Today, Treasury and the IRS issued proposed regulations under section 2801 regarding the imposition of tax on U.S. citizens and residents who receive gifts or bequests from certain individuals who relinquished United States citizenship or ceased to be permanent residents of the United States on or after June 17, 2008.  Section 2801 was enacted, along with section 877A, in the Heroes Earnings Assistance and Relief Tax Act of 2008.  The proposed regulations set forth general rules of liability, define various terms, provide exceptions from liability, specify who is liable for payment of the tax and how the tax is calculated, provide guidance on the treatment of foreign trusts, and address the determination of the U.S. recipient’s basis in the covered gift or bequest.  The preamble to the proposed regulations states that the IRS intends to issue Form 708 (U.S. Return of Gifts or Bequests from Covered Expatriates), on which covered gifts and bequests are to be reported, when the regulations are finalized. The final regulations will contain the due date for filing Form 708 and the payment of the section 2801 tax.  Recipients of covered gifts and bequests “will be given a reasonable period of time” after the publication of final regulations to file the Form 708 and to pay the section 2801 tax on covered gifts and bequests received on or after June 17, 2008, and before the publication of final regulations.  According to the preamble, interest will not accrue on the section 2801 tax liability for any taxable years until the due date for payment, as specified in the final regulations, has passed.