
FILING.—The return required
under this subsection shall be filed not later than—
‘‘(A) 30 days after the date on which a
court order is issued with respect to the suit or
the date the agreement is entered into, as the
case may be, or
‘‘(B) the date specified Secretary.
‘‘(b) STATEMENTS TO BE FURNISHED TO INDIVIDUALS
INVOLVED IN THE SETTLEMENT.—Every person required to
make a return under subsection (a) shall furnish to each
person who is a party to the suit or agreement a written
statement showing—
‘‘(1) the name of the government or entity, and
‘‘(2) the information supplied to the Secretary
under subsection (a)(1).
The written statement required under the preceding sen-
tence shall be furnished to the person at the same time the
government or entity provides the Secretary with the infor-
mation required under subsection (a).
‘‘(c) APPROPRIATE OFFICIAL DEFINED.—For purposes
of this section, the term ‘appropriate official’ means the offi-
cer or employee having control of the suit, investigation,
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or inquiry or the person appropriately designated for pur-
poses of this section.’’.
(2) CONFORMING AMENDMENT.—The table of sec-
tions for subpart B of part III of subchapter A of
chapter 61 is amended by inserting after the item re-
lating to section 6050V the following new item:
‘‘Sec. 6050W. Information with respect to certain fines, penalties, and other
amounts.’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to amounts paid or incurred on or after
the date of the enactment of this Act, except that such
amendments shall not apply to amounts paid or incurred
under any binding order or agreement entered into before
such date. Such exception shall not apply to an order or
agreement requiring court approval unless the approval
was obtained before such date.
SEC. 225. REVISION OF TAX RULES ON EXPATRIATION OF
INDIVIDUALS.
(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
subsections (d) and (f), all property of a covered expa-
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triate to whom this section applies shall be treated as
sold on the day before 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, 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 to any
such loss.
Proper adjustment shall be made in the amount of
any gain or loss subsequently realized for gain or loss
taken into account under the preceding sentence.
‘‘(3) EXCLUSION FOR CERTAIN GAIN.—
‘‘(A) IN GENERAL.—The amount which, but
for this paragraph, would 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, allo-
cable expatriation gain taken into account under
subsection (f)(2) shall be treated in the same
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manner as an amount required to be includible
in gross income.
‘‘(B) COST-OF-LIVING ADJUSTMENT.—
‘‘(i) IN GENERAL.—In the case of an
expatriation date occurring in any calendar
year after 2007, the $600,000 amount under
subparagraph (A) shall be increased by an
amount equal to—
‘‘(I) such dollar amount, multi-
plied by
‘‘(II) the cost-of-living adjustment
determined under section 1(f)(3) for
such calendar year, determined by sub-
stituting ‘calendar year 2006’ for ‘cal-
endar year 1992’ in subparagraph (B)
thereof.
‘‘(ii) 
ROUNDING
RULES.—If 
any
amount after adjustment under clause (i) is
not a multiple of $1,000, such amount shall
be rounded to the next lower multiple of
$1,000.
‘‘(4) ELECTION TO CONTINUE TO BE TAXED AS
UNITED STATES CITIZEN.—
‘‘(A) IN GENERAL.—If a covered expatriate
elects the application of this paragraph—
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‘‘(i) this section (other than this para-
graph and subsection (i)) shall not apply to
the expatriate, but
‘‘(ii) in the case of property to which
this section would apply but for such elec-
tion, the expatriate shall be subject to tax
under this title in the same manner as if
the individual were a United States citizen.
‘‘(B) 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 as-
sessment or collection of any tax which may
be imposed by reason of this paragraph,
and
‘‘(iii) complies with such other require-
ments as the Secretary may prescribe.
‘‘(C) ELECTION.—An election under sub-
paragraph (A) shall apply to all property to
which this section would apply but for the elec-
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tion 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 ref-
erence to the property with respect to which the
election was made.
‘‘(b) ELECTION TO DEFER TAX.—
‘‘(1) IN GENERAL.—If the taxpayer elects the ap-
plication of this subsection with respect to any prop-
erty treated as sold by reason of subsection (a), the
payment of the additional tax attributable to such
property shall be postponed until the due date of the
return for the taxable year in which such property is
disposed of (or, in the case of property disposed of in
a transaction in which gain is not recognized in
whole or in part, until such other date as the Sec-
retary may prescribe).
