The United States has respected citizenship for those born on U.S. soil, since the U.S. Supreme Court ruled on the issue back in 1898 in United States v. Wong Kim Ark.  We know that notwithstanding stare decisis, SCOTUS sometimes overturns its prior precedent.  See,  Loper Bright Enterprises v. Raimondo (2024) overturning  Chevron U.S.A. Inc. v. Natural Resources Defense Council (1984);  Dobbs v. Jackson Women’s Health Organization (2022), overturing Roe v. Wade (1973); and Brown v. Board of Education (1954) overturning  Plessy v. Ferguson (1896).  

• President’s Executive Order 14160: Titled, Protecting the Meaning and Value of American Citizenship

It provides in relevant part:

Sec. 2. Policy. (a) It is the policy of the United States that no department or agency of the United States government shall issue documents recognizing United States citizenship, or accept documents issued by State, local, or other governments or authorities purporting to recognize United States citizenship, to persons: (1) when that person’s mother was unlawfully present in the United States and the person’s father was not a United States citizen or lawful permanent resident at the time of said person’s birth, or (2) when that person’s mother’s presence in the United States was lawful but temporary, and the person’s father was not a United States citizen or lawful permanent resident at the time of said person’s birth.

(b) Subsection (a) of this section shall apply only to persons who are born within the United States after 30 days from the date of this order.

• SCOTUS Announced it Will Hear Arguments on May 15, 2025

See, SCOTUS order  – here, and reported here: Birthright citizenship cases to be heard at the Supreme Court in May

The Congressional Research Service has an excellent summary article it prepared in 2018, titled – The Citizenship Clause and “Birthright Citizenship”: A Brief Legal Overview (1 Nov. 2018).   This report was drafted when President Trump during his first term questioned the validity of “birthright citizenship”.  Below is an excerpt from that 2018 article, relevant to the:

Under federal law, nearly all people born in the United States become citizens at birth. This rule is known as “birthright citizenship,” and it derives from both the Constitution and complementary statutes and regulations. The Citizenship Clause of the Fourteenth Amendment states that “[a]ll persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.” The Immigration and Nationality Act (INA), in turn, declares certain persons to be U.S. citizens and nationals at birth. INA § 301(a) more or less tracks the Citizenship Clause in stating that “a person born in the United States, and subject to the jurisdiction thereof” is a “national[] and citizen[] of the United States at birth.” (The INA also extends citizenship at birth to various persons not protected by the Citizenship Clause, such as those born abroad to some U.S. citizen parents.) Federal regulations—including those that govern the issuance of passports and access to certain benefits—implement the INA by providing that a person is a U.S. citizen if he or she was born in the United States, so long as the parent was not a “foreign diplomatic officer” at the time of the birth.

The report goes on to explain –

The weight of current legal authority suggests that these executive and legislative proposals to restrict birthright citizenship would contravene the Citizenship Clause. At least since the Supreme Court’s decision in the 1898 case United States v. Wong Kim Ark, the prevailing view has been that all persons born in the United States are constitutionally guaranteed citizenship at birth unless their parents are us born individuals foreign diplomats, members of occupying foreign forces, or members of Indian tribes. In Wong Kim Ark, the Court held that a man born in the United States in 1873 to parents who were Chinese nationals acquired citizenship at birth under the Fourteenth Amendment. The parents were ineligible to naturalize under the law of the time, but they had established “permanent domicile and residence in the United States.” The Court reasoned that the Citizenship Clause should be “interpret[ed] in light of the common law” and grounded its holding in the common law principle of jus soli or “right of the soil.” Pursuant to that principle, “every child born in England of alien parents was a natural-born subject, unless the child of an ambassador or other diplomatic agent of a foreign state, or of an alien enemy in hostile occupation of the place where the child was born.”

• Tax Expatriation Consequences –

As to “tax expatriation” – of these individuals?  I suspect these babies (i.e., those born after 30 days from the executive order; on or after February 19, 2025) will have bigger issues to worry about other than their U.S. tax issues if SCOTUS rules against them.

