The purpose of this post is to argue that H.R.4501 does NOT protect U.S. citizen Pope Leo from the invasive reporting obligations which are at the heart of what it means to be a U.S. citizen. The Catholic Church may rue the day that it elected a U.S. citizen as pope.
For H.R. 4501 to achieve the tax and reporting related aspects of its legislative purpose it must:
– either exempt him from Subtitle F in addition to exempting him from Subtitle A or exempt him entirely from Title 26 (The Internal Revenue Code); AND
– exempt him from 5314 of 31 U.S.C.
This post is organized as follows:
Part A – Purpose and Summary: Part B – The Concerns Articulated By Representatives Of The Catholic Church And Others Part C – Parsing H.R.4501 – why it does NOT achieve what it purports to achieve: Part D- An X.com thread discussing this issue …
Part A – Prologue – It’s not about FATCA. It’s about U.S. citizenship taxation
U.S. citizenship taxation is a mechanism that is used by the United States to:
1. Capture the residents of OTHER countries and claim they are really U.S. residents; and
2. Impose U.S.taxation on the non-US source income actually received (or in the case of GILTI, transition tax, foreign trust rules, etc. not actually received) by those residents of other countries.
FATCA is a mechanism used by the United States to force other countries to search for and locate their own residents who are (because of a U.S. birth place) effectively the property of the United States. In practical terms, the mechanism used is the “FATCA IGA” and the countries who sign the “FATCA IGA” are partner countries. The job of the partner country is three-fold:
(i) to locate and determine which of their residents are either U.S. citizens or are suspected to be U.S. citizens
(ii) to report their financial information to the Internal Revenue Service of the United States
(iii) to deny bank services to those individuals who do not cooperate with the FATCA inquisition.
In effect, (as the court decision makes clear) the purpose and effect of FATCA is to assist with exporting U.S. citizenship taxation into other countries. In the same way that modern extradition treaties are used to export U.S. criminal law around the world, FATCA is used to export U.S. citizenship taxation around the world. The following post also argues that U.S. citizenship taxation (if it matters) is a violation of international law.
On July 25, 2025 a Dutch court confirmed its view that the Netherland’s FATCA IGA with the United States is NOT subject to any provisions of the GDPR. In other words, U.S. citizens, who are residents of the Netherlands and call the Netherlands home do NOT have the same rights as citizens of other countries!
In paragraph 7 of its decision, the court confirms that Accidental Americans in the Netherlands are NOT afforded the same rights as other Dutch residents as follows:
Beoordeling door de rechtbank
7. De rechtbank stelt voorop dat zij begrip heeft voor de op zitting door eisers geuite gevoelens van frustratie en onvrede. Eisers hebben duidelijk gemaakt dat zij door het hebben van een dubbele nationaliteit nadelige gevolgen ondervinden als gevolg van Amerikaanse wetgeving. De rechtbank kan begrijpen dat de uitwisseling van financiële gegevens van eisers met de VS door de Belastingdienst een zekere impact kan hebben op eisers. Dat laat onverlet dat de rechtbank de beroepen moet beoordelen aan de hand van de aangevoerde beroepsgronden en de toepasselijke wet- en regelgeving (het toetsingskader).
An English translation of Paragraph 7 is:
7. The court first of all states that it understands the feelings of frustration and dissatisfaction expressed by the plaintiffs at the hearing. The plaintiffs have made it clear that they suffer adverse consequences as a result of American legislation due to their dual nationality. The court understands that the exchange of the plaintiffs’ financial data with the US by the Dutch Tax Authorities may have a certain impact on the plaintiffs. Nevertheless, the court must assess the appeals on the basis of the grounds for appeal put forward and the applicable laws and regulations (the assessment framework).
The decision of the Dutch court underscores the simple reality that U.S. citizenship is indeed a disability in the 21st Century.
Part B – A brief summary of the decision – Accidental Americans in the Netherlands do NOT have rights under Article 18 of the GDPR
— John Richardson – Counsellor for US persons abroad (@ExpatriationLaw) July 26, 2025
In summary:
Because the Netherlands has signed a FATCA IGA with the United States, individuals described in the IGA (U.S. Citizens) have NO rights under Article 18 of the GDPR!
