The problem of citizenship taxation for Americans abroad is acute. Many people agree that citizenship taxation must end. Citizenship taxation is a combination of the U.S. Internal Revenue Code (imposing punitive taxation on non-U.S. assets and income streams), Regulations (the Internal Revenue Code gives Treasury broad regulatory authority) and tax treaties (the treaty “saving clause” denies U.S. citizens most of the benefits of the tax treaties. Unsurprisingly, various remedies have been proposed.
Legislative Fix (a change to the Internal Revenue Code):
Examples of proposals that are legislative fixes include the 2018 Holding bill and the 2024 LaHood bill. Significantly, neither bill ends citizenship as a sufficient condition for U.S. tax residency.
Regulatory Fix (mitigating the problems of citizenship taxation by regulation):
In 2020, Dr. Laura Snyder, Dr. Karen Alpert and John Richardson published “A Simple Regulatory Fix For Citizenship Taxation”. In this paper we demonstrated how Treasury through its regulatory authority could change the impact of the U.S. (domestic) Internal Revenue Code on on Americans abroad.
A Tax Treaty Fix To Citizenship Taxation:
In 2025, Dr. Laura Snyder, Dr. Karen Alpert and John Richardson published “A Simple and Unilateral Treaty Fix for Citizenship Taxation”. Both the paper and discussion is available at the SEAT site. Notably, this approach changes neither U.S. domestic law nor regulations. Rather, it simply argues that U.S. Treasury could refrain from exercising its rights under the “saving clause” found in U.S. tax treaties. The “saving clause” gives the United States the right (but not the obligation) to impose U.S. taxation on U.S. citizens abroad as though the treaty did not exist. Notably, this prevents U.S. citizens from using “tax treaty residency tie break” provisions to elect to be treated as tax residents of ONLY their country of residence. Incredibly, Green Card holders ARE permitted to (effectively) “opt in” to residence-based taxation.
The SEAT argument is that:
The United States could end the double taxation of Americans abroad simply by electing to NOT exercise its rights under the “saving clause”. This would allow President Trump to fulfill his pledge to end the “double taxation” of Americans abroad by NOT invoking the “saving clause”.
In the summer of 2025 Latife Hayson of The Interchange, an Australian living in the United STates included an episode about U.S. citizenship taxation. Although mainly from an Australian perspective, the video (and shorts) will be of interest to U.S. citizens living all over the world.
Full Video:
US Expat Tax Explained: Navigating Citizen-Based Tax Traps & the Push for Residency-Based Taxation
What Is Meant By The Double Taxation Of Americans Abroad?
On February 12, 2025 I hosted an “X Spaces“. The intended purpose was to discuss Professor Avi-Yonah’s new paper “Should The United States Abandon Citizenship-based Taxation”? The paper is clearly in support of the continuation of U.S. citizenship taxation. The paper is here:
X Space #13 w/John Richardson RE: Double Taxation of Americans Abroad, Feb 12th 2025: Discussing Professor Avi-Yonah's paper which defends citizenship taxation, + @sdetreville's proposal to have Americans abroad pay a flat opt-out fee, & many other topics.https://t.co/768aQHE4mk…
At the end of the discussion we focused on the question of:
Q. What is meant by ending double taxation?
I suggested that the answer is:
A. Double taxation is the result of double tax residency. For U.S. citizens “double tax residency” is caused by U.S. citizenship taxation. It is ended by severing citizenship from tax residency.
Two previous discussions about ending Citizenship-based “double taxation”
I have included the “slides” that were prepared for each of these presentations. They (in my opinion) do a good job in explaining what citizenship taxation really is and what is required to end it.
Enjoy (or not).
July 10, 2024 – What is REAL(ly) Residency Taxation?
— 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.
Prague – 1. Livestream with @IRS_Medic and @Keith__Redmond or 2. Attend in person in Prague – Jan. 21, 2024 – 13:00 CET – Brix bar & Hostel, Rohacova 132/15, Prague 3 Žižkov – 200CZK (includes lunch) – DM @Expatriationlaw to register if attending live. https://t.co/l5NblSqrD9
— John Richardson – Counsellor for US persons abroad (@ExpatriationLaw) January 9, 2024
US citizenship abroad information/discussion sessions in January of 2024:
1. London, UK – Wednesday January 17, 2024 – 18:00 – Location: The Sutton Arms – first floor wine room – 6 Carthusian Street, London – EC1M 6EB
2. Prague, Czech Republic – Sunday January 21, 2024 – Brix bar & Hostel, Rohacova 132/15, Prague 3 Žižkov
– 200CZK – includes lunch
3. The Prague session will be livestreamed on the IRSMedic Youtube Channel. Check there for how to join.
Outline, table of contents and purpose of this post.
