Yes, a covered expatriate may make an irrevocable election (“deferral election”) with respect to any property deemed sold to defer the payment of the additional tax attributable to any such property. This election is made on an asset-by-asset basis. To make the deferral election the expatriate must provide adequate security and must irrevocably waive any right under any U.S. treaty that would preclude assessment or collection of any tax imposed. Adequate security in this context means (1) a bond that is furnished to, and accepted by, the Secretary, that is conditioned on the payment of the tax (and interest thereon), and that meets the requirements of IRC section 6325, or (2) another form of security for such payment (including letters of credit) that meets such requirements as the Secretary may prescribe. If the IRS subsequently determines that the security provided for the deferred tax no longer qualifies as adequate security, the deferred tax and interest will become due immediately, unless the expatriate corrects such failure within 30 days after notification by the IRS.
Each covered expatriate who makes a deferral election must enter into a tax deferral agreement with the IRS. Requests to enter into a tax deferral agreement must include (1) two signed copies of the template agreement, (2) a description of the asset(s) with respect to which the covered expatriate is electing to defer tax, (3) an attachment showing the calculation of the tax attributable to such asset(s), (4) documentation of the proposed security offered to secure the deferral of tax, (5) a copy of an agreement with a U.S. agent, and (6) a copy of the covered expatriate’s return for the taxable year that includes the day before the expatriation date. Requests should be sent to the following address:
Internal Revenue Service PO Box 331 Drop Point S607-F8854 Bensalem, PA 19020
