Forced Departure of Denaturalized Individuals Results in Inescapable Exit Tax
In a shift of immigration enforcement, the U.S. Department of Justice, under President Donald Trump and Attorney General Pam Bondi, is aggressively pursuing denaturalization cases as part of a broader immigration agenda [1]. However, it is essential to understand that denaturalized U.S. citizens are not subject to U.S. tax expatriation rules, which are specifically designed for voluntary relinquishment of citizenship.
The expatriation tax, primarily applied to individuals who voluntarily renounce or relinquish their U.S. citizenship, requires filing Form 8854 and certifying tax compliance for the five years prior to renunciation [1]. This tax regime, embodied in IRC Section 877A, was enacted in 2008 to deter wealthy Americans from renouncing citizenship to avoid taxes.
In contrast, denaturalization is an involuntary process initiated by the U.S. government through federal court—often for grounds involving fraud or national security threats—and strips an individual of citizenship without their consent [2][3]. Since this is not a voluntary expatriation, the statutory provisions for expatriation tax do not straightforwardly apply.
Legal experts note the constitutional and procedural complexity of denaturalization and its rarity, emphasizing that only a narrow set of cases meet the high evidentiary burden to revoke citizenship [2][3]. There is no indication in the tax rules or government guidance that those involuntarily denaturalized are subjected to the expatriation tax or have to file expatriation statements comparable to voluntary expatriates.
A naturalized citizen who has enjoyed citizenship benefits is considered a citizen for tax purposes up until the court-ordered revocation date. However, they may still have tax obligations for the period they were U.S. citizens or residents. If further clarification or legal advice is needed, consulting an immigration attorney or tax expert familiar with expatriation and denaturalization law is recommended [2].
Green card holders must follow specific procedures to escape U.S. tax liability upon expiration or revocation of their green cards. The expatriation tax regime also imposes a separate transfer tax under Code Section 2801 on U.S. citizens or residents who receive gifts or bequests from a covered expatriate [1]. Staying informed about legal, political, and regulatory shifts in this area is essential, as they can occur rapidly with life-changing implications.
The intersection of denaturalization and the expatriation tax regime is an emerging, seismic issue in America's immigration debate. Proactive measures are necessary for naturalized citizens and long-term residents, particularly those with significant wealth, to minimize the risks and tax hits from denaturalization or green card revocation and the expatriation tax regime. Ensuring complete accuracy in immigration applications is the first step in avoiding denaturalization or revocation cases.
[1] U.S. Department of Justice, "Justice Department Announces New Efforts to Protect National Security and Ensure Integrity Within the U.S. Citizenship and Immigration System," Press Release, June 11, 2025. [2] National Law Review, "Denaturalization: A Rare but Growing Trend," Article, March 1, 2023. [3] Forbes, "The Implications of Denaturalization for U.S. Citizens," Article, July 15, 2022.
Denaturalized individuals, regardless of President Trump's immigration policies, are not obligated to pay the US expatriation tax since denaturalization is an involuntary process and not a voluntary relinquishment of citizenship. In business and financial matters, it's crucial for naturalized citizens and long-term residents, especially those with significant wealth, to maintain accuracy in their immigration applications to avoid denaturalization or revocation cases, potentially resulting in tax implications.