In that post, I suggested that FATCA litigation fails because it has to date focused on certain results of FATCA (privacy breaches, discrimination, etc.) No FATCA litigation (to date) has focused on the reality that U.S. “citizenship taxation” is the reason for FATCA and therefore the cause of all the FATCA related problems. The effect of FATCA and the FATCA IGAs is to enforce U.S. citizenship taxation on the world (including and PRIMARILY on individuals who are tax residents of other countries). A principal purpose of FATCA is to export U.S. tax laws into other countries. By signing the FATCA IGAs, these countries agree to assist the United States in identifying which of their country’s residents (and often citizens) are also U.S. citizens and should therefore be subject to U.S taxation. Put another way: the purpose of the FATCA IGAs is to expand the U.S. tax base into other countries.
For background on the issue of the United States claiming the residents of other countries as U.S. tax residents see:
The conclusion of the September 2024 post was that:
Future FATCA litigation should focus on whether it is a violation of international law for the United States to impose citizenship taxation (the reason for FATCA) on the residents of other countries (who suffer the effects of FATCA).
The purpose of this post is to continue the analysis and to explore the specific question:
Is U.S. citizenship taxation – the process of claiming nonresidents as U.S. tax residents – a violation of international law?
Is it a violation of international law for the United States to:
1. Claim the residents of other countries as U.S. tax residents; and
2. Impose U.S. taxation on the non-U.S. source income of those individuals who do NOT live in the United States?
(I am introducing and developing the argument cannot impose U.S. citizenship taxation on the tax residents of OTHER countries. The United States, has of course the sovereign right, to impose citizenship taxation on U.S. residents.)
If U.S. citizenship taxation, as applied to the residents of OTHER countries, conflicts with the norms of international law, then the foundation for FATCA (as applied to non-U.S. residents) crumbles. In theory, this would provide courts and tribunals a justification for refusing to apply FATCA obligations in relation to individuals who are tax residents of other countries and are not residents of the United States. In addition, it might cause countries to give careful consideration to the effects of the “saving clause” which is part of all U.S. tax treaties.
It is my hope that this post will analyze this question by identifying and outlining “some” of the relevant issues. Perhaps, this post will “begin’ a discussion about this important issue. Should U.S. citizens, because and only because of their citizenship, become “dual tax residents” simply by moving from the United States?
For each issue I will suggest an answer and provide a backup source(s) for further inquiry.
Suggested conclusion:
This post is a “thought experiment”. I believe that a credible argument can be developed that U.S. citizenship taxation – as applied to those who are tax residents of other countries – is a violation of CIL (“Customary International Law”). What follows are the “individual components” of the argument, along with commentary on each. The individual components are organized in the following outline:
Outline
Part A – Some Theoretical Concepts
1. What is US citizenship taxation? U.S. citizenship taxation defined
2. What is meant by international law?
Part B – Tax Residency And International Law
3. Is the concept of “tax residency” generally subject to the rules of international law?
4. Concepts of tax residency as expressed through tax treaties including treaty tie breakers
Part C – Can The Method Of Taxation Violate Individual Rights As Expressed In Human Rights Documents?
5. Professor William Thomas Worster – Taxation and Human Rights
6. Barriers To Emigration Under International Law
Part D – U.S. Citizenship Taxation And the Tax Sovereignty Of Other Nations
7. U.S. Citizenship Taxation As A Method To Siphon Capital From Other Nations
8. The Common Law Revenue Rule As An Expression Of Tax and Territorial Sovereignty
Part E – U.S. Tax Treaties And The “Saving Clause” – Contracting Out Of The Principles Of International Law?
9. Taxation Perspective: Is the “saving clause” an agreed upon override to the “revenue rule” and other international norms?
10. Information Perspective: Can FATCA information extraction generally be used to refuse to provide information about a country’s tax residents?
11. Enforcement Perspective: Should exemptions from cooperation on enforcement of tax debts extend to the disclosure of FATCA information? The cases of Canada, Netherlands, France, Sweden …
Part F – Possible Conclusions …
For those who don’t want to read the rest:
The purpose of this post has been to develop a general theory of why U.S. citizenship taxation – to the extent that it claims the tax residents of other countries as U.S. tax residents – is a violation of international law. Theory aside, there is no other country in the world that uses an attribute (citizenship), that is often an immutable characteristic (place of birth), that bears no presumptive relevance to a physical or economic connection to a country, as a sufficient condition for tax residency. In so doing, the United States is defining tax residency in terms of the “circumstances of birth”, rather than the “circumstances of life”. The only effect is to claim the residents of other countries as tax residents of the United States (even when they are residents and often citizens of those other countries).