Did USCs Born in the U.S. (not to USC Parents) – Accidentally “Expatriate” for U.S. Tax Purposes? – per  President Trump issued Executive Order (EO) 14160

Will the “gold card” sell to ultra high net worth investors around the world who want U.S. citizenship (“USC”)?  What are the tax costs of USC?  * About the Author:  Patrick W. Martin

President Trump again announced on April 3, aboard Air Force One his plan:

See, the New York Post –  Trump unveils $5 million ‘gold card’ for rich migrants emblazoned with his image

Whether the U.S. adopts a new “Gold Card” “For $5 million [that] we will allow the most successful job-creating people from all over the world to buy a path to U.S. citizenship,” is up to the U.S. government.

* Congressional Powers:   Article I, Section 1, and Article I, Section 8 of the U.S. Constitution. 

Congress can amend Title 8 and include a new “Gold Card” option.

Current law provides the EB-5 visa as one path towards a “green card” that ultimately can lead to U.S. citizenship through naturalization.

President Trump presented at his March 4th speech to a joint session of Congress, explaining the concept:   “It’s like the green card, but better and more sophisticated. And these people will have to pay tax in our country.”

* Reducing the Deficit:  $1.31 trillion more than Gov’t has collected in fiscal year (FY) 2025

Sounds like a panacea to help the U.S. federal deficit problem?  If 100,000 of these “Gold Cards” were sold for $5M each, and these funds were paid directly over to the federal government, that would raise $500 billion dollars.  If 1 million were sold, that would be $5 trillion dollars to use to pay down the deficit (running annually at far greater than $1 trillion dollars since 2019).   

To put that into perspective, the EB-5 visa that also leads to a “green card” that can further lead to U.S. citizenship through naturalization has an annual visa limit of about 10,000.  See, USCIS’s article – (16 Aug 2024) – Annual Limit Reached in the EB-5 Unreserved Category  There have been multiple years where the annual visa limit was not met. Prior to 2015, the 10,000 visa limit was never met and in several years there were less than 500 EB-5 visas issued annually.

• EB-5 visa – Leading to a Green Card

There have been less than 150,000 EB-5 visas issued over the last 35 years since its adoption in 1990.   Is it realistic to be able to “sell” even ten thousand $5M gold visas annually, when the “green EB-5 visa” costs $800,000 and has had less than 150,000 issued in nearly 35 years?

Plus, see the U.S. Department of State’s Immigrant Visa Statistics, including the – Annual Numerical Limits for Fiscal Year 2025  for more details about the EB-5 visa program statistics.

• • Equity Investment for EB-5 visa – $800,000 (Does NOT go to the Government)  

The total required equity investment amount for an EB-5 visa in the qualifying project, is only $800,000 (if in a “TEA”).  See, EB-5 Immigrant Investor Program, as published by the U.S. Citizenship and Immigration Services (USCIS).  See, USCIS’s Chapter 2 – Immigrant Petition Eligibility Requirements.  It used to be only $500,000 (1/10th of $5M).  A TEA is a  targeted employment area (“TEA”) that meets specific requirements under the law.  If the capital investment is not in a TEA, the required minimal capital investment amount is $1,050,000 that increases in January 1, 2027 and each 5 years thereafter.  Still about 1/5th the cost of a “gold visa”.

• U.S. Estate and Gift Tax Consequences for U.S. Citizens and those with a Green Card (“Gold Card”?)

Finally, maybe the biggest impact on who wants an investor visa that leads to U.S. citizenship depends largely upon the U.S. income tax and U.S. estate and gift tax consequences.  There are many tax implications.  See, my case  Aroeste v United States – Order Nov 2023, that was appealed to the 9th Circuit by the Office of Solicitor General (DOJ).  U.S. District Court ruled in favor of green card holder. 

Ultra high net worth individuals around the world want to know the tax costs of U.S. citizenship.  Importantly, new regulations were issued in January 2025 regarding the tax consequences of renouncing USC and triggering the U.S. “expatriation tax” that is the primary focus of these materials.  See, these regulations – here:  Guidance Under Section 2801 Regarding the Imposition of Tax on Certain Gifts and Bequests From Covered Expatriates

These tax consequences of the “gold visa” will be explored in more detail in Part II.

