Get the heck out of America. Oh, and pay up on your way out the door...

By Liz Zitzow - Once again congress has voted in favour of taxation without representation. The jolly wonderful Defenders of Freedom Tax Relief Act (HR 3997) gives a modest level of tax relief to our troops, and to pay for it, we’re going to gouge the very people that make our country great: immigrants. It includes the following onerous taxes on greencard holders who’ve held a greencard for more than seven years: If they “give up” their greencard, they’ll be walloped with a tax on the increase in their net worth in excess of $600,000. And if they want to give anything to their American friends or relatives after they’ve “given up” their greencard, their American friends and relatives will be walloped with a tax for receiving the gift. It’s called an exit tax, and it’s supposed to apply to US citizens giving up their US citizenship, but the way it’s drafted, greencard holders are caught in the net too.

The unfairness of this law isn’t in whether or not we choose to tax people who voluntarily leave the US. It’s the fact that for many greencard holders, “giving up” their greencard isn’t voluntary. With this new law, greencard holders who leave the US for an extended period of time for perfectly ordinary and legitimate family and business reasons risk being subject to this tax.

Why? Sure, we call it permanent residency, but greencards are revoked by the INS many times a year for failure to spend enough time in the US. That’s right. You have a greencard, you like living in the USA, but you’re Italian, so your boss sends you to Italy to handle some client problems there. One thing leads to another, you end up spending a couple of years there, and bingo, bango, no more greencard. Or perhaps your mum back in Hong Kong is ill, so you end up going there to help her through hospice and home care. Well, she hangs on for far longer than the doctors predicted, and along the way you end up losing your greencard. Is this criminal behavior? No. So why are they being tarred and feathered?

It’s not fair. If you aren’t already cautions about greencards, I’d think twice before advising clients to get greencards. Lobby your congressperson to remove greencard holders from this law. If this law does manage to pass without removing this unfair tax, lobby your congressperson to vote a companion bill that removes the INS requirement for long-term greencard holders to remain in the USA. That way, they can leave without fear that they’ll lose their card and lose their US assets to the exit tax.

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Steve Knowles has spent 25 years in business and practice in the UK, but he also worked in the states and the years haven't dulled his way of seeing an alternative view to everyone else, and every day is a new adventure.

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Joel M. Ungar, CPA is a lifelong resident of the Detroit area and a graduate of The University of Michigan. He is a principal with Silberstein Ungar, PLLC, a Top 15 auditor of SEC public reporting companies.

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Allan Boress, CPA, with over 25 years as a practitioner and consultant to the accounting profession. Mr. Boress is the author of 12 published books in 6 different languages, including a best-seller, The "I-Hate-Selling" Book.

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Sandra Wiley, COO and Shareholder, is ranked by Accounting Today as one of the 100 Most Influential People in Accounting as a result of her prominent role as an industry expert on HR and training as well as influence as a management and planning consultant. She is also a founding member of The CPA Consultant's Alliance. Sandra is a certified Kolbe™ trainer who advises firms on building balanced teams, managing employee conflict and hiring staff.
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