The Nestmann Group, Ltd.
by Mark Nestmann: Mexico
Reforms Its Immigration Laws
There are several
ways that a U.S. citizen can expatriate; i.e., end their U.S. citizen
A U.S. citizen
loses nationality by voluntarily performing any of the following
acts with the intention of relinquishing U.S. nationality:
- Being naturalized
in a foreign country.
- Taking an
oath or similar declaration of allegiance to a foreign state.
or serving in, the armed forces of a foreign state if (A) such
armed forces are engaged in hostilities against the United States,
or (B) serving as a commissioned or non-commissioned officer.
- (A) Working
for a foreign government as a citizen of that government; or (B)
if such work requires an oath of allegiance or similar declaration.
- Making a
formal renunciation of nationality before a diplomatic or consular
officer of the United States in a foreign state.
- Making a
formal renunciation of nationality in the United States in wartime.
treason, attempting by force to overthrow, or bearing arms against,
the United States.
these actions require that you be at least 18 years old for them
to be effective.)
majority of individuals who voluntarily expatriate do so under options
#1 or #5. For instance, obtaining a second passport from another
country (#1) is an expatriating act. If you choose to expatriate
after doing so, that is your right under U.S. law.
In the past,
Ive generally advised clients who have used our services to
help them expatriate to avoid renouncing their citizenship (option
#5). The reason is an obscure law enacted in 1996 called the Reed
amendment. This law gives the U.S. Attorney General the discretion
to deny entry into the United States to a former U.S. citizen who
renounces U.S. citizenship in order to avoid U.S. taxation. Other
categories of excluded persons are those with communicable
diseases or other health conditions; those convicted of crimes involving
moral turpitude or illegal drugs or with multiple criminal convictions;
prostitutes; spies; terrorists; and draft evaders.
wording of the Reed amendment appears to apply only to those who
renounce U.S. citizenship, Ive recommended to our clients
that they choose another expatriation option other than renunciation.
Generally this is #1, in which you acquire a foreign nationality
and subsequently relinquish U.S. citizenship.
years after its original enactment, regulations under the Reed amendment
have not been promulgated, nor has its power ever officially been
invoked. One reason is that the law is so extreme that even that
paragon of civil liberties, former Attorney General Janet Reno,
questioned its constitutionality.
is that the law is likely obsolete. The tax law that discourages
expatriation no longer requires that a persons expatriation
be tax-motivated to come into effect. Anyone who meets
the criteria to be defined as a covered expatriate is
subject to it. Among other consequences, covered expatriates must
pay an exit tax on unrealized gains that exceed $636,000
(indexed annually for inflation). Your motivation for expatriation
havent stopped U.S. consular officials from occasionally denying
visa applications from former U.S. citizens, apparently using the
Reed amendment as legal authority for doing so. In another case,
U.S. customs officials used the Reed amendment as justification
to deny a former U.S. citizen permission to board a U.S.-borne jet.
Fortunately, the situation was quickly resolved in favor of the
former U.S. citizen seeking to re-enter the United States.
apparently made no effort to determine if the targeted individuals
had renounced or merely relinquished their U.S. citizenship.
In addition, the State Department helpfully lumps anyone who U.S.
citizen who expatriates into a single category, which it calls renunciants.
make the distinction Ive made between renunciation and relinquishment
largely irrelevant. As the procedure for renunciation is simpler,
and removes any question of intent, I no longer see any reason to
avoid this option.
Why might you
wish to give up U.S. citizenship? One possible reason, of course,
is that you no longer need to pay U.S. tax on your worldwide income
if you reside outside the United States. Another reason is that
youll find it much easier to invest or do business overseas
as a non-U.S. citizen.
My newly revised
report, The Billionaires Loophole, describes these
advantages, and outlines the procedure for giving up citizenship,
step-by-step. It also shows you practical ways to avoid the exit
tax and other consequences of being a covered expatriate.
Fortunately, you dont need to be a billionaire to benefit
from expatriation. To learn more,
click here. And, if youre ready to expatriate, or would
like to explore its suitability for your particular circumstances,
please contact me at [email protected].
with permission from The
Nestmann Group, Ltd.
Nestmann [send him mail]
is a journalist with more than 20 years of investigative experience
and is a charter member of The
Sovereign Societyís Council of Experts. He has authored over
a dozen books and many additional reports on wealth preservation,
privacy and offshore investing. Mark serves as president of his
own international consulting firm, The
Nestmann Group, Ltd. The Nestmann Group provides international
wealth preservation services for high-net worth individuals. Mark
is an Associate Member of the American Bar Association (member of
subcommittee on Foreign Activities of U.S. Taxpayers, Committee
on Taxation) and member of the Society of Professional Journalists.
In 2005, he was awarded a Masters of Laws (LL.M) degree in international
tax law at the Vienna (Austria) University of Economics and Business
© 2011 Mark
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