The 1996 Reed Amendment – The Immigration Law with “No Teeth” and “No Bite”

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U.S. immigration lawyers around the world often cite the 1996 revision in the immigration law that was introduced by then Representative Reed (now Senator Reed).  The provision found at INA 212(a)(10)(E) (8 U.S.C. § 1182(a)(10)(E)) is often referred to as the Reed Amendment.  It provides as follows:

(E) Former citizens who renounced citizenship to avoid taxation
Any alien who is a former citizen of the United States who officially renounces United States citizenship and who is determined by the Attorney General to have renounced United States citizenship for the purpose of avoiding taxation by the United States is inadmissible.

Not surprisingly, immigration lawyers often become alarmed at such provision, if their client can be deemed “inadmissible”; i.e., not be allowed back into the U.S.  What if you want to travel to the U.S.?

Fortunately, the Reed Amendment is –

(a) now irrelevant under the current “mark-to-market” expatriation tax provisions, since the motivation of why someone renounces their U.S. citizenship, be it due to the complexity of the U.S. tax laws or otherwise, is not applicable any longer (i.e., the term tax “avoidance” does not appear anywhere in Section 877A); and

(b) has never been invoked by the federal government to bar reentry of a former U.S. citizen in its history (even when it was relevant from the mid 1990s through the following two decades).

The subjective test of “tax avoidance” that existed in the 1996 tax expatriation provisions were eliminated in 2004.

There are a number of legal reasons why the government has never invoked this provision, notwithstanding calls by influential Senators in some cases to have its provision invoked.  See, Reed Asks Homeland Security to Enforce Law on Ex-Citizen Tax

Hence, it is a provision with “no teeth” and “no bite.”

For more details, see

GAO Report – (Year 2000) Tax-Motivated Expatriation: Enforcement of IRS and Immigration Act Provisions

Joint Committee Reports – 2003 Report re: Section 877 Revisions (550 page report)

Joint Committee Reports – 2008 Report re: HEROES Act – Mark to Market Regime – New Section 877A (55 pages)

 

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