The Reed Amendment, also known as the Expatriate Exclusion Clause, created a provision of United States federal law () attempting to impose an entry ban on certain former U.S. citizens based on their reasons for renouncing U.S. citizenship. Notably, entry can be denied to persons who renounced their U.S. citizenship to avoid paying income taxes. The United States is one of two countries in the world that taxes its citizens' income earned abroad for citizens whose primary residence is abroad. The other country to do so is Eritrea.
The Amendment was named for its author Jack Reed, and passed into law as part of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996.
Though the Reed Amendment received strong bipartisan support during the committee stage, Democratic lawmakers including Daniel Patrick Moynihan later criticised it as inappropriate, embarrassing, and badly-drafted. Efforts at establishing procedures to enforce the amendment ran into early difficulties, and the executive branch never promulgated the implementing regulations. The Department of Homeland Security has stated that they cannot obtain the information required to enforce the amendment unless the former U.S. citizen "affirmatively admit[s]" his or her reasons for renouncing citizenship, and so from 2002 to 2015, only two people were denied entry to the United States on the grounds of the amendment.
Various Democratic and Republican politicians including Reed himself, Chuck Schumer, Chuck Grassley, Lamar S. Smith, and others have made many unsuccessful efforts to enact clearer definitions of the classes of former citizens to be banned from re-entry, and to enable executive agencies to share information with each other in order to enforce the ban.
Overview and legislative history
The Reed Amendment added the following text to the Immigration and Nationality Act of 1952's list of "Classes of aliens ineligible for visas or admissions", under the "Miscellaneous grounds" category:
(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.
This provision is located at INA 212(a)(10)(E) (). It was introduced by then-Representative Jack Reed (D-RI).
Reed first introduced his eponymous amendment during the debate on the Immigration in the National Interest Act of 1995 (). He stated that "there's no attempt by this legislation to prevent someone from renouncing their citizenship", but that people who did so for purposes of tax avoidance should "not be able to return to the United States". At the time, the issue of giving up U.S. citizenship for tax purposes was receiving a large amount of media attention, which also resulted in Congress adding provisions to the Health Insurance Portability and Accountability Act to broaden the "expatriation tax" () and to make public the names of people giving up U.S. citizenship. Reed's amendment ostensibly intended to address the issue of wealthy individuals who had renounced U.S. citizenship but then later attempted to obtain residency visas to return to the United States.; also available in PDF form from the website of the Government Printing Office. One example discussed was Kenneth Dart of Dart Container, who had become a citizen of Belize and then attempted to obtain a diplomatic visa to serve as Belize's new consul in Sarasota, Florida. Florida Congressmen Sam Gibbons and Dan Miller both wrote to the State Department to protest, and by October 1995, the government of Belize had withdrawn its nomination of Dart as consul. Wealthy people who renounced U.S. citizenship for tax reasons were estimated to comprise about a dozen of the roughly one thousand people per year who became ex-Americans.
The House Committee on the Judiciary approved Reed's amendment by a vote of 25 to 5, over objections from opponents of the law arguing that it was punitive, difficult to enforce, and gave too much discretion to the Attorney General. All 12 Democratic members of the committee, as well as 13 of the 18 Republican members, voted in support; the five opposers were Howard Coble (R-NC), George Gekas (R-PA), Carlos J. Moorhead (R-CA), Bill McCollum (R-FL), and Lamar S. Smith (R-TX). Another similar bill, the Illegal Immigration Reform and Immigrant Responsibility Act of 1996, contained the Reed Amendment in its originally-introduced version, and went on to be enacted on September 30, 1996.
Reactions
In the aftermath of IIRIRA's passage, Reed's fellow Democrat Daniel Patrick Moynihan made a speech on the Senate floor denouncing the Reed Amendment in harsh terms, saying: "The wording of the statute is embarrassing. How can an alien renounce U.S. citizenship? In what capacity would said alien do so officially? One assumes that a court of law would find the language incoherent and unenforceable ... This is the way we legislate at 5 o'clock in the morning 4 days before adjournment." Moynihan went on to state that it was inappropriate to use visa restrictions to enforce the tax law, called it a provision "which does not reflect well on a free society", and advocated for the alternative plan of modifying the expatriation tax to tax accrued capital gains instead.
