The following is a guest blog post by Jacob Stein, a partner with Klueger & Stein, LLP in Los Angeles. Mr. Stein practices international taxation and structures cross-border business transactions.
An increasing number of Americans are opting for an expatriate life. In fact, as MSN reports, more Americans than ever have renounced their U.S. citizenship in the first quarter of 2015. Moving abroad and getting a new citizenship may cut off the U.S. government’s ability to recover taxes from the expat because the U.S. will no longer have personal jurisdiction over that person. That’s where the “exit tax” comes into play—the expatriation rules of the Internal Revenue Code seek to extract a tax while the U.S. still has jurisdiction.