Senators Announce Crackdown on Saverin

It looks like Sens. Schumer and Casey are moving to make sure that Eduardo Saverin really does pay a pretty hefty price for ditching his US citizenship to duck US taxes.I’ve been writing about this for the last few days. And yesterday we learned that there are immigration laws in place which bar former US citizens who bagged their citizenship from ever re-entering the country. In other words, by renouncing his citizenship to dodge US taxes Saverin, whether he knew it or not, is banned for life from reentering the USA.

Only it’s not quite that simple. In talking to a number of readers yesterday who are either consular officials or immigration or tax attorneys, I learned that the particular law has actually never been enforced. And the relevant agencies haven’t even put in place clear procedures to enforce it.

But, here’s the thing: renouncing citizenship to avoid taxes has grown dramatically in the last half dozen years. And there’s probably never been another example with such a massive price tag — $67 million — or involving someone so well known in the popular culture. So it seemed to me that this might be the first time the law was actually put into effect. And it seems that may be right.

This morning Sens. Schumer and Casey are holding a press conference at 11 AM to, as the release puts it …

unveil a comprehensive plan to respond to Facebook co-founder Eduardo Saverin’s scheme to renounce his U.S. citizenship in order to dodge taxes on profits he is expected to collect when the social-networking company goes public.

Saverin, a partial owner of Facebook, has lived in Singapore since 2009 and renounced his U.S. citizenship in September. The avoidance scheme could reportedly help him duck up to $67 million in taxes since Singapore, unlike the U.S., has no capital gains tax. That amount could increase even further as Facebook’s stock price rises.

The senators will call Saverin’s move an outrage and describe a plan to re-impose taxes on expatriates like Saverin even after they flee the United States and take up residence in a foreign country. Their plan would also bar individuals like Saverin from reentering the country.