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linkSocialite Denise Rich dumps U.S. passport
(Reuters) - Denise Rich, the wealthy socialite and former wife of pardoned billionaire trader Marc Rich, has given up her U.S. citizenship - and, with it, much of her U.S. tax bill.
Rich, 68, a Grammy-nominated songwriter and glossy figure in Democratic and European royalty circles, renounced her American passport in November, according to her lawyer.
Her maiden name, Denise Eisenberg, appeared in the Federal Register on April 30 in a quarterly list of Americans who renounced their U.S. citizenship and permanent residents who handed in their green cards. (link.reuters.com/naq28s)
By dumping her U.S. passport, Rich likely will save tens of millions of dollars or more in U.S. taxes over the long haul, tax lawyers say.
Rich, who wrote songs recorded by Aretha Franklin, Mary J. Blige and Jessica Simpson, is the latest bold-faced name to join a wave of wealthy people renouncing their American citizenship. Facebook co-founder Eduardo Saverin gave up his U.S. passport to become a citizen of Singapore, an offshore tax haven, before the company's initial public offering in May.
Nearly 1,800 citizens and permanent residents, a record since data was first compiled in 1998, expatriated last year, according to government figures.
Rich, who was born in Worcester, Massachusetts, has Austrian citizenship through her deceased father, said Michael Heidt, a lawyer in Hollywood, Florida, who represented her in a recent lawsuit.
He said Rich had dumped her U.S. passport "so that she can be closer to her family and to Peter Cervinka, her long-time partner." Rich's two daughters live in London; Cervinka, a wealthy property developer, is an Austrian national. Rich plans to make London her main residence and does not intend to acquire other passports, Heidt said.
MARC RICH's PARDON
Rich's ex-husband, commodities trader Marc Rich, fled the United States in 1983 when indicted on charges of tax evasion, fraud, racketeering and illegal trading of oil with Iran. They divorced in 1996.
Marc Rich received a presidential pardon in 2001 on President Bill Clinton's last day in office. Federal prosecutors and Congress investigated the pardon, and in 2002 a House of Representatives committee concluded Denise Rich had swayed the action through donations to the Clinton library and campaign.
Dubbed "Lady Gatsby" by Yachting magazine, Rich owns multiple properties, including a mansion in Aspen, Colorado. She is a frequent habitue of Cannes, Monte Carlo and St. Tropez with celebrities and singers aboard her 157-foot yacht, Lady Joy.
Rich will escape future U.S. taxes but possibly not all current ones. In 2008, Congress imposed an expatriation tax on persons with a net worth of more than $2 million who dump their U.S. citizenship or permanent residency. Under the law, those people owe an "exit tax" on their worldwide property, computed at a fair market value the day before they leave. But tax lawyers say the tax can be reduced or avoided by structuring asset holdings through foreign annuities.
While Austria, like the United States, generally taxes its citizens on their worldwide income, it has generous tax breaks for citizens who spend half the year abroad.
In January, Rich put her 5th Avenue penthouse in New York on the market for $65 million, according to the listing agent, The Corcoran Group. New York property records show Rich acquired a 100 percent stake in the apartment, described by Corcoran as "the epitome of luxury and grandeur," for $200,000 in 2006. Bonnie Evans, the Corcoran broker for the property, declined to discuss details.
COOK ISLANDS TRUST
The recent lawsuit against Rich was filed on behalf of Lee Goldberg, the former protector of a Cook Islands trust of which Rich is a beneficiary, in February. The case was dismissed in April, court records show.
The Cook Islands, a South Pacific tax haven, offers Swiss-style secrecy for wealthy investors.
The lawsuit accused Rich and Richard Kilstock, a British real estate entrepreneur who is married to Rich's daughter Daniella, of "transferring, moving or secreting trust assets, in violation of the trust's guidelines and without the knowledge or permission of Goldberg."
Rich and Kilstock denied the charges and accused Goldberg of altering trust documents, court filings show.
Both Goldberg and his attorney, Donald Thomas, declined to discuss the case. Rich recently dismissed Goldberg, one of her long-time lawyers, as protector of the trust.
Heidt, who also represents Kilstock in the case, declined to discuss the lawsuit. Kilstock did not return calls requesting comment.
(Editing by Eddie Evans and Mohammad Zargham)
Socialite Denise Rich dumps U.S. passport
Comments (7)
CitizenAbroad wrote:
Austrian vs. US taxation: This story is misleading regarding Austrian vs. US taxation, which seems to suggest that Austria is a tax haven. Austria taxes RESIDENTS of Austria based on worldwide income, irrespective of citizenship. (Residency-based taxation is the method used by all countries in the world, except the US (and Eritrea)). The US and Eritrea tax their CITIZENS based on worldwide income. An Austrian citizen, residing in the UK, would file a tax return in the UK only. A US citizen, residing in the UK, would file two tax returns. One for the UK, as a resident of the UK, and one for the US, as a citizen of the US, although resident in the UK.