For a more detailed discussion of tax issues tied to pre-immigration to the U.S., see my chapter of the tax implications of immigration to the U.S. (as opposed to emigration from it).   I wrote the tax chapter in the latest edition of the American Immigration Lawyers Association (“AILA’s) –  Immigration Options for Investors & Entrepreneurs (out of print) titled Key U.S. Tax Considerations for Investor Visa Applicants by Patrick W. Martin. 

Depending upon the factual circumstances of each individual, they may be able to benefit from the international tax treaty law articulated by the U.S. Federal District Court in Aroeste v United States – Order (Nov 2023).  Future posts will explore the legal relevance of some of the following questions to consider:

• • Does the individual reside in one of the 67 countries affected by a U.S. income tax treaty with the United States?  See, DHS Report: 3.89M Emigrated LPRs — Who Falls Under the Tax Treaty Escape Hatch?

• • Does the individual have a “green card” they never formally abandoned (has it “expired” on its face; of the document)?

• •  Was no USCIS Form I-407, Record of Abandonment of Lawful Permanent Resident filed with the U.S. federal government?
• • If one was filed, when, from where, and how was it filed?
• • Has the individual affirmatively filed USCIS Form – I-90, Application to Replace Permanent Resident Card (Green Card)?
  • 
    

    

• • Has the individual filed any U.S. federal income tax returns since leaving the United States?
• • Was a professional tax return preparer hired or consulted about the filing of a federal income tax return (e.g., a certified public accountant, an enrolled agent, a full time tax return preparer,  ta tax attorney, etc.)?

• • Has the individual been filing IRS Form 1040 Resident Tax Returns in the same way Mr. Aroeste was filing – based upon the advice (that turned out to be erroneous -although given in good faith) from their U.S. tax return preparer?
    

    

• • Has the individual been filing IRS Form 1040NR, Non-Resident Tax Returns?  If so, when and how?

• • Has the individual ever filed IRS Form 8854, Initial and Annual Expatriation Statement?  If so, when and how (was it attached to a federal tax return 1040 or 1040NR)?

• • Has the individual ever filed IRS Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b)?
• • What steps if any have been taken to notify the U.S. federal government (irrespective of the agency) regarding their physical residency outside the United States?
    

 There are important unintended tax consequences that can befall individuals here:  see, Oops…Did I “Expatriate” and Never Know It: Lawful Permanent Residents Beware! International Tax Journal, CCH Wolters Kluwer, Jan.-Feb. 2014, Vol. 40 Issue 1, p9).

This information is intended to provide general information about tax expatriation legal concepts under U.S. law to help readers better understand often very complex issues within the U.S. international tax field for citizens and lawful permanent residents.  General legal information is not the same as legal advice, that is, the concrete application of law to a specific case with unique and particular facts. 

Legal advice also should include strategic planning and advice to a particular case.  A legal adviser should be able to assist an individual in taking important decisions and steps, related to the specific goals of the individual, while understanding the legal and tax consequences of each step.  There are a range of consequences that the “U.S. tax expatriation” laws impose upon different types of transactions, transfers, reorganization of assets, etc.  None of these items are discussed in this Tax-Expatriation.com   This is not legal advice.

There have been numerous posts about how Lawful Permanent Residents (“LPRs”) who have not formally abandoned their green card might have adverse U.S. tax consequences as part of the U.S. “expatriation tax.”

Tax Expatriation: The Numbers Affected Are Far Greater for Lawful Permanent Residents vs. Citizens

See for instance – 

Timing Issues for Lawful Permanent Residents (“LPR”) Who Never “Formally Abandoned” Their Green Card

Also, in 2014, I wrote an article on the specific issues that later became part of case law in the federal district court nearly a decade after this original post –  Aroeste v. United States, Case No. 22-cv-00682-AJB-KSC (2023), appealed to the 9th Circuit and dismissed by the DOJ with prejudice in 2024.  

