Liberty and justice for all United States persons abroad

The Isaac Brock Society

That @MayorOfLondon is a good man but he still suffers from the U.S. taint which is “very difficult to give up.”

Posted on by Posted in Issues regarding US persons abroad 369 Comments

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.

369 thoughts on “That @MayorOfLondon is a good man but he still suffers from the U.S. taint which is “very difficult to give up.””

  1. I’d love to hear what Margaret Wente thinks of this. She wrote an op-ed in the Globe a few years ago titled ‘help, I’m in the IRS crosshairs’. She’s been silent since.

  2. That was a really good article by Robert the Woodie on Boris Johnson.

    I think the US will put Boris under maximum pressure to make an example out of him in order to scare others into the tax net.

    I really hope Boris joins the good fight against CBT, FATCA and FuBAR. Expats could really use having a celebrity on their side.

  4. @Bubblebustin,

    I wanted to say that Boris is a dual at birth and would not have to pay the exit tax as long as his filings are up to date.

    Ah, good point.

    So the choice is to either
    1) fly under the radar as a US citizen without getting caught up on taxes, or
    2) file back taxes and pay up and then be free to shed US citizenship.

    Now that option 1) is out, I predict he will now be forced into doing 2) to preserve his political career. Maybe he will wait until 2015 so that the 5-year look-back doesn’t include his 2009 house sale? (And probably the IRS gives him a pass on auditing previous years.)

    But I hope he fights back!

  6. I guessed that the Mayor of London owed $330,000 CAN for the sale of his house but that was a later house which his wife still lives in (this is a different story). I had this guess this morning on a different thread here on IBS. Anyway hundreds of thousands owed to a country that you never lived in past age 5, it is so unfair that USA taxes its “citizens” (cattle branded on the butt) wherever they live. The bad thing is that Robert Wood thinks Boris will not be taxed on anything. Maybe “US persons” in the more expensive Canadian cities (Toronto, Vancouver) where the appreciation has been 2-4 X over the past 10 years, will wake up to the US injustice, thanks to the antics of the London Mayor (and donate to ACDS). That is the good thing.

  7. If Boris ever does back down, he should at least demand the ‘Geithner’ treatment and be named next head of the US Secretary of the Treasury if he gets tired of being Mayor of London
    http://www.accountingweb.com/topic/tax/did-obamas-treasury-nominee-tim-geithner-weave-tangled-tax-web
    http://www.accountingweb.com/topic/tax/rangel-rule-would-give-taxpayers-free-pass-penalties
    or,
    be appointed to the powerful Ways and Means Committee like Democrat Charlie Rangel http://waysandmeans.house.gov/about/members.htm .

    See the ‘Rangel Rule’
    The ‘Rangel Rule'” as proposed by “……Republican — Congressman John Carter of Texas — is trying to draw attention to this basic unfairness by proposing a law which he calls the Rangel Rule.

    Carter’s bill calls for the elimination of all IRS penalties and interest for paying taxes that are past due. The bill is named for Charles B. Rangel, and the official name is, the Rangel Rule Act of 2009, HR735 http://www.opencongress.org/bill/hr735-111/show . According to Carter’s Web site, the rule would “prohibit the Internal Revenue Service from charging penalties and interest on back taxes against U.S. citizens.” The proposal includes a provision whereby taxpayers could escape the assessment of penalties by writing on their tax forms “Rangel Rule.”
    “All U.S. taxpayers would enjoy the same immunity from IRS penalties and interest as House Ways and Means Chairman Charles Rangel (D-NY) and Obama Administration Treasury Secretary Timothy Geithner, if a bill introduced today by Congressman John Carter (R-TX) becomes law.

    “…We must show the American people that Congress is following the same law, and the same legal process as we expect them to follow. That has not been done in the ongoing case against Chairman Rangel, nor in the instance of our new Treasury Secretary Timothy Geithner. If we don’t hold our highest elected officials to the same standards as regular working folks, we owe it to our constituents to change those standards so everyone is abiding by the same law. Americans believe in blind justice, which shows no favoritism to the wealthy or powerful.””….

    Or,
    Perhaps Obama will offer Boris a position like the one he gave to Tom Daschle:
    “…Tom Daschle, former Senator from South Dakota, Democrat, was nominated by President Obama to head the office of Health and Human Services and oversee the nation’s health reform. After Daschle was nominated to head HHS, he quickly amended tax returns for several recent years and paid tax and interest amounting to over $140,000 that should have been paid earlier….”