The concept behind residency-based taxation is the taxpayer uses the services of the country where he/ she is living. The concept behind citizenship-based taxation is unknown to me. Perhaps a US or Eritrean politician could explain it.
FBAR_Compliant wrote:
You cannot tell the story of people (rich or not) who are either renouncing or relinquishing (there is a difference) their citizenship without a full understanding the unique nature of U.S. Citizenship taxation with all the complexity that surrounds it.
You have to couple this understanding with the inside knowledge of a 3 year IRS jihad in search of revenues ostensibly to cover the continued tax breaks for U.S. homelanders and profligate deficit spending by Congress. Currently they are chasing up revenue from all U.S. persons (more than just citizens) living around the world even when they are not resident in America any longer. Only other country that does anything close to this is Eritrea. They want to tax and penalize them for past FBAR reporting failures, get them to report in the future, even if they have no tax liability, and consequently make life very difficult for them in the countries of their residence.
Never mind that no other civilized country in the world does this. This is the American way. Other countries send their citizens out in the world unencumbered with double taxation and reporting burdens to create markets for their export products. The US tethers,on the other hand, them home with an taxation shackle with severe, complex and expensive tax rules that makes it almost impossible to them to survive, complete or create export jobs for the homeland.
This story was fun one to write, I am sure, even with all the inaccuracies that it contains about Austrian territorial taxation (very normal in the world) and Saverin’s renunciation. BTW, he did not take up Singapore citizenship. He did keep his Brazilian citizenship. You should do some serious inquiries of why he would keep it over the US passport? Could it be that the US be doing something wrong and that Brazil is doing something right?
I understand that story with headline of “Socialite dumping the US passport” is designed to titillate the “drive by” pop culture reader who understands nothing about the complexities of U.S. Citizenship tax law, or the past 3 year offshore IRS jihad. This story adds nothing to the broader understanding of the harmful policies like FBARs and FATCA. If you just said FWhat? I rest my case. You really should start googling around! If you have lived in Timbuktu for the past 30 years and felt the recent pressure of the IRS attempts to haul you into their revenue/penalty net, you get the broader story however!
US citizenship taxation complexities, penalties and continued offshore actions have many unintended consequences and tons of collateral damage. Basically, if you live over seas, and are no longer resident in America, you have some tough choices, Comply, renounce or return home to Kansas! The cost of the US passport has just reached a tipping point, and many are deciding the cost of maintaining it is not worth the benefit anymore.
Those who are taking the renunciation route (a term the US uses for handing in a passport) are doing it for very understandable reasons. It is not just about the taxes, it is about the complexity, the hassle and the Draconian penalties. This is not just the rich leaving, but they are the most sensational and easy to write about. The IRS is required to give you their stats and names on what is called “covered expats” or those having certain characteristics. The most common being that their world wide assets have a value in US dollars more than $2 million. But is my contention that they are just a small part of the story.
There is another class that you don’t know about or would have a harder time counting, and that is the thousands of average dual citizen or accidental Americans who are facing these same serious decisions and electing not to participate in the most complex and onerous penalty taxation regime in the world any longer. Also there are thousands of immigrants who are being seriously harmed, and are just heading back home rather than hand over their family savings to the IRS jihad just because they failed to send in an FBAR that few knew about.
Yes, this story is a headline grabber, but just scratches the surface of a story much bigger than just what is portrayed here.
arete66 wrote:
The real problem isn’t people like Denise Rich. The real problem is that America has the most lenient transfer pricing rules in the world, allowing companies like Google, Facebook, and so forth to pull a Double-Irish under the auspices that their falsely constructed shell subsidiaries overseas deal with each other as if at arm’s length (riiiight!) when interacting with one another. We lose out on roughly 60 billion dollars in annual revenue by allowing this nonsense. The tax holiday in 2004, in which companies were allowed to bring such moneys back into the U.S. at extremely low tax rates, was promised to create jobs. Instead, corporations mainly reinvested the money in buying back stock and continued to “downsize” and “streamline”. Let Denise renounce her citizenship. But nail companies who do all their business here and hide their money overseas.
lyne wrote:
Once someone renounces their citizenship, they should be on the no-enter list.
theagitator wrote:
If our tax laws are too complex it is only because the 1% – ers such as Denise Eisenberg Rich have wanted them that way. Tax attorneys get rich, while hiding their over compensated clients’ money in trusts and offshore accounts. They pay an effective tax rate that is much below what the 99% pays. She needs to be persona non grata in the USA.
Our political leaders (besides getting reelected) have only several priorities….low taxes for the rich, sending our military to fight wars in the Middle East, and waging war on internet freedom and those who have the audacity to copy generally worthless digital material from Hollywood (of which she represents), while doing nothing to protect those average Americans whose jobs and rights have been stolen for the benefit of Wall St..
jaguar6cy wrote:
Another liberal, democrat, progressive and dear friend of Bill and Hillary Clinton.
scythe wrote:
@ theagitator – succinct and yes