It is respectfully submitted that, for these reasons, that citizenship taxation is a violation of CIL (“Customary International Law” and should NOT be tolerated by the international community.
In developing my argument, I have included links to previous posts. The linked posts are NOT part of this post, but are supplied for further reading on each topic.
Here is a 2023 article by Robert T. Kudrie of the University of Minnesota about US @citizenshiptax and #FATCA. Would be interested to hear anybody's comments about the article …https://t.co/0w9pYdjORf
— John Richardson – Counsellor for US persons abroad (@ExpatriationLaw) April 19, 2025
Despite its title the article seems to focus more on the importance and enhancement of tax enforcement on U.S. residents with “offshore income and assets” than on Americans abroad with income and assets in their country of residence. Put another way, I understand the article to more of an attempt to argue for enhanced enforcement of “resident-based taxation” and less of an argument for “citizenship-based taxation”. (The thesis seems to be more about ensuring that residents are taxed on their complete worldwide (offshore) income, rather than an argument that citizens living outside the United States should be taxed on their non-U.S. source income.) By confusing this issue, the article becomes one more of a series of articles that claims to justify “citizenship-based taxation” because U.S. residents are not paying tax on their non-U.S. source income.
There is very little analysis on the question of why the United States should be imposing its worldwide tax regime on nonresidents.
The author argues that Americans abroad living in select countries (those with tax systems similar to the U.S. system) should be subject to the tax system of their country of residence (residence-based taxation).
Generally the article replicates the U.S. tax academics’complete misunderstanding of how the U.S. extra-territorial tax regime affects Americans abroad. (He lives in the “echo chamber” of Avi-Yonah, Kirsch, Zelinsky, etc.) He makes not the slightest mention that the U.S. (citizenship based) extra-territorial tax regime is really about the application of U.S. taxation to the non-U.S. source income received by people who do not live in the United States.
That said, he does seem to recognize that as a matter of lack of connection to the United States, certain U.S. citizens abroad (those with less than three years of U.S. residence after the age of 18) ought to be able to cease being taxed under the U.S. tax rules and be allowed to live solely under the tax regimes of their country of residence (a good thing).
The author concludes with:
Vii. summinG up
Human mobility across states is increasing even as skepticism about some aspects of globalization grows. Concern about material inequality within states is also high and growing.
The policy proposals presented here attempt to increase the fiscal grip of the U.S. government on high income and wealth citizens who have benefited from the U.S. national environment while reducing tax interference with most Americans who choose to live abroad. The suggested policies also change the rules for those relinquishing citizenship to recover more fully tax revenue that should have gone to the U.S. Treasury. Revised policies should allow those below the top ten percent of the U.S. citizenry in income and wealth to live and pay taxes as locals in foreign countries with personal tax systems similar to that of the U.S. The very well off and those who reside in low tax jurisdictions should stay in the U.S. system. Any shift to a foreign system should entail mark-to-market capital gains taxation. Relinquishing U.S. citizenship should require the payment of both deemed capital gains and deemed estate taxation without step-up. None of this will be possible unless administration is tightened and enforcement is greatly increased. Truly effective enforcement will require greater international cooperation, but U.S. initiatives should meet success among states striving to reduce tax escape.
In October of 2024, Candidate Donald Trump pledged to end the double taxation of Americans abroad. In the Appendix* to this post I have included three videos discussing this pledge.
I have created a specific X.com community for the purpose of discussing President Trump’s pledge to end the double taxation of Americans abroad. You are invited to join that community here:
The pledge to #enddoubletaxation requires definition. What does it mean? Does it represent severing citizenship from tax residency? Does it represent a move to “territorial taxation”? What does it mean?
In this context I have been creating a series of “Principles” that should be discussed to define, refine and articulate the goal of “ending the double taxation of Americans abroad”.
To date (see below)I have identified a number of principles which have been explored on X.com. I would like to supplement each of the principles by a live discussion on X.com Spaces. What follows are the principles. I will add the dates in the next few days. Please circulate this post widely. It represents an opportunity for those in the X.com community to contribute to the discussions (which will be recorded).
