London Mayor Boris Johnson on January 22 announced that he has settled an IRS claim for capital gains tax owed on the sale of his London residence.
"The matter has been dealt with. We've nothing further to add," Johnson's spokesman said. Further details were not released on the amount originally demanded or on the settlement amount.
Johnson was born in the United States and holds dual citizenship. "It's very difficult to give up," he previously said when asked why he has maintained two passports and why he renewed his U.S. passport two years ago.
Johnson's residence was bought for £470,000 in March 1999 and sold for £1.2 million in May 2009, according to the Financial Times.
When asked during a November episode of The Diane Rehm Show whether he would pay the IRS for the capital gains on his property, Johnson responded, "No is the answer. I think it's absolutely outrageous. Why should I?" Johnson added that he pays taxes to the United Kingdom, his place of residence and employment.
Under U.K. law, no CGT is due on the sale of a primary residence.
Erin L. Fraser of Butler Snow UK LLP said that U.S. expatriates fearing the consequences of returning to the United States should know that "generally, there are several hoops that the IRS must jump through before they can levy upon a bank account or, worse, before the Department of Justice shows up at a taxpayer's house (or hotel) with metal bracelets."
Section 7402 provides U.S. district courts with jurisdiction to enforce orders, processes, judgments, and summonses related to revenue laws. If a taxpayer visited the United States, a federal court "could issue a writ ne exeat republica at the behest of the DOJ's Tax Division and keep the taxpayer in the U.S.," Fraser said, although he added that would be an extraordinary measure.
Johnson is believed to have paid the IRS in anticipation of his March trip to the United States.
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