New York-born London mayor Boris Johnson refuses to pay US tax bill http://t.co/MaKDcZnTnM via @guardian U.S. London Emb won't pay con "tax"
— U.S. Citizen Abroad (@USCitizenAbroad) November 20, 2014
Read the complete article here.
It includes:
Boris Johnson has revealed that he is refusing to pay a tax demand issued to him by US authorities – despite previously lambasting the US embassy in London over its failure to pay the congestion charge.
The mayor of London, who was born in New York and holds a US passport as well as a British one, visited the country last week to promote his book and said during an interview with NPR (National Public Radio) that he had been hit with a demand for capital gains tax.
He said the US demand related to his first home in the UK, which was not subject to capital gains tax in England.
And for the absolute and total U.S. hypocrisy:
Johnson has continually pressed the US embassy to pay unpaid fines it has incurred for the congestion charge. The embassy has refused to do so, claiming the charge is a tax and therefore its diplomats are immune. During a visit to the UK by Barack Obama in 2011, Johnson reportedly asked him for a £5m cheque for unpaid congestion charges but the US ambassador intervened before the president could answer. By last year the amount the US embassy owed in congestion charge fines had risen to more than £7m, the most of any diplomatic mission in the capital.
@Mr. A. “Do Boris Johnson and other UK/US duals currently have this same protection in the UK?”
Good Question, one Boris may already know.
First, you need to review the “The Multilateral Convention on Mutual Administrative Assistance in Tax Matters.”
http://www.oecd-ilibrary.org/taxation/the-multilateral-convention-on-mutual-administrative-assistance-in-tax-matters_9789264115606-en
The “bad news” is that the UK has agreed in the treaty to collect taxes as if were their own.
The “good news” is that there is a section under Reservations which states, “A Party which has made a reservation in respect of a provision of this Convention may not require the application of that provision by any other Party;”
The “Brilliant News” is that the USA has made the following reservation, “The United States will not provide assistance in the recovery of any tax claim, or in the recovery of an administrative fine, for any tax, pursuant to Articles 11 through 16 of the Convention (as permitted by paragraph 1.b of Article 30 of the Convention).”
http://www.conventions.coe.int/Treaty/Commun/ListeDeclarations.asp?NT=127&CM=8&DF=01/09/2014&CL=ENG&VL=1
So Boris Johnson can tell the USA to BUGGER OFF!!
(Moderators, this may make a useful addition above the fold and it may even be helpful to Boris.)
@George
I have to agree with your assessment. My misguided trust allowed me to put my guard down, and rocking up to a desk at LAX after over 20 hours of transit I’m not sure how much guard I had to let down anyhow. In retrospect I made some stupid mistakes in a short period of time that would have far reaching effects on my life. Like running a red light while thinking about dinner. My default behavior when it comes to customs and immigration is to tell them what they want to hear so I can gather up my stuff and get out.
Nonetheless, I do not consider the wrong reply from a sleepy traveler to be justification for rearranging the last 20 years of his or her life. Considering the implications that they were aware of (and I wasn’t) I think it would have been appropriate to say a little more of what was at stake .
I haven’t seen this mentioned anywhere but it’s an important consideration. The US taxes the sale of your primary residence but throughout your ownership mortgage payments are tax deductible. I’m not sure about the UK but in Canada there is no such deduction. So taxing non-residents on the sale of your primary residence would also be double taxation?
Reuters says he should pay up:
http://blogs.reuters.com/breakingviews/2014/11/24/boris-should-pay-up-but-not-shut-up-over-u-s-tax/?pending=1#comment-14320
@Neill
Thanks for posting the Reuters article, but because you posted the link with your comment, others can’t comment. Would you mind posting the original link to it?
Try this:
http://blogs.reuters.com/breakingviews/2014/11/24/boris-should-pay-up-but-not-shut-up-over-u-s-tax/
@ProudAussie. It’s gotten to the point a traveler practically needs to be accompanied by their immigration lawyer when they approach US customs. One never knows what innocent reply may cause a world of harm down the road.
US customs personnel have shown themselves to be remarkably ignorant of their own country’s laws. Personally, I carry a printout of the relevant sections of US citizenship law with me just in case I need to educate them. So far, I have not had to produce it and who knows what sort of ruckus it would cause if I ever do.
I do know one thing. They may refuse me entry but I will not carry a US passport. I believe I am actually safer in the US traveling as a Canadian. So far, I’ve gotten a lot more respect from US customs traveling on my Canadian passport than I ever did as a returning US citizen.
@tdott @badger
Streamlined only requires 3 years of tax returns and Boris sold his home in 2009. The requisite 6 years of FBAR’s would certainly make the selling of his home a discoverable tax event. Besides that, he’s already shot his mouth off about it. I would think (and I’m no expert) that he could enter Streamlined, only instead of only submitting 3 years of tax returns, he would submit 6.
Boris has got some tough decisions to make. Should the IRS eject him from Streamlined and audit him, he can’t then enter OVDP. Not only that, there’s no SOL’s on unfiled tax returns! What a heyday the IRS would have over him if they wanted to throw the book at him (which they won’t have much choice but to do if he keeps resisting). He also has the tough choice between being a US tax resister and a future in politics.
@Bubblebustin re: ” He also has the tough choice between being a US tax resister and a future in politics.”
I wonder about that. As the world is slowly waking up to the evil that is US inflicted FATCA and CBT, perhaps Boris will look more like a hero than a criminal for being a resister. At least I HOPE that’s what he thinks. We need visible persons like himself to come forward and make a public stance in favour of the good fight. He has a moral obligation to back us up, and not bend over for the IRS.