October 24, 204 – @VP@KamalaHarris promises to take the tax, banking and financial services concerns of "Overseas Americans" seriously.
October 28, 2024 – The @JoeBiden Kamala Harris administration issues IRS Notice 2024-78 which effectively incentivizes BOTH FFIs and the #IGA…
— John Richardson – Counsellor for US persons abroad (@ExpatriationLaw) November 3, 2024
October 24, 2024 -Letter to Americans abroad from Kamala Harris
In a letter addressed to Americans abroad Vice President Harris said that she takes the concerns of US citizens overseas seriously, “whether it’s improving access to consular services, addressing the complex challenges you face with banking, taxation, and financial services, or ensuring equal treatment in immigration and citizenship processes.”
October 28, 2024 – Biden Treasury Letter To Americans Abroad – Notice 2024-78 – Either Comply With FATCA and U.S. Citizenship Taxation or Renounce U.S. Citizenship
The IRS today released Notice 2024-78, extending the temporary relief provided in Notice 2023-11, subject to the procedures and requirements of Notice 2024-78, for certain foreign financial institutions required to report U.S. taxpayer identification numbers (U.S. TINs) for certain preexisting accounts as defined in an applicable Model 1 intergovernmental agreement (IGA).
If a foreign financial institution in an eligible Model 1 IGA jurisdiction complies with the procedures described in the notice, then the U.S. Competent Authority will not determine there is significant non-compliance with the reporting Model 1 FFI’s obligations under the IGA solely as a result of its failure to report U.S. TINs associated with its preexisting accounts for the 2025, 2026, and 2027 calendar years.
Notice 2024-78 is the first indication of how seriously (NOT) the Biden/Harris administration takes the concerns of Americans abroad. In brief, the message from the Biden Administration to (an update to Treasury Notice 2023-11) Americans abroad is:
Either comply with FATCA and U.S. citizenship taxation or renounce your U.S. citizenship!
— John Richardson – Counsellor for US persons abroad (@ExpatriationLaw) December 24, 2023
Part 1 – Introducing Mr. FBAR – Looking For Mr. FBAR Part 2 – 2011 – Financial Crimes, FBAR and Americans Abroad – Perspective From The Isaac Brock Society Part 3 – 2020 – Financial Crimes, FBAR and Americans Abroad – Comments From Americans Abroad And Treasury’s Answer Part 4 – 2024 – Financial Crimes, FBAR and Americans Abroad – Americans abroad need to keep commenting Part 5 – What should you include in your comment? Appendix – Treasury’s 2021 response to the comments of Americans abroad
To cut to the chase:
Pursuant to 31 U.S. Code § 5314 the Treasury Secretary has the clear statutory authority to exempt Americans abroad from the FinCEN 114 AKA FBAR reporting requirements. The statutory language is:
(b)The Secretary may prescribe—
(1)a reasonable classification of persons subject to or exempt from a requirement under this section or a regulation under this section;
Therefore, it is important to make your views known to Treasury!
Treasury has provided another opportunity (the last one was in 2020) for Americans abroad to comment directly on the FinCEN 114 AKA FBAR requirement. I strongly recommend that Americans abroad take this opportunity to comment on the appropriateness of FBAR being required for the local bank comments of Americans abroad.
Update April 16, 2024 – Understanding the context of the comment request
I just received the following note from a reader of this post – “Someone out there”:
The Paperwork Reduction Act mandates that agencies engaging in information collection must seek approval every 3rd year from the Office of Management and Budget to extend the collection for an additional 3 years. The agency must demonstrate that the information collection is necessary, has utility and that the burden is minimal. Here’s an overview of the process: https://pra.digital.gov/clearance-process/
The first comment period (step 2 in the renewal process) was initiated in October of last year and Treasury received 40+ comments). Now the process is at step 4. Treasury has read the comments from October and has summarized them into their supporting statement which has now been submitted to OBM. The current supporting statement as well as the October public comments can be found here: https://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=202403-1506-001
Comments during the current 30 day period are sent directly to OBM for consideration. If for whatever reason OBM finds the information collection to be unnecessary, it has the authority to take a few actions: approve, disapprove, file comment, or return the ICR to the agency if it fails to meet the procedural requirements. The OBM can even instruct the agency to undergo “rulemaking” which means that Treasury would have to propose new FBAR rules which could eventually make its way into the regulations.
