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According to several articles, Boris Johnson, the British foreign minister who was born in the U.S., was hounded by the IRS for taxes on the sale of his house in the U.K.

For example here: https://www.nytimes.com/2017/02/08/world/europe/britain-boris-johnson-renounces-american-citizenship.html

However, what is never explained is how the IRS may have known about this in the first place. Sale of a primary residence is not taxed in the U.K. and thus it should not have appeared on his U.K. tax filings.

How could the IRS have known about this?

  • maybe he deducted losses from it the last x years? – Aganju Jan 7 '18 at 2:38
  • @Aganju there were no losses. He sold it for a considerable profit – CodyBugstein Jan 7 '18 at 4:58
  • The simple answer is due to the man's high profile. The IRS literally has a number of departments which simply look for high profile "examples"; the IRS needs to keep a high profile in the press so that the peasants stay at a high fear level of the IRS. They couldn't care less about the few dollars of tax it will bring it (it will cost them 100x that to prosecute the case). Note that - of course - the timing of these always happen during tax season in the US. – Fattie Jan 8 '18 at 15:10
  • Hi @Fattie, do you have a link supporting your assertion that there are departments that specifically target high profile people? – CodyBugstein Jan 8 '18 at 15:11
  • (Regarding literally "how did they know he sold a house" - they just saw it in the press like anyone else. it would be like if you said "how did they know that XYZ actor made a lot of money from a film" when they go after actors - it's just common knowledge. In answer to the sense of your question, no, there's no sort of "reporting system" of the like. Tens of thousands of non-famous people would be in the same situation, and it would never come up or be followed up for any reason.) – Fattie Jan 8 '18 at 15:11
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I would guess that a large deposit appeared in his bank account and that information was shared with the IRS.

Such sharing of information deemed relevant is now automatic.

As for who is applicable, the FATCA reporting start date applies to all accounts and investments in existence at 30/06/2014, and all of these relevant accounts are to be reported to HMRC annually by 31/5 following and exchanged with the IRS by 30/9 following. The first reporting calendar year is 2016, so the information will be received by the IRS for the first time in 2017.

The word ‘information’ could be considered a vague term, so to clarify, the information being reported on will include the following:

Name/address/residence/tax number

Date of birth & place of birth

Account numbers

Account balance or investment value

Gross interest

Dividends

Sales proceeds of investments

Name of reporting entity

For those concerned about the use of their data, the Automatic Exchange of Information Programme includes terms that ensure the data is securely held and exchanged, is completely confidential and is only used to offset the problem of tax evasion.

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The linked article mentions that Boris Johnson has renounced his American citizenship.

This is the usual way of saying, "Boris Johnson has persuaded the US Government to stop considering him to be a US citizen".

In order to have the US government take this step, one must file and pay US income tax for a number of years before the date of renouncement. All income must be declared: income as defined by the American IRS. This includes capital gains on all property, including real estate, with any exemptions set by the IRS.

Mr. Johnson would want to avoid a charge of tax fraud in these filings, so presumably he was thorough and honest in declaring all income...

  • From the article it is apparent that his desire to renounce his citzenship stemmed from the fact that the IRS was demanding tens of thousands of dollars from him for his home's appreciation. So your answer is based on a seemingly false assumption – CodyBugstein Jan 7 '18 at 4:58
  • No... According to this article, theatlantic.com/international/archive/2015/02/…, BJ may have paid the tax to facilitate his renouncement. His desire to renounce dates back as far as 2006, when he needed a US passport to travel t the US as mayor of London... – DJohnM Jan 7 '18 at 5:45
  • thanks for pointing out that fact. I saw in several other articles that he was being criticized for renewing his US passport if he wanted to renounce. I didn't realize it is actually required of US citizens if they want to travel to the US – CodyBugstein Jan 7 '18 at 6:49
  • @CodyBugstein It is legally required, but apparently there is no penalty for not doing it. See this. In any case, BJ had a valid US passport for whatever reason(s) at the time of the home sale. – Spehro Pefhany Jan 7 '18 at 16:12
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Buying and selling property in the UK is a matter of public record. The Land Registry keeps records of the owners of all property that has been bought and sold since the Land Registry has been set up.

Information on the sale dates and prices for houses is available for free on a number of UK web sites. Further information about ownership is available by paying a small fee to the Land Registry.

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    That assumes the IRS scans property records across the world looking for names of US citizens? Boris Johnson has a pretty unique name (see his full official name) but many people have common names. This seems like a complex and labor intensive operation – CodyBugstein Jan 7 '18 at 22:59
  • The whole thing was/is a cause célèbre, of course they simply knew because he's already a well-known issue to them. In the sense of your question though Cody, @sphero does make a good point that due to FACTA reporting, in a sense it would be "reported". But that's not "how they found out" - in the ocean of reporting they never notice or care about this with an ordinary, non-radar citizen. – Fattie Jan 8 '18 at 15:16

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