‘‘(2) DETERMINATION OF TAX WITH RESPECT TO
PROPERTY.—For purposes of paragraph (1), the addi-
tional tax attributable to any property is an amount
which bears the same ratio to the additional tax im-
posed by this chapter for the taxable year solely by
reason of subsection (a) as the gain taken into ac-
count under subsection (a) with respect to such prop-
erty bears to the total gain taken into account under
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subsection (a) with respect to all property to which
subsection (a) applies.
‘‘(3) TERMINATION OF POSTPONEMENT.—No tax
may be postponed under this subsection later than the
due date for the return of tax imposed by this chapter
for the taxable year which includes the date of death
of the expatriate (or, if earlier, the time that the secu-
rity provided with respect to the property fails to
meet the requirements of paragraph (4), unless the
taxpayer corrects such failure within the time speci-
fied by the Secretary).
‘‘(4) SECURITY.—
‘‘(A) IN
GENERAL.—No election may be
made under paragraph (1) with respect to any
property unless adequate security is provided to
the Secretary with respect to such property.
‘‘(B) ADEQUATE SECURITY.—For purposes
of subparagraph (A), security with respect to
any property shall be treated as adequate secu-
rity if—
‘‘(i) it is a bond in an amount equal
to the deferred tax amount under paragraph
(2) for the property, or
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‘‘(ii) the taxpayer otherwise establishes
to the satisfaction of the Secretary that the
security is adequate.
‘‘(5) WAIVER OF CERTAIN RIGHTS.—No election
may be made under paragraph (1) unless the tax-
payer consents to the waiver of any right under any
treaty of the United States which would preclude as-
sessment or collection of any tax imposed by reason
of this section.
‘‘(6) ELECTIONS.—An election under paragraph
(1) shall only apply to property described in the elec-
tion and, once made, is irrevocable. An election may
be made under paragraph (1) with respect to an in-
terest in a trust with respect to which gain is re-
quired to be recognized under subsection (f)(1).
‘‘(7) INTEREST.—For purposes of section 6601—
‘‘(A) the last date for the payment of tax
shall be determined without regard to the election
under this subsection, and
‘‘(B) section 6621(a)(2) shall be applied by
substituting ‘5 percentage points’ for ‘3 percent-
age points’ in subparagraph (B) thereof.
‘‘(c) COVERED EXPATRIATE.—For purposes of this
section—
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‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), the term ‘covered expatriate’ means an ex-
patriate.
‘‘(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 not been a resident of the
United States (as defined in section
7701(b)(1)(A)(ii)) during the 5 taxable
years 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 indi-
vidual attains age 181⁄2, 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 relin-
quishment.
‘‘(d) EXEMPT PROPERTY; SPECIAL RULES FOR PEN-
SION PLANS.—
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‘‘(1) EXEMPT PROPERTY.—This section shall not
apply to the following:
‘‘(A) UNITED STATES REAL PROPERTY IN-
TERESTS.—Any United States real property in-
terest (as defined in section 897(c)(1)), other
than stock of a United States real property hold-
ing corporation which does not, on the day before
the expatriation date, meet the requirements of
section 897(c)(2).
‘‘(B) SPECIFIED PROPERTY.—Any property
or interest in property not described in subpara-
graph (A) which the Secretary specifies in regu-
lations.
‘‘(2) SPECIAL RULES FOR CERTAIN RETIREMENT
PLANS.—
‘‘(A) IN GENERAL.—If a covered expatriate
holds on the day before the expatriation date any
interest in a retirement plan to which this para-
graph applies—
‘‘(i) such interest shall not be treated
as sold for purposes of subsection (a)(1), but
‘‘(ii) an amount equal to the present
value of the expatriate’s nonforfeitable ac-
crued benefit shall be treated as having been
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received by such individual on such date as
a distribution under the plan.
‘‘(B) TREATMENT
OF
SUBSEQUENT
DIS-
TRIBUTIONS.—In the case of any distribution on
or after the expatriation date to or on behalf of
the covered expatriate from a plan from which
the expatriate was treated as receiving a dis-
tribution under subparagraph (A), the amount
otherwise includible in gross income by reason of
the subsequent distribution shall be reduced by
the excess of the amount includible in gross in-
come under subparagraph (A) over any portion
of such amount to which this subparagraph pre-
viously applied.
‘‘(C) TREATMENT
OF
SUBSEQUENT
DIS-
TRIBUTIONS BY PLAN.—For purposes of this title,
a retirement plan to which this paragraph ap-
plies, and any person acting on the plan’s behalf,
shall treat any subsequent distribution described
in subparagraph (B) in the same manner as
such distribution would be treated without re-
gard to this paragraph.