The statutes for this PRA approval process is found in 44 U.S. Code § 3507 and 44 U.S. Code § 3508 but the key subsection is 3507(h).
So any comments submitted during this 30 day period should be aimed at convincing the OBM that Treasury’s supporting statement is inadequate or that FBAR is unnecessary, doesn’t provide utility, is a burden and that the OBM should instruct Treasury to propose new rules that would modify the FBAR regulations.
Those who are interested in learning more, read on … Otherwise please go directly to the comment page.
— SEATNow.org – Stop Extraterritorial American Tax (@SEATNow_org) April 1, 2024
On February 26, 2024, Tax Notes Federal published an article entitled “Taxing Fat Cats Abroad.”
The article defended the Foreign Account Tax Compliance Act (FATCA) as an “automatic exchange of information used to track down and tax accounts held by wealthy U.S. citizens living abroad.”
The article contained many errors and misinterpretations.
SEAT co-founders John Richardson, Karen Alpert, and Laura Snyder submitted a response to the article, entitled “FATCA Is Not the Answer.”
Their response, published on March 18, 2024, can be accessed via SSRN at this link.
The response explains:
1. The considerable differences between FATCA and CRS. They include FATCA’s lack of reciprocity and the United States’ refusal to join CRS;
2. The inequalities inherent in the U.S. tax system with respect to Americans living outside the United States and their discriminatory treatment;
3. The irrelevance of FATCA with respect to Farhy v. Commissioner and Bittner v. United States;
4. The unjust stigmatization of Farhy, Bittner, and all Americans living outside the United States;
5. Inconsistencies between the article’s defense of citizenship-based taxation and the “single tax principle” advocated by professor Reuven Avi-Yonah;
6. The failure of the article, in its theorectical defense of citizenship-based taxation, to contend with the real system in place today and its myriad intractable problems;
7. The lack of any connection between taxation and voting rights;
8. The importance of the 14th Amendment for the equal protection of the rights of Americans living outside the United States; and
9. That the 16th Amendment is not — and it should not be used as — a license to channel violations of constitutional and human rights through the tax code.
"The Unknown Ambassadors: A Saga Of Citizenship" by Phyllis Michaux – A great read documenting the history of discrimination against #Americansabraod prior to the #FATCA era … (also provides an interesting blueprint for effective advocacy) pic.twitter.com/4cOYOn3KRl
— John Richardson – Counsellor for US persons abroad (@ExpatriationLaw) January 19, 2024
I just read “The Unknown Ambassadors: A Saga Of Citizenship” by Phyllis Michaux.* Phyllis Michaux was an American citizen who married a French citizen/resident. She lived her adult life in France. By any standard, she was an impressive and effective advocate for the rights of Americans abroad.**
I recommend the book (if you can find a copy) to all Americans abroad. As diverse as the community of Americans abroad is, what unites them is far greater than what divides them. What unites all Americans abroad is the horrible discriminatory treatment they suffer at the hands of the U.S. government. (As the distribution of vaccines in the covid pandemic demonstrated, the discriminatory treatment is NOT limited to taxation.) In this respect the United States is practically unique. Ireland honours and celebrates its diaspora. France gives it expats representatives in the legislature. The United States does (in 2024) and always has (as documented in “The Unknown Ambassadors”) mistreat its citizens abroad. U.S. citizens abroad are examples of the “discrete and insular minorities” contemplated in Justice Stone’s infamous Carolene Products footnote 4.)**** U.S. citizens, more than the citizens of any other country are in need of a second citizenship.
Phyllis Michaux’s achievements from the 20th century offer lessons for the many individuals and groups who are advocating to achieve justice for Americans abroad in the 21st century.
“The Unknown Ambassadors” provides an account of Ms. Michaux’s recognizing discrimination against Americans abroad as a matter of fact, identifying the laws responsible for that discrimination, identifying the appropriate U.S. government agencies to lobby for change and finally executing that change. Advocates for Americans abroad in the 21st century should read this book. A testament to her achievements is that the “Phyllis Michaux Papers” are found in the “Georgetown University Archival Resources”.
