Accept this as a Gift: Unilaterally Enforcing Foreign Tax Judgments

Abstract

Current U.S. law treats foreign tax judgments differently than other foreign civil judgments, prohibiting U.S. courts from recognizing and enforcing the former, even though they recognize and enforce the latter. In this article, Brunson argues that there is no compelling reason for this different treatment and that it is ultimately detrimental to the government’s revenue collection. As long as the revenue rule continues to prevent the United States from enforcing foreign tax judgments, the nation cannot enlist foreign help in reducing the foreign tax gap; other countries will only collect U.S. tax judgments if the United States reciprocally collects their tax judgments. The revenue rule also allows foreign persons to hide their assets in the United States, effectively turning the United States into a tax haven. For the sake of reducing the international tax gap and for the sake of international tax justice, the United States must revoke the revenue rule.