    Then there is Penny Pritzker, appointed Commerce Secretary;
    “….On the eve of her Senate confirmation hearing, commerce-secretary nominee Penny Pritzker alerted Congress that she mistakenly understated her 2012 income by at least $80 million….”
    http://online.wsj.com/articles/SB10001424127887324659404578499951071913328
    and,
    http://www.bloomberg.com/news/2013-05-21/pritzker-s-54-million-family-trust-fee-seen-as-unique.html
    or, current Secretary of the Treasury Lew”http://www.businessinsider.com/citis-government-job-bonus-for-jack-lew-2013-2 http://billmoyers.com/2013/03/08/jack-lew-citigroup-and-the-ugland-truth/

  8. Just to clarify my comments above, I am not saying that Boris owes the US anything – unlike Geithner, Rangel, Daschle, et al. Just pointing out what we already know – the political elite in the US rewarded politically connected US homelanders with powerful appointments – including the oversight of everyone else’s taxes and banking, etc. – despite those appointees being actual knowledgeable US residents who actually owed US taxes and enjoyed actual US services – and who should have known about US tax laws by virtue of their positions, education, US residency, etc. – while at the same time creating imaginary US residency and extraterritorial tax and reporting burdens and potential penalties for those living lifelong or longterm outside the US, like Boris who just happened to be born with US citizenship, and who already pay taxes where they actually live and earn and bank.

  9. Hey – Full marks to Boris to saying NO. Ironically this position could help his election as MP. The UK Govt is currently looking at the lopsided US-UK Extradition treaty.

    Brits don’t like to be seen as being seen as subservient to Americans. They may talk about America of big houses and sunshine, but equally they think its justice system, gun problem, and homelessness problem as bad.

    Boris is the first well known Accidental American to say NO and it’s certain more will follow.

  12. The problem with Boris, as you will see from the comments, is that people in the UK are seeing him as being like all of the Brits who swan off to Monaco when they get rich enough. They are happy to see a wealthy person taken down for once. He is too rich to be the ideal spokesperson unfortunately. Plus, he is a member of a political party that not everyone backs.

    Maybe the story will encourage people in more straightened circumstances to come forward. Someone who sold their house to pay for care and then had a huge U.S. tax bill would arouse more sympathy, particularly if the UK government had to pick up some of the tab for their care as a result.

    Of course, U.S. policy is attempting to pull capital out of foreign countries.

  13. @Duke: Wente wrote in another column this year something about she and her husband moved to a high rise condo. It is likely they sold a home with significant capital gains in the hot Toronto real estate market.

    I have no idea if that was reported to the IRS.

  14. @Duke: Margaret Wente moved to that condo in 2009. She and her husband “swapped our house and spacious yard for a high rise condo in mid-town Toronto.” They did it to go green.

    http://www.theglobeandmail.com/globe-debate/living-in-a-green-hood/article790993/

    I suspect they had significant capital gains on the house with the spacious yard. Did she report this to IRS? I have no idea, but she should have. If not, she could find herself in the same situation as Boris. One big difference–she was not a dual from birth. She came to Canada from Illinois when she was 13. She has written a book called the “Accidental Canadian.” She calls Canada her “home and (not) native land.”

    http://browseinside.harpercollins.ca/index.aspx?isbn13=9780006395096

  15. Bloomberg has the story now. “No tax please, I’m British.”

    http://www.businessweek.com/news/2014-11-21/no-tax-please-i-m-british-london-mayor-tells-irs

    The Times.; “Boris risks jail by telling America he won’t pay its tax.

    http://www.thetimes.co.uk/tto/news/politics/article4273722.ece

    Ldn24 “No Siree! Boris Johnson refuses to pay US taxes”

    http://www.london24.com/news/politics/no_siree_boris_johnson_refuses_to_pay_usa_tax_bill_1_3856974

    We need Boris on our side. I have tweeted him several times, but no reply.

  16. Although this thread is about Boris and the injustice of U.S. tax policies, there is an important practical message for Americans abroad. That message is:

    For those Americans abroad who regard their principal residence as part of their retirement plan, they must renounce U.S. citizenship.

    See the following at:

    http://citizenshipsolutions.ca/2014/10/11/when-renouncing-u-s-citizenship-is-a-smart-retirement-planning-tool-for-americansabroad/

    I want to share a scenario that I am encountering more and more with Americans abroad. And yes, it is related to taxes (or at least to U.S. tax laws). The tragedy is that many Americans are NOT aware of this until it is too late.

    Consider this very realistic, very common and very likely scenario for Americans abroad in Canada.

    Realistic Hypothetical:

    Retired senior citizen who has lived in Canada almost all his life. He is a dual Canada U.S. citizen with a net worth under two million U.S. dollars (the magic number that leads to being a “covered expatriate”) who has a small pension and lives in a fully paid off house. Most of his net worth is in the value of the house. The cash flow generated by the pension is just enough to cover basic living expenses. General inflation is a worry. The costs to maintain the house are also a worry. The costs to maintain the house are increasing every year. It’s clear that the house must be sold for a number of reasons which include the inability to afford the maintenance of the house in the long run.