Because U.S. citizenship taxation impacts different groups in different ways, it is hard to garner a significant mass of people to committed to the mission of ending citizenship taxation. There are five different groups who are impacted by citizenship taxation. Yet they would seem very different if you were to meet them in heaven.
Part A – “The Five People You Meet In Heaven” – the notion of interconnectedness Part B – Barack Obama and the revival of citizenship taxation – how did his administration “slice and dice” Americans abroad? Part C – Different kinds of Americans abroad with different attitudes toward the taxation of Americans abroad Part D – Fault Lines Among Americans Abroad – The discussion in Keith Redmond’s American Expatriates Facebook group Part E – The Five Types Of Americans Abroad Obama Would Meet In Heaven Part F – Conclusion
— John Richardson – Counsellor for US persons abroad (@ExpatriationLaw) February 20, 2022
This is Part 2 of the series. In Part 1, I identified that it is essential that individuals (and governments) unite to bring an end to the US tradition of “citizenship taxation”. “Citizenship taxation” – what a phrase. The words are not descriptive of anything. It clearly has something to do with some form of taxation. The inclusion of the word “citizenship” makes it sound almost patriotic. But maybe, not. Maybe it’s just part of what means to be a citizen. Since only the United States has citizenship taxation, perhaps taxation is what it means to be a US citizen. If so, then perhaps US citizenship should be called “taxation based citizenship”. The concept of citizenship means different things in different countries. Is this a statement that the essence and the meaning of US citizenship is taxation and only taxation?
Citizenship Taxation – Theory vs. Reality
A supporter of citizenship taxation is someone who THINKS about “citizenship taxation”. An opponent of citizenship taxation is anybody who has tried to LIVE under citizenship taxation.
Ending U.S. citizenship taxation is an increasingly popular topic. Here is a presentation that I organized in July or 2024 attempting to answer the questions of:
1. What does it mean to end citizenship taxation; and
2. What would a system of residence taxation really look like?
Thanks to @Tpsmyth01 for help in "Take 1: Digging The Foundation To Build The House Of US Residency-based Taxation" – Hosting a zoom call to discuss proposal and related matters on Sat. July 10/21 at 8:00 am EST – Please DM to join https://t.co/MH9CxZYkeJ via @expatriationlaw
— John Richardson – Counsellor for US persons abroad (@ExpatriationLaw) July 9, 2021
It’s about “pure residency-based taxation” and not citizenship-based taxation with a “carve out”
I have previously advocated that the United States should move to to a system of pure residence-based taxation. A system of pure residency-based taxation, means that:
Citizenship is NOT a sufficient condition for tax residency. If citizenship is not a sufficient condition for tax residency, income sourced outside the United States, which is received by people who are not residents of the United States, should not be taxable by the United States.
Note that pure residency-based taxation is NOT citizenship-based taxation with a “carve out” for US citizens living abroad. To put it another way: US citizens, simply because they are US citizens, would NOT be defined as US tax residents and subject to US worldwide taxation. This is different from US citizens being defined as US tax residents, but allowing (like the FEIE) for their foreign income to be excluded from US taxation. Note also that this is a legislative proposal. It is therefore different from our earlier proposal for “A Regulatory Fix To Citizenship Taxation“.
It is my opinion and the opinion of the members of SEAT, that only a system of pure residency-based taxation will solve the many problems of Americans abroad!
How is residency to be determined?
.@Taxresidency in Canada is largely based on being "ordinarily resident". This is based on actual circumstances and appears to be a combination of domicile, a degree of physical presence and the centre of gravity of your life. https://t.co/fs6m4Nlrz2 via @expatriationlaw
— John Richardson – Counsellor for US persons abroad (@ExpatriationLaw) July 9, 2021
Residency is commonly determined in various ways. For example, Canada determines residency based on an objective deeming provision (number of days spent in Canada and through a “facts and circumstances” test described as ordinary residence). Generally, citizenship (if it is a factor at all) is not a significant issue in determining ordinary residence. The Canadian experience is proof that it is possible to have very sticky tax residency without citizenship being an issue.
