It’s no coincidence that churches and banks are usually the two largest buildings in a community. “Filthy lucre,” as the King James so eloquently phrases it, has often reared its ugly head in Christian history. And if you think that the televangelist scandals of the 1980s were a recent development, think again.

When Pope Urban II proclaimed the First Crusade in 1095, the stated mission – freeing Jerusalem and other holy sites from the grip of infidels – was really only a smokescreen. Many historians agree that the Pope’s real mission was to prop up the decaying Byzantine Empire, and specifically regain the fertile regions of Anatolia, and restore the lucrative East-West trade routes through that area of the Middle East.

The whole thing blew up in a rather disastrous fashion. 200 years of military campaigns accomplished no lasting victory, crippled what was left of the Byzantine Empire, created a permanent divide between the Western and Eastern Christian churches, and forever poisoned the relationship between Christians and Muslims.

Fast-forward about a century to June 2015. There’s no evidence of any tax shenanigans in the Vatican; by most accounts, there are only a handful of American residents or expats with money in the Holy See. The agreement between the Vatican and the U.S. is more about Pope Francis making a statement; viz, tax cheats are contrary to his overall vision (the Vatican quoted the Pope as saying “evading just taxes is stealing both from the state and from the poor”).

What Happened

American Ambassador Kenneth Hackett concluded nearly two years of negotiations with Vatican Foreign Minister Archbishop Paul Gallagher, when the latter agreed to sign on to the U.S. Foreign Account Tax Compliance Act. The Church only agreed to blow the whistle on individuals, a likely stumbling block in negotiations, as Uncle Sam was almost certainly pressing for more. There are now over 60 countries that have agreed to become collection agents for the IRS.

Rather ominously, Ambassador Hackett marked the agreement as a “very significant step” towards financial cooperation between the two nations; Archbishop Gallagher was probably spot-on when he called the pact “a historic event.”

This arrangement did not come out of left field. In 2013, the two governments signed a Memorandum of Understanding concerning financial crimes like terrorist financing and money laundering. Then, last July, the Vatican agreed to exchange information with the Comptroller of the Currency, a division of the Treasury Department.

All these moves have one thing in common. The Vatican has a rather poor reputation in international financial circles. Last year, Francis appointed Cardinal George Pell as head of the newly-created Secretariat for the Economy, specifically charging him with increasing financial transparency at the Holy See.

What it Means

Several times in his Epistles, St. Paul stresses that today is the day of salvation, because tomorrow may be too late. There’s a similar call ringing o’er the restless wave in today’s financial world. If you have undeclared offshore assets, today is the day to partner with an attorney and get things out in the open. Maybe you honestly forgot about the handful of Euros you have in a French bank, or you didn’t think that proceeds from a second mortgage were taxable outside the United States. The IRS doesn’t care about the backstory.

Furthermore, the times, they are a-changin’. Although the government is about to wrap up the foreign account crackdown, a downsized IRS will be targeting “wealthy expats” well into the future, in order to make headlines. It is probably unfair to lump all foreign account holders into this category, but if you’re looking for fair, I believe it’s on the old Jones farm on the outskirts of town this year. They say the Ferris wheel is really nice.

 

Original Post By:  Michael DeBlis