US Law

Internal Revenue Service or International Revenue Service?

October 25, 2018 William Tong 0

What does the eastern African nation of Eritrea have in common with the United States? Not much, aside from a shared practice that makes the two countries absolutely unique in the entire world: the practice of collecting income taxes based on citizenship as opposed to residency. The overwhelming majority of tax-collecting jurisdictions on Earth are based on the concept of residency, whereby the tax laws of a jurisdiction define a set of criteria to determine whether a person is considered a resident in said jurisdiction. For instance, two common components of residency tests include, first, the circumstances in which a particular length of physical presence within a jurisdiction would count toward residency, and second, a threshold of length of physical presence above which residency is ascertained. Most jurisdictions also have a clause that allows for stays or visits that do not contribute to residency, such as transitional presence and various […]