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Another way to dodge the tax man....renounce your Citizenship

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Another way to dodge the tax man....renounce your Citizenship

Post  Panda on Wed 11 Jul - 9:49

(CNN) -- Wealthy socialite and Grammy-nominated songwriter Denise Rich has renounced her U.S. citizenship and resides in London, her spokeswoman Judy Smith said Tuesday.

Rich's maiden name, Eisenberg, appeared on April 30 in the Federal Registrar's Quarterly Publication of Individuals Who Have Chosen To Expatriate, though she left in November 2011.

By handing in her American passport, tax lawyers say she is able to legally avoid paying significant taxes on her estate.

Rich, 68, is the ex-wife of billionaire commodities trader Marc Rich, who was pardoned in 2001 by then-president Bill Clinton for oil profiteering and tax evasion after he fled to Switzerland. The pardon was considered controversial because of Denise Rich's financial contributions to the Democratic Party and to the Clinton Library.

As of 2001, Denise Rich had made more than $1.3 million in political contributions to the Democratic Party since 1993, including $70,000 to Hillary Clinton's Senate campaign and $450,000 to the Clinton presidential library in Arkansas.

Investigators told CNN at the time that there were Secret Service logs showing that Rich went to the White House the last night of Bill Clinton's presidency.

Rich isn't the only high-profile American to abandon ship. Facebook co-founder Eduardo Saverin also appears on this list. He renounced his citizenship in May shortly before Facebook's initial public offering. They are two of many who have expatriated from the United States in the last few years.

"It may not be coincidental that some of these high profile expatriations are occurring when asset values have been relatively depressed," said tax attorney Dean Berry of Cadwalader, Wickersham, & Taft LLP.

But Rich is not completely off the tax hook. According to expatriation tax legislation passed in June 2008, she is considered a covered expatriate and will therefore have to pay an exit tax on the net gain calculations of her assets. It is still far less than she would have paid as a U.S. citizen with a large estate, however, according to tax attorneys.

"Expatriation makes the most sense when asset values are historically low and tax rates are historically low. Her timing may have had something to do with that," tax attorney David S. Miller of Cadwalader, Wickersham, & Taft LLP said.

In January, Rich put her Fifth Avenue Manhattan penthouse on the market, according to her real estate agency, Corcoran. The property, which boasts 20 rooms and 11 baths, is on sale for $65 million.

According to her spokeswoman, Rich renounced her citizenship because she wanted to live in London, where her long-time partner and her two daughters live.

Rich, a songwriter, has been nominated for Grammys three times. She has written for Patti LaBelle, Chaka Khan and Marc Anthony, among others. In 1999, Rich was nominated for a Grammy for the duet she penned for Mary J. Blige and Aretha Franklin, titled "Don't Waste Your Time."

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