New expatriation tax rules passed by Congress; AICPA comments incorporated.

The Heroes Earnings Assistance and Relief Act of 2008 reflects many of the AICPA's comments to Congress. At press time, the act had passed the House and Senate and was expected to be signed by President Bush. It contains revised rules for taxing individuals who expatriate, alters the tax treatment of foreign subsidiaries of U.S. companies for employment tax purposes and increases penalties for failure to file returns.

The act imposes a mark-to-market regime for taxing gain of U.S. citizens and long-term U.S. permanent residents who expatriate. Most property of a covered expatriate would be treated as sold on the day before the expatriation at fair market value. Gains in...