    Most Canadians use their principal residence as a vehicle of financial planning. That’s because under Canadian tax laws, a principal residence is a “tax free capital gain”. Unlike U.S. residents Canadians do NOT receive a tax deduction for mortgage payments. Income taxes are far higher in Canada than in the United States. This is part of the policy reason for Canada’s allowing a “tax free” capital gain on the sale of the principal residence. Canadian resident taxpayers are able to sell the house, take a “tax free” capital gain and invest that capital in an income generating vehicle.

    As a U.S. citizen this senior citizen is NOT able to sell the house without paying a significant part of the proceeds to the U.S. government in the form of a capital gains tax. The U.S. does (subject to a partial exemption) subject the capital gain on a principal residence to taxation. As a U.S. citizen, this senior is subject to taxes in both Canada and the U.S. The U.S. will tax the same gain that Canada will exempt from tax.

    This senior simply cannot afford to lose the capital that will be lost on the sale of the home that is a U.S. capital gains tax. It’s not an option. On the other hand, he can’t afford the costs to keep the house.

    Solution: The only way to maintain his retirement capital is to renounce U.S. citizenship before selling the house.

    This senior must choose between being a U.S. citizen and having enough capital to live on in retirement.

    Unfortunately this is a “real life” scenario that I am seeing more and more of. It’s a very real problem. It’s a the result of being subject to one tax system (Canada) that encourages the use of a principal residence as a vehicle for retirement planning and a second tax system (U.S.) that does not encourage the use of a principal residence as a vehicle for retirement planning.

    It’s obvious that seniors in the situation of having to downsize their principal residence must renounce U.S. citizenship prior to doing taking this step. This is simply a practical reality.

    So, yes there are situations where it makes sense to renounce U.S. citizenship to avoid U.S. taxes.

    To put it simply: It’s unfair, unreasonable and unjust for the U.S. to impose taxation on retirement planning assets in Canada. In this instance, renouncing U.S. citizenship is a necessary part of the retirement plan!

    Conclusion:

    This message needs to be spread far and wide!!

  17. As noted in a different thread yesterday, Boris has been the victim of some very bad advice. He was elected an MP in 1997. If that doesn’t qualify as a relinquishing event, nothing does. Per his 2006 blog, he never had a US passport other than the one he held as a child when he returned to the United Kingdom from New York where his parents were temporarily located. It seems his mother may have been working for the World Bank so he may even have had grounds to evade citizenship by birth if his parents had diplomatic status, but he shouldn’t need to rely on that.

    From what I can gather from his blog and newspaper articles, he was travelling to Mexico via the US with his family for a vacation in 2006 and was denied boarding because his UK passport showed a US birthplace. He accepted the assertion of the airline official that he was an American and could not travel to the US without a US passport. That was wrong, but unfortunately Boris knew no better. He traveled to Mexico via Spain to rejoin his family and then published a very public (but ineffective) “I renounce” column in the press. That was mistake number 2 because now he was out from under the radar and had announced his dilemma to his own accountants and lawyers who, as good little compliance folks do, followed the path of apparent least resistance. Nobody explored with him the facts and circumstances of his prior relinquishment and he had pretty much muddied the waters with his public newspaper column by then. It seems he knuckled under and got a passport for travel purposes to avoid hassle. Mistake 3. Then speaking out on NPR – well, let’s just say he is his own worst enemy. I’ll stop trying to number his mistakes now!

    Boris has only one choice: correct his mistakes. Becoming an MP in 1997, or even Mayor in 2008 was an event of relinquishment. At that high a policy level position, I am not sure how strict the standard of “intent to relinquish” would be imposed, but I would think he could press for a fairly low standard. He very likely knew that those steps would be incompatible with remaining loyal to the Constitution of the United States of America and flag for which it stands. He can be taken as intending the consequences of his actions and having never asserted a claim to US citizenship in the past, there can be little reason to expect that he intended to retain it or was somehow coerced into becoming an elected official of a foreign country to earn a living.

    The only fly in his ointment is his behaviour in 2006. He was badly advised and should simply say so. Subsequent actions don’t UNDO a relinquishment that had already occurred. Those actions are nothing more than evidence of intent at the time of the expatriating act. He had no US citizenship in 2006 and applied for and received a US passport in the mistaken belief that the US officials he dealt with knew what they were talking about. Send it back and use Humphrey Bogart’s line in Casablanca when asked about the waters of Casablanca: “I was misinformed”. You aren’t a US citizen Boris and there is nothing to renounce.

