Will the IRS also have to chase down Edward Snowden?

August 8, 2013 — Leave a comment

Edward Snowden’s whistleblowing escapade has finally landed him in Moscow and out of the transit zone of the Sheremetyevo airport.

While on the run, the U.S. government has revoked his passport and has charged him with espionage and theft of government property. His consulting job with Booz Allen Hamilton allowed Snowden to access National Security Agency documents and he leaked a number of details regarding U.S. government surveillance program to the press and other sources.

The Russian Immigration Service will allow Snowden to live, work and travel within Russia until July 31, 2014; Russia will consider him a ‘temporary refugee’.

Snowden’s previous consulting gig at Booz Allen Hamilton paid him about $120,000: a number lower than the $200,000 he told The Guardian.

So far, he has reportedly “[blown] through a large chunk of his savings paying for his lengthy stay in the airport hotel [in Sheremetyevo].” With this in mind, he will have to find a job soon to live properly in Russia.

Luckily for Snowden, he has received a myriad of job offers from different Russian firms. Vkontakte, the Russian version of Facebook, has invited Snowden to Petersburg. “He will be happy if he decides to join the star team of programmers,” notes Pavel Durov, the Mark Zuckerberg of Russia.

Similarly, there are reports that the Russian parliament may be looking to Snowden to work for them as well.

Edward Snowden, third right, leaves Sheremetyevo airport outside Moscow with his Russian lawyer Anatoly Kucherena, second right. Photograph: AP/Russia24

Edward Snowden, third right, leaves Sheremetyevo airport outside Moscow with his Russian lawyer Anatoly Kucherena, second right. Photograph: AP/Russia24

Ruslan Gattarov, a member of the Federation Council and a member of the ruling United Russia party, told the Interfax news agency: “I am going to discuss with Snowden a possible cooperation with a working group (dealing with citizens’ privacy rights and personal data security).”

It looks likely that Snowden will be employed shortly in Russia. However, will the United States and in particular, the IRS, ever see a dime in taxes from Snowden considering he is a U.S. citizen abroad?

United States citizens, regardless of where one lives, are subject to the U.S. income tax.

“While many U.S. citizens qualify for certain foreign earned income exclusions and foreign income tax credits, that doesn’t absolve [one] from the requirement to file a U.S. income tax [this applies to tax treaties as well].”

The United States and Russia do have a tax treaty and a taxpayer who wants to claim this treaty needs to file Form 8833.

“Failure to file a return, including the Form 8833, can subject you to penalties (and in some cases, you may lose your right to claim treaty treatment, exclusions or credits).”

This would also apply to foreign account reporting requirements such as FBAR (Report of Foreign Bank and Financial Accounts) and FACTA (Foreign Account Tax Compliance Act).

Even though the U.S. has revoked Snowden’s passport, his citizenship has not been invalidated. Moreover, a passport revocation only put a ban on one from traveling.

There are two ways in which Snowden could lose his citizenship and thus not have to pay taxes. In the first scenario, he would have to come back to the United States to make his formal request to renounce his citizenship but this will probably not happen at this time. The other way he could lose his citizenship is if there is a formal prosecution and the court convicts him of treason.

So in all reality, if Snowden begins to work in Russia, he will have more woes and will have to deal with another aspect of the U.S. government: the jolly, old IRS.

JDKatz: Attorney's At LawJDKatz, P.C. is a full-service law firm focused on tax law and estate planning. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys.

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