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Tax Relief For ‘Accidental Americans.’ Virtually all children born in the United States, and many born outside the United States with at least one U.S. citizen parent, acquire American citizenship at birth. Because U.S. citizens are subject to tax on their worldwide income regardless of where they reside, this has created complications for many individuals who were unaware of their American tax obligations. The Internal Revenue Service now offers relief to many, but not all, individuals who want to terminate their U.S. citizenship without facing back taxes and penalties. They can do so provided they have a net worth of less than $2 million and satisfy several other requirements. Internal Revenue Service, Relief Procedures for Certain Former Citizens.

SCOTUS Considers A Debt Collection Dilemma. After Kevin Rotkiske defaulted on about $1,200 of credit card debt in 2005, his bank turned the debt over to a collection agency. The agency twice tried to serve Rotkiske with a lawsuit at an address where Rotkiske no longer lived. A stranger signed for the papers, and the court later issued a default judgment. Rotkiske discovered the judgment when he applied for a mortgage in 2014. He sought to overturn it on grounds that the debt collectors fraudulently served papers that they knew he would not receive. The lower federal courts rejected his lawsuit as untimely. Under the Fair Debt Collection Procedures Act, the courts held, suits must be brought within one year of the “violation,” in this case the allegedly fraudulent service. Rotkiske contends that a “discovery rule” gave him one year after he discovered the matter. Arguments were scheduled this month and a Supreme Court decision is expected by next June. Rotkiske v. Klemm.

IRS Promises Further Guidance On Virtual Currency. Virtual currency is a form of property, rather than money, according to the IRS. In general, the receipt of bitcoin and similar cryptocurrency is taxable as income at its dollar value when it is received. Using virtual currency to acquire other property is treated as a taxable transaction that can generate gain or loss. But the IRS has not addressed some technical issues, such as what happens when a virtual currency “forks,” or is traded at different values on various exchanges. In response to a congressional inquiry, the IRS commissioner has promised additional guidance soon. Letter to Rep. Tom Emmer, May 16, 2019.

If you enjoyed this article, be sure to check out Palisades Hudson’s book, Looking Ahead: Life, Family, Wealth and Business After 55, now available in paperback and as an e-book.

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