🧮 40% Tax, 60 Pages of Rules, 100% on the U.S. Recipient

Section 2801 has quietly sat in the Code since 2008. Now, with final regulations and the release of Form 708, it has become a very real 40% tax risk for U.S. beneficiaries of former citizens and long‑term green card holders.

Unlike the “normal” estate and gift tax system—where the donor or the estate usually bears the liability—this regime squarely targets U.S. recipients of “covered gifts” and “covered bequests” from “covered expatriates.”

⏰ In this issue, I break down what’s changed and why it matters:

•✅ How the final §2801 regulations and Form 708 turn a dormant rule into an enforceable inheritance‑style tax on cross‑border wealth.

•✅ The current definition of a “covered expatriate,” including the income‑tax, net‑worth, and certification tests that can turn a former U.S. person into a permanent problem for their U.S. heirs.

•✅ What counts as a “covered gift” or “covered bequest,” how the 19,000‑dollar annual buffer works, and which transfers (charitable, marital, already‑taxed) fall outside the regime.

•✅ Who actually has to file Form 708 (U.S. individuals, domestic trusts, and certain foreign trusts), how the timing rules work, and where the small‑transfer exception really does—and does not—help.

•✅ Why foreign‑trust elections and “migrated” trusts can radically change who writes the check to the IRS and when that liability crystallizes.

⏰ The main Substack article walks through these points in plain English and is open to all readers.

For paid subscribers, I’ve included:

•✅ Detailed planning examples (including common family structures with foreign trusts).

•✅ Practical Form 708 timelines and checklists you can use in client meetings.

•✅ A deeper dive on protective filings, documentation standards, and how to manage the rebuttable presumption when donors will not cooperate.

If you advise global families, serve as a trustee, or have clients with expatriate relatives, you’ll want to understand this new landscape before the first IRS notice arrives.

🔗 Dive into the full breakdown here: 🧮 40% Tax, 60 Pages of Rules, 100% on the U.S. Recipient