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February 18, 2015
London Mayor to Relinquish U.S. Citizenship
by Teri Sprackland

Full Text Published by Tax Analysts®

Less than a month after reaching a tax settlement with the IRS, London Mayor Boris Johnson has announced his intent to renounce his American citizenship.

Johnson, who is a dual citizen, said he no longer wishes to hold on to his U.S. citizenship in a February 15 interview with London's The Sunday Times. The Mayor of London's Office confirmed the statement to Tax Analysts February 17. Johnson told The Sunday Times that his dual citizenship was "an accident of birth" and that he was renouncing his U.S. citizenship to prove his "commitment to Britain."

Johnson only recently emerged from a dispute with the IRS over capital gains tax levied on the sale of his London home. The mayor paid an undisclosed amount, which he called absolutely outrageous, in advance of a six-day tour of Boston, New York, and Washington earlier this month. Billed as a trade mission to boost London as a science and technology center, the trip was widely assumed to have political motivations as well.

The U.S. requires that American citizens' taxes be paid up before a request to renounce citizenship can be processed. Johnson had previously been adamant that he would never pay the U.S. tax on his London property, which was exempt from taxation under British law as a primary residence. According to Erin L. Fraser of Butler Snow UK LLP, IRC section 7402 provides U.S. district courts with jurisdiction to enforce orders, processes, judgments, and summons related to revenue laws. If a U.S. expatriate visits the United States, a federal court can issue a writ ne exeat republica at the behest of the Justice Department's Tax Division and keep the taxpayer in the United States.

Johnson, who had long debated giving up his dual citizenship, has been particularly outspoken about U.S. taxation being based on citizenship rather than residency. Only the U.S., apart from Eritrea, taxes all its citizens, including dual nationals, no matter where they live. Other countries tax on residency rather than citizenship. The issue is hotly debated in Europe, where American expatriates often pay heavy local taxes based on their residency on top of the U.S. taxes.

Americans have been giving up their passports in numbers unheard of before the enactment of the Foreign Account Tax Compliance Act in 2010. Onerous filing rules and paperwork since the crackdown on wealth held overseas, and the difficulties foreign banks now face if they let American citizens keep bank accounts have contributed to the sudden jump. According to U.S. government data, 3,000 Americans renounced their citizenship in 2013. That number jumped to 3,417 in 2014. As of September 12, 2014, it costs $2,350, to surrender a passport to the U.S. government, a significant increase since 2009, when the fee was $450.

Johnson is leaving his job as London's mayor to run for Parliament in Uxbridge and South Ruislip in the forthcoming general election. He has denied any intention to succeed David Cameron as prime minister or leader of the Conservative Party.

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