Cook v. Tait 14: It’s NOT “citizenship-based taxation”, It’s “extraterritorial taxation”

The Cook v. Tait Series of Posts


In January of 2013 I began a series of posts to explore the rationale (if there is one) for  “citizenship-based taxation”. I simply cannot understand how the United States of America, a country that once was a leader in human rights, can treat it’s citizens (not to mention Green Card holders) so badly. I assume that Congress has simply not YET considered this issue.

This series of posts (including the Prologue are):


Cook v. Tait Prologue: Citizenship renunciations soaring under Obama – Renunciation as an Act of Self Defense

Cook v. Tait 1: Does Cook v. Tait really mean that citizenship-based taxation is constitutional in all cases?

Cook v. Tait 2: The presumption of government benefit

Cook v. Tait 3: Legal Scholar agrees justification in Cook v. Tait, but offers new justification for citizenship-based taxation

Cook v. Tait 4: Taxation of #Americansabroad based on US culture 150 years ago! Time warp or what!

Cook v. Tait 5: Citizenship-based taxation was never justified – League of Nations reports!

Cook v. Tait 6: Taxation of Green Card holders who reside outside the U.S.

Cook v. Tait 7: Equality: Law prohibits both rich and poor from sleeping on the park bench

Cook v. Tait 8: Does citizenship-based taxation cross the boundaries of tax justice?

Cook v. Tait 9:  US may have to stop citizenship-based taxation to get #FATCA IGAs

Cook v. Tait 10: Those born outside the U.S. to U.S. citizens, may not be U.S. citizens

Cook v. Tait 11: Who should #Americansabroad be compared to for tax purposes? Even U.S. citizens are entitle to “equal protection” under the 14th amendment

Cook v. Tait 12: Afroyim v. Rusk, The 14th amendment and the forcible destruction of citizenship

Cook v. Taint 13: The U.S. can no longer be permitted to levy taxes on the residents of other countries in general and border babies in particular

Cook v. Tait 14 – Boldly Go where no taxing authority has gone before

Cook v. Tait 15 – Why did the Soviet Union, Bulgaria, Vietnam and Myanmar adopt CBT? To maintain control.

Cook v. Tait 16 (Reblog of post) Supreme Court’s Decision in Cook vs. Tait and Notification Requirement of Section 7701(a)(50)


The above tweet references the following comment to the Cook v. Tait 1 post.


Anne Frank says

Interesting discussion of Cook V Tait. I concur that the reasoning is spotty and summary at best. It is however USSC, so they would have to be motivated to re-examine it (not impossible, I gather). You are quite correct that the lynchpin of the reasoning is the existence of some sort of benefit. The USCA decision you cite (Rexach) logically makes it clear that the analysis is not dependent on a case-by-case analysis (i.e. the individual situation of one taxpayer does not determine the validity of a law of general application).

Apart entirely from the paucity of (unconvincing) reasoning in Cook v. Tait, it cannot be disputed that two situations are unexamined and potentially quite distinct:
1. The status of non-resident Green Card holders; and
2. The status of FORMER citizens who have relinquished/renounced and are nevertheless subjected to taxes after the fact (see s. 877 and the ten year “tail” of post-exit taxes if you relinquished for the wrong reasons plus the provision that deems a former citizen to be a US Person until the Secretary of State is notified (not in citizenship law nor in 14th amendment) and until all “delinquent” tax filings brought current).

I might add a third situation which Cook v. Tait did not consider and its summary reasoning applies still less convincingly to: the case of the dual domiciled in a country where he or she has citizenship (i.e. the whole issue of dominant or master citizenship).

There can be little doubt that US law does NOT apply outside the US in any of these cases. Even the provisions of the tax treaty which purport to allow Canada to collect taxes for the IRS in Canada from US citizens (but not duals) may be open to examination, but that it another topic entirely.

Point being these issues are far from being cut and dried, settled law in the US. The vengeful and even hysterical level that Schumer et al have taken their witch hunt to in the US may actually motivate some judges to examine the matter, but it will take a pretty deep and patient pocket to take them on. A bit of a pity that the Facebook fellow didn’t try get more aggressive in taking them on, as it’s hard to see who else would have the staying power. There are a couple of posters on this site who would make lovely test cases, but I doubt any of them feels like volunteering for that meat grinder.

Boldly Go – To Claim Taxing Authority, Where No Tax Authority Has Gone Before

This post is part of the series of “Cook v. Tait” posts which have explored U.S. citizenship-based taxation. I believe this series of posts has demonstrated that U.S. citizenship-based taxation is unjustifiable. That said, the above comment from Anne Frank, makes it clear that:

What the U.S. calls “citizenship-based taxation” extends far beyond the taxation of U.S. citizens. Although, it “includes” U.S. citizens, it applies to an ever increasing number of groups.

The U.S. claims as “tax subjects/chattels” some people:

– who live outside the U.S.; and

– who are taxed on income that is no way connected to the U.S.

are described as “U.S. persons”.

At the present time, “U.S. persons” include:

– U.S. citizens (whether 14th amendment citizens or  citizens by statute)

– Some people, born to some U.S. citizens outside the U.S.

– Green Card holders who no longer reside in the U.S.

– non-citizens who “vacation for too long a period” in the U.S. (think some Canadian snowbirds)

– those who have expatriated and who are no longer U.S. citizens or Green Card holders

– possibly certain entities

FATCA is an attempt by the U.S. to force all U.S. persons to pay their “fair share” of U.S. taxes. Furthermore, the FATCA legislation, regulations and IGAs allow the U.S. and only the U.S. to define “U.S. persons”. Therefore, there is nothing to stop the U.S. to continually expand the definition of U.S. person.

Since the U.S. and only the U.S. controls the definition of “U.S. person”, there is nothing to stop the U.S. from incrementally:

A. Defining all non-U.S. residents as U.S. persons; and

B. Excluding all U.S. residents (Homelanders) from the definition of U.S. person.

Of course that could never happen.

Think about it. The U.S. is claiming the right to levy taxes on the residents and citizens of other countries. Where do they imagine that they get this right?

What the U.S. calls “citizenship-based taxation” should be called “extraterritorial taxation”.

It’s time for the world to realize what is happening and reject ANY form of U.S. extraterritorial taxation.

FATCA is the vehicle to enforce, “extraterritorial taxation”.

As such:

FATCA is considered to be “the gift that keeps on giving” for lawyers.

FATCA will also expose, what has until now, been America’s dirty little secret of:

Claiming the right to tax citizens and residents of other countries on income not connected to the U.S.!





4 thoughts on “Cook v. Tait 14: It’s NOT “citizenship-based taxation”, It’s “extraterritorial taxation”

  1. Petros

    The answer to the Snowbird problem is simple: Just stay south of the US; it is warmer there in any case, and lots of Americans in most of these places — so it will be just like staying in Florida.

  2. Pingback: Conference on “Citizenship-based taxation” – May 2/14 Toronto, Canada | Citizenship Counselling For U.S. Citizens in Canada and Abroad

  3. Pingback: U.S. Gift tax rules and returns – What #Americansabroad need to know about marriage to a non-citizen | US Taxation Abroad

  4. Pingback: Cook v. Tait 15: Why did the Soviet Union, Bulgaria, Vietnam and Myanmar adopt CBT? To maintain control? | U.S. Persons Abroad – Members of a Unique Tax, Form and Penalty Club

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