@Bubblebustin, …not that I blame anyone for ‘bending over’ so to speak. We all gotta do, what we gotta do, but Boris has an opportunity to draw attention to our plight by actively and publically resisting. For him, to comply, is setting a bad example for those who are fighting against FATCA and CBT.
WhiteKat,
We can fervently hope that Boris would want to back us up (or some other *famous folk* would), but what we would like and welcome cannot make it Boris Johnson’s moral obligation — or that of anyone else (we had hoped to see that by now). We can only HOPE and encourage that would be his choice.
I, too, think that if Boris Johnson did make that choice, to back us, it could / *might* enhance his political career. Will he choose to do what is best for himself and his family or will he choose to continue his resistance as shown in the NPR Diane Rhem Show interview that has brought this more into the open?
@Calgary, re: “we would like and welcome cannot make it Boris Johnson’s moral obligation — or that of anyone else (we had hoped to see that by now).”
I disagree. People like Boris, who chose a career in politics have moral obligations that the rest of us do not.
@Cheryl,
I don’t think this would be viewed as double taxation, if I understand you correctly. The reason is that the tax is imposed on different kinds of income. Presuming one is paying a mortgage with disposable income, (employment income, salary, wages, etc.). When you sell an asset, it’s an issue of capital gain/loss. If you have a gain, you are receiving money that you have not already paid tax on.
@Bubblebustin
*He also has the tough choice between being a US tax resister and a future in politics*
Why does he have to choose… he is not violating any laws in the UK because he pays his taxes there… his problem is with the US that has nothing to do with the UK… U will be very surprised at the number of anti-US people with thoughts of sticking it to the gov’t… if he didn’t open his mouth… there would not be world wide attention to this matter.. so I count that as a plus to putting a face to the situation
If it’s moral for Boris to resist paying US taxes, then is it immoral to pay them?
I personally want Boris to resist, as I believe he’s the biggest and best champion we could have (and correct me if I’ve overlooked others) but it’s his decision to decide which way he’s going to get screwed.
@Cheryl
Even if Canada taxed us on our principal residence, the US still would, as it is a capital gain, not earned income. It would (and should) be dealt with in out treaty, and Canada’s been asleep at the wheel.
@USFP
I believe that UK voters would be reluctant to elect someone who can’t travel to many countries without getting extradited to the US, let alone someone who won’t enter the US.
@WhiteKat
*I disagree. People like Boris, who chose a career in politics have moral obligations that the rest of us do not*
If our own gov’t had morals… we wouldn’t be in this situation to sue them… someone pointed out to me… they are helping the financial industry above us… but the biggest thing is the pipeline… Which the President said… its more for the benefit of Canada rather then the US… or words to that… he wanted to study it more… no matter what is said… with the current president… there will not be a pipe line agreement…
@Bubblebustin
Diplomatic immunity or something like that… Say US President is convicted of war crime in some country that the US laughs off… he gets arrested in another country cause they have some kind of treaty with that country.. wouldn’t that make the world news & send ripples through the international community… Voters on the UK are like anywhere else… they have their own agendas why they vote people in… screwing the US could be a reason to vote him in….
http://blogs.spectator.co.uk/coffeehouse/2014/11/boriss-taxing-dilemma-relinquish-his-us-passport-or-pay-american-tax/
>It’s not clear that Johnson has ever exercised his right to vote in a US election, but he got more than his
> Constitutionally protected say in 2008, with a 1,063-word Telegraph endorsement of then-candidate Barack
> Obama.
We in my book he deserves much of the hassle he is getting based on that. Some of us who can not vote could see quite clearly that Obama was going to take our stuff. A lot of less wealthy people didn’t realize they would be included.
BB BJ can’t enter streamlined. It isn’t available to anyone against whom the IRS already has imposed any sort of tax. On another point, no country in the world would extradite him to the US for taxes owing.
TM one reason that it is a form of double taxation is that in the US one’s first mortgage interest is tax deductible. Not so in the UK. I your calculations of any possible tax owing by BJ on his income i think you left out the foreign tax credit. It is unlikely he would have any liability on his various salaries. PFICs, pensions, trusts- a whole different hornet’s nest. I hope he refuses to pay. I predict the IRS isn’t quite stupid enough to charge him with a crime.
@Duke of Devon
We don’t know that the IRS has taken any action against him. He said, if I recall correctly, that the US wants to tax him.
It’s going to be interesting how this develops. We may not even find out if he capitulates, unless he re-enters the US!
I stand corrected. Boris said:
‘They’re trying to hit me with some bill, can you believe it?’
Still not known that they’ve assessed him anything, as I might have said the same thing when I found out what the US tax was on my home.
Come to think of it, maybe Boris does have the balls for the job of defending us if he chose to give the IRS the one finger salute after assessing him – ON US TURF!
@Neill
In that Spectator article, Anne Jolis writes:
“The short answer, to borrow the Mayor’s logic, would be because capital-gains tax on real estate is paid by virtually everyone else who holds US citizenship – except those who can afford the clever lawyers to avoid it.”
Now I would guess that to avoid paying US tax on real estate it would have to be designated as something other than a principal residence, say an investment, and done throughout the ownership of the property, or at least at the point of sale – not six years after you sell it. If there’s any lawyer smart enough to do that, then tell me his name!
@Duke of Devon
I agree with Tricia that it is not double taxation. Double taxation means being taxed twice on the same dollar. The mortgage interest deduction vs capital gains apply to 2 different sets of dollars. What it unquestionably is, though, is the worst of both worlds.
FWIW, Wikipedia defines double taxation like this:
AFAICT examples of true double taxation are few, e.g., the newish net investment income tax (NIIT).