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Considering moving out of the U.S.? Don't lie about your assets

Before Nov. 8, a lot of people proclaimed they would leave the country if a particular candidate won the presidential election. With the election over, many may be thinking about making good on their pledge -- maybe not too many from Wisconsin or Minnesota, but from elsewhere.

Indeed, early on the morning after the election, there were news reports about how Canada's website for immigration had crashed. The Canadian Broadcasting Corporation said some 200,000 visits were recorded at about 11 p.m. Tuesday. Half of them were from U.S. internet addresses.

Obviously the election is inspiring some to deeply consider moving north of the border or perhaps to somewhere tropical like New Zealand. But if you are considering such action, for whatever reason, be sure you are prepared to address issues that could result in tax litigation involving the IRS.

One example of the kind of thing that can happen can be seen in the experience of a former college professor of business. According to reports, this individual had expatriate standing because of triple citizenship in the U.S., U.K. and Israel. He ran afoul of the IRS by failing to disclose assets in offshore accounts and avoiding liability under the U.S. government's Expatriation Tax.

This tax, also called the exit tax, applies to any American citizen who chooses to renounce his or her citizenship. It also applies to anyone who might have long-term resident status and chooses to end that status for federal tax reasons.

The latter is what the one-time business professor allegedly did. He pleaded guilty to the charge. Because of his admitted wrongdoing, he now faces a possible five years in prison and financial penalties of at least $100 million.

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