See, Oops…Did I “Expatriate” and Never Know It: Lawful Permanent Residents Beware! International Tax Journal, CCH Wolters Kluwer, Jan.-Feb. 2014, Vol. 40 Issue 1, p9.

The U.S. Treasury issued new Regulations that can impact LPRs who have previously filed U.S. 1040NR tax returns under an applicable income tax treaty.   On December 13, 2016, the these final regulations require foreign-owned, single-member U.S. limited liability companies (“SM-LLCs”) that are treated as disregarded entities for U.S. tax purposes to file an information return to report certain transactions. These  Treasury Regulations, 26 CFR § 1.6038A-1(c) require these foreign-owned SM LLCs to be treated as if they are a separate domestic “C” corporation specifically for reporting purposes.

Treasury Regulations, 26 CFR § 1.6038A-1(c) require foreign-owned SM LLCs to be treated as if they are a domestic “C” corporation for reporting purposes (Form 5472)

An individual who is a LPR can fall into this category in certain circumstances; namely where they cease to be a “U.S. person” under IRC Section 7701(b)(6).  See, IRS Form 5472 directly here –

Accordingly, the regulations treat such SM-LLCs as domestic corporations and require them to file IRS Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business. The regulations also require these SM-LLCs to maintain records with respect to the reported information.

The Treasury Department announced 776 renunciations, which brings the 2014 total to 2,353, on track to match last year’s record breaking 2,999 citizens who renounced.

US Citizen Renunciations Q1 thru Q3 – 2014

See, Will Qtr 2 Exceed Qtr 1 – 2014, Record of USC Renunciations?

As has been mentioned previously, this list does not include lawful permanent residents who have terminated their LPR status for purposes of these tax law provisions. For further reading on LPRs, see, Oops…Did I “Expatriate” and Never Know It: Lawful Permanent Residents Beware! International Tax Journal, CCH Wolters Kluwer, Jan.-Feb. 2014, Vol. 40 Issue 1, p9

Maybe the LPR list represents several hundred thousands of individuals? The current total estimated number of LPRs is 13.3 million for the year 2012 as reported by the Office of Statistics of the DHS. See, Estimates of the Legal Permanent Resident Population in 2012

There are two distinct ways that LPRs can terminate their tax residency status. First, through the formal immigration law process typically involving filing Form I-407.  See, Who is a “long-term” lawful permanent resident (“LPR”) and why does it matter?

Second, they can terminate their LPR status, for tax purposes, by merely meeting the statutory requirements of IRC Section 7701(b)(6). This simply requires the individual to move from the U.S. and live in a country with a U.S. income tax treaty and meet the other two statutory requirements.

This statutory language has three tests for when the individual is no longer a LPR for federal tax purposes:

1. The individual is treated as a resident of a foreign country under the provisions of a tax treaty;
2. The individual does not waive the benefits of the treaty, and
3. Notifies the Secretary of the commencement of such treatment.

See, LPR status can be abandoned for tax purposes (since 2008 tax law changes) by merely leaving and moving outside the U.S. [and filing a U.S. tax return]  in some cases?

The U.S. federal government has made the life of world travelers much simpler over the last few years, for those who have signed up and participate in one of the “trusted traveler programs.“

Entry into the U.S. through customs and immigration checkpoints is fast tracked and explained in more detail below.

Also, a related program that provides much convenience to travelers is the Pre-TSA.  This is a program described on the government website as –

What does TSA Pre?™ mean for travelers?

Obtaining approval for Pre-TSA.  is facilitated if an individual has already been approved for one of the “trusted traveler programs.”

You can typically avoid long lines of travelers who do not have such clearances and it provides a more convenient way of traveling in and out of the U.S.

However, once a USC renounces, they can no longer travel on their previous status as a USC under a “trusted traveler program”  where they previously applied and represented they are a USC.

Once a person ceases to be a USC, they can no longer represent themselves to be a citizen.  Indeed, there is a specific statutory provision that holds that any person falsely claiming citizenship can be found to be inadmissible for entry into the U.S.  8 U.S. Code § 1182 – Inadmissible aliens

Accordingly, you should not continue to travel on your existing/old “trusted traveler program”  documents.  You will need to re-apply as a non-USC.  More details on the Global Entry program are provided below from the government’s own website –

Global Entry

What is Global Entry?