Among various academics' and practitioners' criticisms of the law, Renee S. Liu describes it as "an inappropriate response" to the problem it sought to address, while Michelle Leigh Carter argues that it may "unconstitutionally infringe on the fundamental right to expatriate". Temple University law professor Peter Spiro also suggested that it conflicts with the Expatriation Act of 1868, as well as the guarantees in the Universal Declaration of Human Rights and the International Covenant on Civil and Political Rights that all people have the right to leave any country and to change their nationality.
Official and unofficial enforcement General issues The U.S. government has never issued regulations to implement the Reed Amendment. One issue with the enforcement of the law was that the Attorney General was never authorized to obtain the required information from the Internal Revenue Service in order to be able to make the determination whether a former American's loss of citizenship was motivated by tax reasons. This restriction arises from .
Michael G. Pfeifer of Caplin & Drysdale states that it is unclear whether the Reed Amendment is intended to apply to all persons "relinquishing" U.S. citizenship by committing an "expatriating act" with the intention of losing U.S. citizenship (all the acts listed in , including (1) obtaining nationality in a foreign country, (2) swearing allegiance to a foreign government, (3) serving in a foreign military under certain conditions, or (4) working for a foreign government), or only those who specifically "renounced" by making a formal renunciation of nationality under § 1481(a)(5) or (6). Mark Nestmann of The Nestmann Group states that despite non-enforcement of the Reed Amendment, he advises his clients to avoid making a formal renunciation of nationality, and instead to naturalize as a citizen of a foreign country and then obtain a U.S. Certificate of Loss of Nationality on the basis of having committed an "expatriating act" under § 1481(a)(1).
At ports of entry
According to retired IRS international tax counsel Willard Yates, the former Immigration and Naturalization Service and the IRS' Office of Associate Chief Counsel (International) worked together in an effort to create procedures to work around the limitation. Under their proposal, the Customs Service (now Customs and Border Protection) would have been required to check the names of all aliens appearing at U.S. ports of entry against the list of former United States citizens published by the IRS under the Health Insurance Portability and Accountability Act of 1996. Those who were identified as former U.S. citizens would be required to sign a waiver of their rights under § 6103; Customs would then fax the waiver to the IRS so that the IRS could provide Customs with tax information relating to the former citizen, in particular whether the former citizen met the asset thresholds of , and any private letter ruling regarding whether or not the former citizen had tax motivations for giving up U.S. citizenship.
However, there were various practical difficulties with these proposed regulations. Most notably, only one IRS agent would have been assigned to handling such requests; if a former U.S. citizen arrived on a weekend, he or she might have to be detained until Monday in order for border agents to make the required determination of tax motivation, as no IRS staff might be available to respond to the request for information on a weekend. Additionally, the IRS already had a large workload drafting other guidance for former citizens and green card holders under newly passed tax laws. Furthermore, DHS later indicated that even if the department were able to obtain tax information on former citizens, their agents "lack[ed] the expertise and resources to review tax filings meaningfully or engage in complicated tax liability analysis, involving both domestic and foreign tax law". In the end, the proposed regulations were never issued.
In June 2014, Reed used his position on the Senate Committee on Appropriations to insert language into the Senate report on one version of the Department of Homeland Security Appropriations Act, 2015 () directing DHS to report, within 90 days of the act's passage, on the steps it was undertaking to enforce the Reed Amendment, including a schedule for issuing guidance or regulations, if necessary. DHS' report, submitted to Congress in November 2015, stated that "there currently are no advisable options for altering enforcement of the inadmissibility ground against persons who do not affirmatively admit to renouncing their U.S. citizenship for the purpose of avoiding U.S. taxation". DHS considered implementing the Reed Amendment by presuming that a former citizen seeking entry had renounced U.S. citizenship for the purpose of avoiding taxation if he or she failed to pay the expatriation tax, obtained a windfall shortly after renunciation, or established residence in a tax haven, and placing the burden of proof on the individual to rebut this presumption; however, the department concluded that this procedure would have both many false negatives (failing to identify people who renounced for tax avoidance reasons) as well as many false positives (incorrectly denying entry to people who had other reasons for renouncing U.S. citizenship).
According to the DHS report, two individuals were denied admission to the United States on the grounds of the Reed Amendment between 2002 and 2015, while another five individuals "were identified as possibly inadmissible" on that basis but were not removed. Joel Paget of Ryan, Swanson & Cleveland states that one such denial (against a person who renounced before the enactment of the Reed Amendment) was reversed after the renunciant's lawyer submitted a legal brief to CBP.
In the visa application process