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

This interesting post goes along well with my series of posts on Cook v. Tait found here:

The author is arguing that even if U.S. citizenship-based taxation is constitutional (which is questionable), that the Cook v. Tait rationale could not justify citizenship-based taxation beyond the point where one ceases to be a citizen for immigration purposes.

The author writes:

The statute says ” . . . An individual shall not cease to be treated as a United States citizen before the date on which the individual’s citizenship is treated as relinquished under section 877A (g)(4). . .”

“How can the U.S. federal government continue to impose U.S. worldwide income taxation on former U.S. citizens because of the provisions under Section 7701(a)(50) and 877A (g)(4)?”

I am not convinced that the effects of S. 7701(a) 50 and 877a(g)4 do apply to those who expatriated prior to 2004. On this point see the interesting article by Michael Miller:

This issue was recently canvassed at the Isaac Brock Society as follows:

Those interested in this issue are encouraged to read the perspectives of a variety of lawyers in the “Isaac Brock post”. I find it incredible that some (but not all)  “cross-border professionals” routinely interpret S. 877A(g) 4 in he way that is least advantageous to the taxpayer.
In any case, this is an interesting “Cook v. Tait” post.


The U.S. Supreme Court upheld as Constitutional the concept of citizenship based taxation in 1924 in Cook v. Tait.  In that case, the U.S. citizen resided permanently and was domiciled in Mexico City with his Mexican citizen wife.

In those years, the Revenue Act of 1921 imposed a top income tax rate of 8%.  The IRS made a demand against Mr. Cook to pay his tax.  Mr. Cook paid it and sued for refund of the US$1,193 paid.    That amount represents about Zwerner Notice of SettlementUS$16,893 in 2014 inflation adjusted dollars.  Neither amounts are significant in current actions taken by the IRS.

As a point of reference, Mr. Zwerner was alleged to owe US$3,630,119 (on an account with a maximum value during the years at issue of apparently no more than US$1.69M) and ultimately paid about US$ 1.75M (more than he even had in his account?) per the Notice of Settlement…

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