Global Entry is a U.S. Customs and Border Protection (CBP) program that allows expedited clearance for pre-approved, low-risk travelers upon arrival in the United States.

How Does the Global Entry Program Work?

Global Entry is a U.S. Customs and Border Protection (CBP) program that allows expedited clearance for pre-approved, low-risk travelers upon arrival in the United States. Though intended for frequent international travelers, there is no minimum number of trips necessary to qualify for the program. Participants may enter the United States by using automated kiosks located at select airports.

At airports, program participants proceed to Global Entry kiosks, present their machine-readable passport or U.S. permanent resident card, place their fingertips on the scanner for fingerprint verification, and make a customs declaration. The kiosk issues the traveler a transaction receipt and directs the traveler to baggage claim and the exit.

Travelers must be pre-approved for the Global Entry program. All applicants undergo a rigorous background check and interview before enrollment.

SAFE TRAVELS!

Probably the most misunderstood concept in the U.S. tax expatriation law provisions is Section 877(a)(2)(C) for several reasons.

1.  People of modest means with modest to little income and little to no assets can fall into this category.

2.  Most individuals think the mark-to-market tax upon expatriation is only applicable to rich, wealthy or otherwise individuals with high levels of income.  See, Accidental Americans” – Rush to Renounce U.S. Citizenship to Avoid the Ugly U.S. Tax Web” International Tax Journal,CCH Wolters Kluwer, Nov./Dec. 2012, Vol. 38 Issue 6, p45

3.  Lawful permanent residents (“LPRs”) can inadvertently fall into this category without doing anything, other than living principally in a country outside the U.S., which has a U.S. income tax treaty. See, Oops…Did I “Expatriate” and Never Know It: Lawful Permanent Residents Beware! International Tax Journal, CCH Wolters Kluwer, Jan.-Feb. 2014, Vol. 40 Issue 1, p9.  At the end of this post is a list of the countries with U.S. income tax treaties.

4.  Few individuals understand exactly what must be included and reported in IRS Form 8854 to be able to satisfy the certification requirement above.  For more details, see What are the consequences of becoming a “covered expatriate” for failing to comply with Section 877(a)(2)(C)?

The relevant provisions of Section 877(a)(2)(C) are highlighted below:

• This section shall apply to any individual if—
• (A) the average annual net income tax . . . is greater than $124,000,
• (B) the net worth of the individual as of such date is $2,000,000 or more, or
• (C) such individual fails to certify under penalty of perjury that he has met the requirements of this title for the 5 preceding taxable years or fails to submit such evidence of such compliance as the Secretary may require.

Failure to certify truthfully about compliance with U.S. tax law for 5 years, as set forth above in the statute, means the individual necessarily will be a “covered expatriate.”   Does this mean that if a U.S. citizen who renounces citizenship or a LPR who abandons their green card, will necessarily be a “covered expatriate” if they fail to follow IRS Notice 2009-45 “Guidance for Expatriates Under Section 877A”?

What steps will the IRS take if someone intentionally does not comply with the certification requirement?  Will they become a target of a criminal investigation, and under what circumstances?  What could be the focal point of IRS Criminal Investigations of Former U.S. Citizens and Lawful Permanent Residents?

There are many pending and open questions not answered by current law, as the U.S. Treasury has yet to publish regulations under Section 877A, 877 or 2801.

APPENDIX – Countries with Income Tax Treaties with the United States

A record number of U.S. citizenship renunciations in 2013, some 3,000, begs the question:  “Why are so many U.S. citizens renouncing?”

???????????????? ?Please click here to view the above in Chinese.?

The U.S. Treasury Department released the number of U.S. citizens who renounced for 2013.  The Federal Registry reported some 631 U.S. citizens who renounced for the quarter; for a total of 2,999 former citizens for the entire year of 2013.

Click here for complete details of the registry

See also more information in this blog under the  “Government Resources” section for more details.

???????????????? ?Please click here to view the above in Chinese.?