“The primary purpose of the Heroes Earnings Assistance and Relief Tax Act of 2008 is to provide a range of tax breaks for veterans. But the law also imposes the first-ever “exit tax” on even moderately wealthy expatriates. I predicted Congress could pass an exit tax bill like this over a year ago, and now it has.
Once President Bush signs this bill, the law will require future expatriates to pay a tax on all unrealized gains of their worldwide estate, including most offshore trusts. And the tax applies not only to former U.S. citizens, but also to long-term green card holders who have resided in the United States for at least eight of the 15 years before they expatriate. (Fortunately, long-term residents can “opt out” of the exit tax, as I’ll explain in a moment.)
How are you supposed to pay the tax without selling your assets? That’s your problem – not the IRS’s – although the bill permits deferral in certain circumstances….”