You may have noticed an uptick in U.S. citizen clients who want to formally expatriate from the United States. They do so for various reasons, including dissatisfaction with the political climate and economic trends, as well as to pursue international opportunities. But as Joan K. Crain notes in her article, “Expatriation: Look Before You Leap!” p. 46, many U.S. citizens and their advisors aren’t aware of the challenges that arise when severing ties with the United States. Her article goes on to explain how practitioners can help clients navigate these complex waters and mitigate future liabilities.
Expatriation complexities aren’t the only challenges faced by internationally focused clients. Another is the steep penalties for failing to report foreign accounts via the Foreign Bank and Financial Accounts (FBAR). Until recently, courts were less open to arguments contesting these penalties. However, some court rulings (including one by the U.S. Supreme Court) indicate a shift in the legal landscape. For example, the Court in Bittner v. United States held that under the Bank Secrecy Act, a taxpayer’s failure to file a compliant FBAR should be treated as one violation—not as a separate violation for each foreign account not timely reported. “Shifting Currents in FBAR Penalties,” p. 68, by Rita M. Ryan reviews these court rulings.
Those practitioners counseling clients based in the United States have their own issues to contend with, one of which is the upcoming sunset of the high estate and gift tax exemption. In his article, “Racing Off Into the Sunset,” p. 28, Stephen L. Ham IV explores the need to make late allocations of generation-skipping transfer (GST) tax to GST non-exempt or partially exempt trusts before the sunset.
