Overseas tax escape door may be closing

If you're planning to expatriate to escape U.S. taxes, you might want to make the move ASAP.

As soon as the HEART Act, which provides tax breaks for military personnel (and blogged about here), becomes law, American taxpayers who renounce their citizenship will be paying larger tax bills.

An article in today's Wall Street Journal notes that, some expatriates are "private-equity deal makers, hedge-fund managers or entrepreneurs who have made fortunes here, whether born in the U.S. or elsewhere.

Others are foreign-born, often academics, who have gained citizenship but are repatriating to their native countries after an extended stay."

Whatever the reason, once the bill is law, U.S. citizens and long-term residents who terminate their status will be taxed once on their unrealized gains, at current market rates. "Stock portfolios, real estate, art and most other types of assets will be captured by this new 'mark to market' tax," the WSJ reports.

Some experts, reports the paper, say the new law could deter some citizens or residents from leaving the U.S., since the benefits of doing so will be reduced. But others might be encouraged to expatriate becasue the new one-time tax is much simpler than the current tax process for such taxpayers.

You can read the full article here.