WHAT ARE THE REPORTING REQUIREMENTS AND TAX LIABILITY IF I AM SUBJECT TO THE EXPATRIATION TAX?
A. Reporting Requirements If the taxpayer is subject to the expatriation tax, Form 8854 must be filed for the year of termination of residency or citizenship and for each remaining year of the ten (10) year post expatriation period, whether or not tax is owed. Failure to file Form 8854 may result in a $10,000 penalty for each failure, unless it is shown that such failure is due to reasonable cause. In addition, the taxpayer must continue to file a U.S. tax return (1040NR) for the ten (10) year period. B. Additional Tax Liability Expatriation tax is an alternative tax regime. Under the regime, expatriates are subject to U. S. income, estate and gift tax on some items, in addition to items on which U. S. nonresidents are generally liable. In addition, if an expatriate returns to the United States for more than thirty (30) days in a year during the ten (10) year period in which the expatriate is subject to the tax, the expatriate will be treated for the tax year as a U. S. citizen or resi
