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A Simple Regulatory Fix For The Problem Of US Citizenship Taxation



John Richardson

Background

In 2016 I first made the suggestion that citizenship-based taxation could be changed through Treasury regulation. In October of 2020 John Richardson, Dr. Karen Alpert and Dr. Laura Snyder completed a paper titled “A Simple Regulatory Fix For Citizenship Taxation”. The idea advanced is that:

Although Congress and the Internal Revenue Code created the problem of “citizenship-based taxation”, Treasury has the authority and moral duty to fix the problems of citizenship-based taxation.

Discussion

In 1924 the Supreme Court of the United States considered U.S. citizenship-based taxation in the case of Cook v. Tait. Of course in 1924, the laws of both citizenship and taxation were very different. I have previously explored the evolution of citizenship, taxation and citizenship-based taxation.

Our 2020 article has received fairly wide distribution (including in the academic community).

Abstract

This article explains the simple regulatory actions that United States Department of the Treasury can take that would, in the absence of legislative change, improve the lives of Americans living overseas and permit the IRS to better focus its limited resources to more effectively administer the U.S. tax system.

The article can be read at SSRN here.

The 2020 article can be at Tax Notes here.

I welcome your comments.

Have a question? Contact John Richardson, Citizenship Taxation.

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The Reality of U.S. Citizenship Abroad

My name is John Richardson. I am a dual citizen. I am a lawyer – member of the Bar of Ontario. This means that, any counselling session you have with me will be governed by the rules of “lawyer client” privilege. This means that:

“What’s said in my office, stays in my office.”

I am also a member of the American Citizens Abroad Professional Tax Advisory Council (PTAC). This is an advisory panel focused on assisting American Citizens Abroad in an FBAR and FATCA world.

The U.S. imposes complex rules and life restrictions on its citizens wherever they live. These restrictions are becoming more and more difficult for those U.S. citizens who choose to live outside the United States.

FATCA is the mechanism to enforce those “complex rules and life restrictions” on Americans abroad. As a result, many U.S. citizens abroad are renouncing their U.S. citizenship. Although this is very sad. It is also the reality.

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