‘‘(D) APPLICABLE PLANS.—This paragraph
shall apply to—
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‘‘(i) any qualified retirement plan (as
defined in section 4974(c)),
‘‘(ii) an eligible deferred compensation
plan (as defined in section 457(b)) of an el-
igible 
employer 
described 
in 
section
457(e)(1)(A), and
‘‘(iii) to the extent provided in regula-
tions, any foreign pension plan or similar
retirement arrangements or programs.
‘‘(e) DEFINITIONS.—For purposes of this section—
‘‘(1) 
EXPATRIATE.—The 
term 
‘expatriate’
means—
‘‘(A) any United States citizen who relin-
quishes citizenship, and
‘‘(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 resi-
dent of a foreign country under the provi-
sions of a tax treaty between the United
States and the foreign country and who
does not waive the benefits of such treaty
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applicable to residents of the foreign coun-
try.
‘‘(2) EXPATRIATION DATE.—The term ‘expatria-
tion 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 cit-
izen shall be treated as relinquishing United States
citizenship on the earliest of—
‘‘(A) the date the individual renounces such
individual’s 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 Im-
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migration 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 natu-
ralization.
Subparagraph (A) or (B) shall not apply to any in-
dividual unless the renunciation or voluntary relin-
quishment 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.—The term ‘long-
term resident’ has the meaning given to such term by
section 877(e)(2).
‘‘(f) SPECIAL RULES APPLICABLE TO BENEFICIARIES’
INTERESTS IN TRUST.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), if an individual is determined under para-
graph (3) to hold an interest in a trust on the day
before the expatriation date—
‘‘(A) the individual shall not be treated as
having sold such interest,
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‘‘(B) such interest shall be treated as a sep-
arate share in the trust, and
‘‘(C)(i) such separate share shall be treated
as a separate trust consisting of the assets allo-
cable to such share,
‘‘(ii) the separate trust shall be treated as
having sold its assets on the day before the expa-
triation date for their fair market value and as
having distributed all of its assets to the indi-
vidual as of such time, and
‘‘(iii) the individual shall be treated as hav-
ing 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 de-
scribed in subparagraph (C)(ii). In determining the
amount of such distribution, proper adjustments shall
be made for liabilities of the trust allocable to an in-
dividual’s share in the trust.
‘‘(2) SPECIAL RULES FOR INTERESTS IN QUALI-
FIED TRUSTS.—
‘‘(A) IN GENERAL.—If the trust interest de-
scribed in paragraph (1) is an interest in a
qualified trust—
‘‘(i) paragraph (1) and subsection (a)
shall not apply, and
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‘‘(ii) in addition to any other tax im-
posed by this title, there is hereby imposed
on each distribution with respect to such in-
terest 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 which in-
cludes the day before the expatriation date,
multiplied by the amount of the distribu-
tion, or
‘‘(ii) the balance in the deferred tax ac-
count 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 pur-
poses of subparagraph (B)(ii)—
‘‘(i) OPENING BALANCE.—The opening
balance in a deferred tax account with re-
spect to any trust interest is an amount
equal to the tax which would have been im-
posed on the allocable expatriation gain
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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 deter-
mined (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, except that section
6621(a)(2) shall be applied by substituting
‘5 percentage points’ for ‘3 percentage
points’ in subparagraph (B) thereof.
‘‘(iii) DECREASE
FOR
TAXES
PRE-
VIOUSLY PAID.—The balance in the tax de-
ferred account shall be reduced—
‘‘(I) by the amount of taxes im-
posed by subparagraph (A) on any dis-
tribution to the person holding the
trust interest, and
‘‘(II) in the case of a person hold-
ing a nonvested interest, to the extent
provided in regulations, by the amount
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of taxes imposed by subparagraph (A)
on distributions from the trust with re-
spect to nonvested interests not held by
such person.
‘‘(D) ALLOCABLE EXPATRIATION GAIN.—For
purposes of this paragraph, the allocable expa-
triation 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 bene-
ficiary 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 distribu-
tion 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 subpara-
graph (A)(ii) shall be imposed on the
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trust and each trustee shall be person-
ally 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 expa-
triate 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 im-
posed by subparagraph (A)(ii), there is hereby
imposed a tax equal to the lesser of—
‘‘(i) the tax determined under para-
graph (1) as if the day before the expatria-
tion date were the date of such cessation,
disposition, or death, whichever is applica-
ble, or
‘‘(ii) the balance in the tax deferred ac-
count 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 expa-
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triate or the estate the amount of such tax im-
posed on the other beneficiary.
