Form 8854 Exit Tax Calculations and Reporting and IRS Relief Procedures for Certain Former Citizens

Determining Covered Expatriate Status, Navigating the Mark-to-Market Tax, and Expatriation Planning

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A


Conducted on Thursday, February 20, 2020

Recorded event now available

or call 1-800-926-7926
Program Materials

This webinar will provide tax advisers and compliance professionals with a practical guide to the basic calculations and reporting requirements needed for U.S. taxpayers and exiting green card holders. The panel will discuss the rules of Section 877A, how to determine if you are a covered expatriate, and strategies for minimizing the impact of expatriation taxes.

Description

The number of U.S. citizens expatriating from the United States has increased by an annual rate of 20% over the past several years. As part of Treasury's effort to eliminate tax avoidance through expatriation, Congress passed Section 877A, which imposes various taxes on U.S. taxpayers who renounce their citizenship or a long-held green card.

Section 877A creates an exit tax regime for individual U.S. taxpayers who renounce their citizenship, relinquished their U.S. citizenship when they become naturalized citizens of another country, or surrendered a green card held for a specified amount of time and whose income or net worth exceeds certain thresholds. The exit tax rules also apply to expatriates who fail to certify U.S. income tax compliance for the five years preceding the year of expatriation.

Expatriating taxpayers must file IRS Form 8854 Initial and Annual Expatriation Statement. This detailed and complex form requires taxpayers to declare a balance sheet reflecting U.S. property owned at the time of exit. For covered expatriates, the exit tax reporting form is a multi-year filing obligation. Late or incorrect filing of Form 8854 carries a steep $10,000 penalty. Tax advisers need to know the form requirements to avoid expensive tax consequences.

In 2019 the IRS issued Relief Procedures for Certain Former Citizens. Individuals with net assets of less than $2 million and tax liability of $25,000 or less for the year of expatriation and five prior years may be eligible for relief from taxes, penalties, and interest for these and previous tax years. The panel will briefly review this new procedure.

Listen as our experienced panel provides a comprehensive and practical guide to navigating the exit tax regime.

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Outline

  1. Expatriation overview
  2. Who is affected by expatriation laws? Who cares?
  3. Expatriation event and expatriation date
    1. Expatriation events for U.S. citizens
    2. Expatriation events for long-term residents
  4. Are you a covered expatriate?
  5. Income taxation of covered expatriates
    1. Specified tax deferred accounts
    2. Deferred compensation
    3. Distributions from nongrantor trusts
    4. Mark-to-market gain/loss recognition
  6. Transfer taxation for friends and relatives of covered expatriates
  7. Planning for expatriation
  8. IRS program for delinquent Form 8854 filings

Benefits

The panel will review these and other key issues:

  • Which taxpayers are subject to Section 877A and must file Form 8854
  • How to calculate the mark-to-market tax and what assets it applies to
  • Transfer tax for friends and relatives of covered expatriates
  • The types of deferred compensation subject to the exit tax
  • Which former citizens qualify for relief from prior taxes under IRS' recently released procedures
  • Strategies for avoiding or minimizing the taxes imposed under Section 877A

Faculty

Hodgen, Philip
Philip D. W. Hodgen

Attorney
Hodgen Law

Mr. Hodgen specializes in the international tax arena. He counsels clients on international tax issues arising when...  |  Read More

Rudd, Debra
Debra Rudd, CPA

Senior CPA
Hodgen Law

Ms. Rudd enjoys working with clients with a wide range of tax problems. Some of her favorite tax projects include...  |  Read More

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