The Internal Revenue Code (the Code)1 generally imposes income tax reporting requirements on all U.S. persons2 (U.S. persons) and certain foreign persons with sufficient nexus to the United States3
The United States is the only jurisdiction that taxes (at full rates) its citizens and green card holders on income they earn anywhere in the world, regardless of where they reside and whether or not they are subject to tax by their country of residence. Thus, for example, a U.S. citizen residing in London must comply fully with the tax rules of both the United States and the United Kingdom. Although there are certain mechanisms available under the U.S. tax laws to avoid double taxation or reduce the tax burden, U.S. persons must often spend enormous amounts of time, as well as economic resources for tax advisory fees, in order to try to understand the relevant laws, collect relevant financial data, and determine what reporting forms must be filed in any year and how best to complete their U.S. tax returns. It is not surprising that even Albert Einstein once said that “[t]he hardest thing in the world to understand is the income tax.”
