Tax Hazards of a U.S. Passport
was having a conversation with a friend of mine who is a journalist
here in the Caribbean. While she grew up in the islands, she was
born in Florida. During my friends early childhood, her mother
divorced and relocated to the Caribbean. Subsequently, her mother
remarried and the husband formally adopted my friend as his legal
In the course
of our conversation, my friend mentioned that she had just re-discovered
her long-lost U.S. passport in a drawer at her mother's home. It
had expired a few years ago. In the intervening years, she had visited
the United States several times, but using another passport. This
is a serious violation of U.S. law, because U.S. citizens must always
use their U.S. passport to cross U.S. borders. However, because
her stepfathers last name appears on my friends Caribbean
passport, no "alarm bells" were ever triggered when she
crossed a U.S. border.
But, this was
just the beginning of my friends problems. I asked her if
she was still filing U.S. tax returns. No, she replied.
I left the United States when I was a child. Why would I have
to file tax returns there when Ive never worked there or even
lived there since childhood?
explained that the United States requires its citizens to pay tax
on their worldwide income, no matter where they live. I also told
her that she possibly faced a long prison sentence for not disclosing
each year the existence of all bank accounts she held outside the
United States with an aggregate value exceeding $10,000. And I mentioned
that while she could make an appointment to give up her U.S. passport
at a local U.S. consulate, she would continue to be subject to these
taxes and criminal sanctions for all past years. She could be arrested
and taken into custody anytime she visits the United States!
was a mixture of horror and disbelief. After a few minutes, she
replied "well, screw 'em! They can keep their damn passport."
I doubt that
the Department of State will collect any passport renewal fees from
this young lady! But even if she formally gives up U.S. citizenship
and expatriates, that still wont eliminate her
past tax or reporting obligations. She needs legal representation
in the United States to deal with these obligations, and it wont
The moral of
this story is that if you are a U.S. citizen, no matter where you
live, you must file a U.S. tax return each year. You must also disclose
details of every bank, securities or other financial
account to the U.S. Treasury each year, if their aggregate
value exceeds $10,000 on Form TD F 90-22.1. Incidentally, the information
on the TD F form may be shared with virtually any government or
police agency anywhere in the world!
Being a former
U.S. citizen, I am no longer subject to these unreasonable and frankly
dictatorial requirements. Nor am I subject to U.S. jurisdiction,
except to the extent of my U.S. investments, or when I visit the
true freedom, and the essence of being a sovereign individual.
Freeman is a pseudonym for a former U.S. citizen and friend of Mark
© 2010 Mark