Individual Expatriations

US legislation that is very close to being enacted would impose a "mark to market" rule for certain expatriations. The rule would apply to certain US citizens that renounce US citizenship and certain "long-term" residents that cease being taxed as US residents. (H.R. 4520 and S. 1637).

The House bill, H.R. 4520, and the Senate bill 1637 have both been passed in their respective chambers, and are headed to a conference of the two chambers. Since the mark to market rules are identical in both bills, if the ultimate legislation includes an expatriation provision it will likely contain the mark to market rule. As usual, exceptions will apply.

Also, President Bush's proposed budget for the next fiscal year (commencing October 1, 2004) provides that, except to the extent provided in regulations, individuals who are subject to the existing "10 year" rule, will still be subject to US tax on their worldwide income if they are physically present in the US for more than 30 days in that calendar year.