    The US may deny him a CLN (should he decide to actually take the step of requesting one). If need be, it might be time to take them to court and have the US Supreme Court revisit its bias in favour of crazy glue citizenship with a plaintiff who is neither on trial for treason (Kawakita or “Axis Sall” Gillars) nor a political dissident trying to come home (Afroyim). US citizenship is a blessing for those who want it; a curse for those who don’t. There is no reason why the hurdle of voluntariness which must accompany an act of relinquishment need be high or low: if the act is deliberate and intentional and the consequence sufficiently understood and intended, that ought to be enough. Boris is actually pretty much a tailor-made exemplar of the millions of “accidental Americans” who want nothing more than to be left alone by a country whose vindictive policies they are powerless to influence. Boris will have little trouble finding a US lawyer willing to take on his case for little or no fees given the instant celebrity that such a case would bring the lawyer undertaking it.

    He might have a shot at denying the original grant of citizenship depending on his parent’s status when he was born. As well, given that he was a UK citizen at birth as well as the date of his relinquishment, he should be clear of any “exit taxes” and the like but that would take a more careful analysis of dates relative to US statutory changes than I have casually done.

    That being said, it is nothing but good to have the US roadblocks to renunciation put in the spotlight (despite UN Universal Declaration of Human Rights obligations not to impose such obstacles) as well as the whole illogical nonsense of CBT. As much as Boris’ political enemies will want to use any excuse to needle him (that is pretty much what you are seeing in the comment section of some of the UK web sites), few ordinary folks on either side of the Atlantic are going to think the US has any legitimate claim to tax Boris Johnson on anything. While Boris has been his own worst enemy with his public utterances, he has done the millions of “little people” in his predicament a service.

    You’re welcome Boris (for the above advice) and thank you Boris (for drawing attention to this issue for the rest). Seriously – SOMEBODY has to get advice like this before Boris before he opens his mouth in public again! If there are any UK readers of IBS who have a means of alerting him – he needs to get better advice.

  18. Seriously – someone in UK – PLEASE send the London Mayor’s office a lovely balloon-o-gram with anti-FATCA messages and kind “personal and confidential “letter from his friends in Canada (just like Anne Frank’s astute advice) and an invite to check out the ADCS!

    http://www.balloonmonkey.co.uk

    (This is not a commercial balloon -o -gram endorsement – they popped up high in Google!

  19. @Blaze

    Someone correct me if I am wrong… from what I read in regards to capital gains…. if u sell your property… and purchase another property that is the same price as what u sold or more…. u have a yr to do so before the capital gains kicks in… another words… there is no capital gains… I am still unsure of this capital gains since we never sold our home in Canada but we have sold other homes in other countries & there was no capital gains to be paid to the gov’t where the homes are/were… since we have found out with the GC that we are tax slave… it has created a huge mess because we bought & sold many times… family likes to buy cheap property & redo as we live there… its a stupid hobby that we regret doing… we did it for a small profit but we actually enjoy this project

  24. @all I have sent the following (who knows whether it will be read) to the mayor’s email address given by @Marie above :

    Mr Mayor,

    A friendly note to let you read an opinion based on limited public information regarding your US “taxedness” by well wishers and fellow travelers in Canada. The opinion has been copied from the comments on the following web page
    https://isaacbrocksociety.ca/2014/11/20/that-mayoroflondon-is-a-good-man-but-he-still-suffers-from-the-u-s-taint/#comments
    The comment is pasted into this email in its entirety at the end.

    Please do take this US Tax grab seriously and seek sound opinion with ALL your facts from a GOOD lawyer. You seem to be a classic case of the “collateral damage” occurring due to FATCA, Citizenship Based Taxation (as practiced only by the US and Eritrea) and will indeed compound and hurt ALL people everywhere if FATCA and CBT are not repealed and if the G20 is so foolish as to impose their version, GATCA. These things will even cause the cost of living for the very poorest on earth to increase.

    Please consider the Constitutional Challenge Litigation now commenced in Canada seeking to declare FATCA contrary to Canada’s Charter of Rights and Constitution. Mirror image cases could be mounted in many countries world wide due to similarities in the Charters of Rights around the world. Please do consider helping http://www.adcs-adsc.ca/

    Consider as well this anguished testimony of a Canadian Cop https://isaacbrocksociety.ca/2014/11/10/oh-canada/

    On a different note. It seems that you are tipped by many to seek very senior Government Service in The UK. In a Commonwealth country, Jamaica, it has been held in a Court of Law that ONLY persons having Commonwealth Citizenships may sit in Parliament. Therefore those MPs who previously were dual citizens of Jamaica and NON Commonwealth countries (Jamaican / US or Jamaican / Venezuela and so on) have had to resign their Non Commonwealth Citizenship so as not to have to resign their seats in Parliament. Perhaps the UK might have a similar rule …. I don’t know, it might be worth research.

    The first mentioned comment / opinion follows:

  25. You’re welcome, USFP. I wish it was as you said as we would not have had a tax liability had we sold our house a few years earlier…

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