Boris Johnson and the IRS: A Lion in Winter becomes a Lamb in Spring

Mar 5, 2015

Recent UK headlines document a run in between Boris Johnson and the IRS. What was it all about – and why did Boris do an about-turn?…

Brits are heavily divided on their opinions regarding Mayor of London Boris Johnson but all can agree he is both interesting and colourful. In the last three months, “BoJo” has also captured the attention of the media on the other side of the Atlantic over his row with the US and its ‘citizenship-based taxation’. Mr. Johnson’s IRS troubles stem from the fact that he was born in the US to British parents, before returning to the UK as a young boy. As a result, he is considered a “US person” for tax purposes, with all of the liabilities that result therefrom.

In November, he boldly announced that a bill he had received from the IRS was “outrageous” and that he “would not pay”. His resolute defiance outraged some American observers, who felt that he was not paying his “fair share” . It also served to ignite a large constituency of overseas “Accidental Americans” who thought that they had found a knight in shining armour who would slay the FATCA beast.

However a scant 2 months later, Boris Johnson meekly announced that he had paid his US tax bill and was going to renounce his US citizenship. Why did the Lion in Winter turn into the Lamb of Spring?

I would STRONGLY suspect that it had nothing to do with concerns of possible arrest for tax evasion on his upcoming book tour in the US. Rather it may be the discovery that he was quite mistaken in thinking that the IRS need him to pick up his chequebook in order to collect. The IRS would just have gone to his bank, brokerage firm etc., all of whom are Qualified Intermediares, and had them seize BJ’s accounts to settle any outstanding bill they thought he owed.

I think that BJ received a quiet late night call from his private banker informing him of this reality, which had the same sphincter tightening effect as hearing the pump action of a shotgun while playing around with the farmer’s daughter in the hayloft.

Bojo – for all his bluster – is no match for the IRS!