‘‘(G) DEFINITIONS AND SPECIAL RULES.—
For purposes of this paragraph—
‘‘(i) QUALIFIED
TRUST.—The term
‘qualified trust’ means a trust which is de-
scribed in section 7701(a)(30)(E).
‘‘(ii) VESTED
INTEREST.—The term
‘vested interest’ means any interest which,
as of the day before the expatriation date, is
vested in the beneficiary.
‘‘(iii) 
NONVESTED
INTEREST.—The
term ‘nonvested interest’ means, with re-
spect to any beneficiary, any interest in a
trust which is not a vested interest. 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.
‘‘(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 adjust-
ments, in order to ensure that gain is taxed
only once.
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‘‘(v) COORDINATION WITH RETIREMENT
PLAN
RULES.—This subsection shall not
apply to an interest in a trust which is
part of a retirement plan to which sub-
section (d)(2) applies.
‘‘(3) DETERMINATION OF BENEFICIARIES’ INTER-
EST IN TRUST.—
‘‘(A) DETERMINATIONS UNDER PARAGRAPH
(1).—For purposes of paragraph (1), a bene-
ficiary’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 pat-
terns of trust distributions, and the existence of
and functions performed by a trust protector or
any similar adviser.
‘‘(B) OTHER DETERMINATIONS.—For pur-
poses of this section—
‘‘(i) CONSTRUCTIVE OWNERSHIP.—If a
beneficiary of a trust is a corporation, part-
nership, trust, or estate, the shareholders,
partners, or beneficiaries shall be deemed to
be the trust beneficiaries for purposes of this
section.
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‘‘(ii) TAXPAYER RETURN POSITION.—A
taxpayer shall clearly indicate on its in-
come tax return—
‘‘(I) the methodology used to de-
termine 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 dif-
ferent methodology to determine such
beneficiary’s trust interest under this
section.
‘‘(g) TERMINATION OF DEFERRALS, ETC.—In the case
of any covered expatriate, notwithstanding any other provi-
sion of this title—
‘‘(1) any period during which recognition of in-
come or gain is deferred shall terminate on the day
before the expatriation date, and
‘‘(2) any extension of time for payment of tax
shall cease to apply on the day before the expatriation
date and the unpaid portion of such tax shall be due
and payable at the time and in the manner pre-
scribed by the Secretary.
‘‘(h) IMPOSITION OF TENTATIVE TAX.—
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‘‘(1) IN GENERAL.—If an individual is required
to include any amount in gross income under sub-
section (a) for any taxable year, there is hereby im-
posed, 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 tax-
able year ending on the expatriation date.
‘‘(2) DUE DATE.—The due date for any tax im-
posed 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 sub-
section (b) shall apply to the tax imposed by this sub-
section to the extent attributable to gain includible in
gross income by reason of this section.
‘‘(i) SPECIAL LIENS FOR DEFERRED TAX AMOUNTS.—
‘‘(1) IMPOSITION OF LIEN.—
‘‘(A) IN GENERAL.—If a covered expatriate
makes an election under subsection (a)(4) or (b)
which results in the deferral of any tax imposed
by reason of subsection (a), the deferred amount
(including any interest, additional amount, ad-
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HR 2 EAS
dition to tax, assessable penalty, and costs at-
tributable to the deferred amount) shall be a lien
in favor of the United States on all property of
the expatriate located in the United States (with-
out regard to whether this section applies to the
property).
‘‘(B) DEFERRED AMOUNT.—For purposes of
this subsection, the deferred amount is the
amount of the increase in the covered expatri-
ate’s income tax which, but for the election under
subsection (a)(4) or (b), would have occurred by
reason of this section for the taxable year includ-
ing the expatriation date.
‘‘(2) PERIOD OF LIEN.—The lien imposed by this
subsection shall arise on the expatriation date and
continue until—
‘‘(A) the liability for tax by reason of this
section is satisfied or has become unenforceable
by reason of lapse of time, or
‘‘(B) it is established to the satisfaction of
the Secretary that no further tax liability may
arise by reason of this section.
‘‘(3) CERTAIN RULES APPLY.—The rules set forth
in paragraphs (1), (3), and (4) of section 6324A(d)
shall apply with respect to the lien imposed by this