Purpose of this post:
The purpose of this post is to propose some simple amendments to the Internal Revenue Code which would provide a foundation for the United States to transition from citizenship-based taxation to pure residence-based taxation. The goal is modest. The post is not intended to (I will write a separate post) deal with those who are CURRENTLY US citizens living outside the United States. It is NOT to address all the issues. That said, most of the Internal Revenue Code focuses on the taxation of those who are US tax residents. Little in the Code focuses on the actual definition of US tax residency.
The purpose of this post is begin with the fundamentals and ask:
How could the existing Internal Revenue Code be modified to provide a framework for residency-based taxation? Of course, readers will be left with many questions. But, the proposed foundation would allow for:
1. US citizens to move from the United States and sever tax residency with the United States.
2. US citizens to move from the United States and continue to be treated as tax residents of the United States.
Under either scenario, US citizens would remain US citizens. They would NOT be required to relinquish US citizenship in order to sever tax residency.
Obviously there will be many complications. But, every journey begins with a modest beginning. This is intended to be only a modest beginning. It is to begin digging the foundation to build the house of “residency-based taxation”.
The post is composed of the following parts:
Part A – Residents Are Subject To Worldwide Taxation
Part B – Nonresidents Are Not Subject To Worldwide Taxation
Part C – Definition Of Resident and Nonresident- 7701(b)
Part D – Definitions That Require Change “US Person”, “Relinquishment Of Residency”, etc.
Part E – Relinquishment Of Residence
Part F – Living abroad without relinquishing US residence
Generally, I believe that amendments to a small number of sections of the Internal Revenue Code provide the foundation from which to grow. Note that this proposal solves the problems of the “Retirees Abroad” (they don’t give notice under the new 877(a)(g)) and the problems of accidentals (they were never tax residents in the first place). There would be regulations (like the Canada Revenue Agency folio) for what constitutes residence. In Canada tax residency is defined largely by “ordinary residence” – a concept that is very sticky).
I am identifying the building blocks that could define tax residency under a US system of residency-based taxation, with few modifications to the Internal Revenue Code. (These building blocks are generally compatible with the existing Internal Revenue Code.) Once the foundation has been built we would then build our way out. This initial foundation solves the PFIC problem, the CFC problems and most problems related to foreign source income. The FinCEN 114 (FBAR) rules currently reference Internal Revenue Code 7701(b). Therefore, the proposals in this post would solve the FBAR problem.
I will discuss other issues impacting Americans abroad in subsequent posts.
I have included only the sections of the Internal Revenue Code that I consider the foundation of US tax residency. When a word is IN CAPS that means that there has been a change to facilitate a change to pure residence-based taxation.
Part I – Pure Residency-based Taxation vs. Citizenship-based Taxation With A Carve Out
US @CitizenshipTax AKA #Extraterritorialtax is greater than the self-interest of any one person. It affects you in ways that may not be obvious now. It affects your neighbours. It affects the sovereignty of your country of residence. It affects the future value of US citizenship
— John Richardson – Counsellor for US persons abroad (@ExpatriationLaw) June 3, 2021
In that post I noted that different persons/groups have different ideas of what is meant by residence-based taxation. That someone tells you that they support residence-based taxation does not tell you what they mean. There are different definitions of residence-based taxation. I strongly believe that people must embrace a definition of residence-based taxation that means that US citizens are NOT – because of their US citizenship – subject to the Internal Revenue Code. In other words, the goal should reflect the view that:
The United States should not be imposing taxation and should not be permitted to impose tax on the non-US source income received by people who are tax residents of other countries and do NOT reside in the United States!
The language in the discussion for change reflects a desire (on the part of individuals and organizations) to move from the US system of “citizenship-based taxation” to a system of “residence-based taxation”. Various individuals and groups describe the goal using the language of “residence-based taxation” AKA RBT. It would be a mistake to assume that RBT means the same thing to different people. The purpose of this post is to describe definitions of RBT and and how those definitions may be defined for different individuals or groups.
