United States tax: Internal Revenue Service (IRS) has issued guidance

The Internal Revenue Service has issued guidance under the mark-to-market expatriation rules (Internal Revenue Code section 877A) enacted in the "HEART" Act of 2008 that are applicable to certain high-net worth individuals with expatriation dates on or after 17 June 2008. Taxpayers may rely on the notice until future regulations announced in the notice are issued (subject to specific expatriation date considerations).

Among other issues, the notice includes a sample agreement on deferral of the tax imposed under section 877A; provides indexed values for gain recognition (amounts exceeding USD 626,000 for 2009) and the average annual net income tax liability test (USD 145,000 for 2009); and addresses related filing and reporting requirements.

The notice does not provide guidance on rules (under new section 2801) that impose a transfer tax on U.S. persons for gifts or bequests received on or after 17 June 2008 from an expatriating individual covered by section 877A. Related tax and reporting obligations, however, will be deferred pending issuance of separate guidance covering the transfer tax, with taxpayers provided a "reasonable" period of time after suchguidance is issued to meet tax and reporting obligations.