Month: October 2023
Successful athletes, singers, writers, actors, artists and other talented individuals from outside the United States rarely consider becoming a U.S. citizen unless they plan on living permanently in the U.S. for the rest of their lives. The reason can often be found in how the U.S. federal tax regime (particularly estate and gift taxes) can apply on their worldwide assets and worldwide income. These talented individuals typically generate income from around the world, most every major country and therefore will have business and investment interests around the world.
A non-citizen artist or entertainer can usually enter into the U.S. for performances and employment opportunities on a range of visa options. For instance, many of these individuals can typically get an O-1 visa, because of their extraordinary abilities.
The petitioner must provide evidence demonstrating your extraordinary ability in the sciences, arts, business, education, or athletics, or extraordinary achievement in the motion picture industry.USCIS – O-1 Visa: Individuals with Extraordinary Ability or Achievement.
If such an individual who has great earning power can easily enter the U.S. when they wish, hence being able to always control their income tax residency status, why would they ever want become a U.S. citizen? Maybe for political or family reasons? See, a prior post explaining the origins of U.S. citizenship based taxation – The U.S. Civil War is the Origin of U.S. Citizenship Based Taxation on Worldwide Income for Persons Living Outside the U.S. ***Does it still make sense?
Indeed, famous U.S. artists have been among those who have renounced citizenship. See, a 2015 post – Tina Turner – Famous People Who Renounced U.S. Citizenship. May her Soul Rest in Peace –
See also, prior posts regarding famous artists and entertainers – including Elizabeth Taylor, Li Lianjie, Yul Brynner, among others who renoucned U.S. citizenship.
* Li Lianjie – Famous Former U.S. Citizens – Born in Beijing, China (“Jet Li”)
Back to British knighthoods and damehoods. British nationals can receive these honors from the British Crown, as did Paul McCartney from the Queen in 1997. Individuals who are British nationals and citizens of commonwealth countries (e.g., Canada, Australia and New Zealand) are eligible for these UK Honors. However, it appears that U.S. citizens (who are not also nationals of the UK or a commonwealth country), will not be eligible for these formal UK honors. There are many honorary UK honors granted to various U.S. citizens over the last several decades, including –
- George H W Bush GCB
- Dwight D Eisenhower GCB
- Bill Gates KBE
- Melinda Gates DBE
- Mark Getty KBE
- Paul Getty KBE
- Billy Graham KBE
- J Edgar Hoover KBE
- Bob Hope KBE
- Angelina Jolie DCMG
- Ralph Lauren KBE
- Yehudi Menuhin, Baron Menuhin KBE
- André Previn KBE
- Ronald Reagan GCB
- Dame Marjorie Scardino DBE
- Steven Spielberg KBE
Paul McCartney would presumably only have to forfeit his knighthood (if at all) if he were to renounce his British nationality. The UK government provides a detailed guide of how to renounce, and in some cases “resume” British nationality. This resumption of citizenship concept does not exist in the United States. The UK guide to renounce British citizenship or nationality can be found on their website – here (Give up (renounce) British citizenship or nationality). It would be comparable to the U.S. Department of State, Foreign Affairs Manual – 7 FAM 1260 – RENUNCIATION OF U.S. CITIZENSHIP ABROAD.
The British version is a lot more user friendly.
taxnotes international published a recent article we prepared (myself, with Luz Villegas Banuelos and Sebastien Chain) –
The article was selected as the week’s Special Report and is made available to the public and released from the paywall. Normally, you need to be a paid subscriber.
The article covers three key interconnected cases.
In the space of just over six weeks, courts made three key judicial decisions. Those decisions helped clarify the requirements of individuals and the limitations on the powers of the IRS in assessing international information reporting penalties:
- title 31 penalties for foreign bank account reports;
- title 26 international information reporting penalties specific to reporting of ownership interests in foreign companies (and trusts1); and
- how the federal statutory regimes of titles 31 and 26 cross over into international law as set forth in U.S. income tax treaties.
The three cases are interconnected and have significance for U.S. taxpayers with global lives, global assets, multinational family members, and businesses or accounts in different parts of the world.Patrick W. Martin, et. al – Six Weeks, Three International Information Reporting Decisions (international taxnotes; September 18, 2023)