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Britain’s new foreign minister avoided paying his U.S. taxes for years

Boris Johnson may have a tough job ahead. He's insulted numerous high-profile figures, including Barack Obama and Hillary Clinton. (Video: Deirdra O'Regan/The Washington Post, Photo: JUSTIN TALLIS/The Washington Post)

As Britain’s newly appointed top diplomat, the colorful and controversial Boris Johnson will be responsible for navigating the island nation’s interests around the world, including the long-standing special relationship with the United States.

But in his personal life, Johnson’s dealings with Uncle Sam have been rocky, and by his own admission, he spent several years spent avoiding U.S. taxes.

The former mayor of London was a driving force in the campaign for Britain to leave the European Union, a move that toppled the nation’s political leadership and is redefining its place in the global economic order. But Johnson himself was born in New York City to British parents, and he lived in America until he was 5 years old, according to an interview on The Diane Rehm Show in 2014.

That means Johnson holds both British and U.S. citizenships, a fact he has repeatedly downplayed and which he once referred to as “an accident of birth.” A decade ago, Johnson declared that he wanted a “divorce from America."

“Always glowing at the back of my mind has been the light from that unused escape hatch. Let’s face it, folks, we manage to endure so many of our earthly captivities by fantasising that we have somewhere a half-open door to another job, another career, another life, or indeed, if we are religious, a life of the world to come. The mere thought of that door is a consolation, even if, as things turn out, we never actually go through it,” Johnson wrote in 2006 on his website.

“Well, as of this week I slam that door shut, and in some indignation. It is not just that I no longer want an American passport. In fact, what I want is the right not to have an American passport, and it is that right, astoundingly, that the Americans are reluctant to give me.”

But he never actually turned in his passport. Instead, English media reported that he renewed it in 2012. In January 2015, he reiterated his intention to renounce. But public records do not indicate that he has actually done it. The Treasury Department publishes a list of Americans who have given up their citizenship each quarter, and Johnson — whose legal name is Alexander Boris de Pfeffel Johnson — has not shown up since his declaration last year.

The most recent names were released in May. Johnson did not respond to an email request for comment.

Boris Johnson 'lied a lot,' says French foreign minister

Johnson’s uneasiness over his citizenship was not just philosophical. The United States is one of the only countries in the world that taxes the income of its citizens no matter where they live — and Johnson owed a hefty bill.

In his 2014 interview on the Diane Rehm show, Johnson said he was supposed to pay capital gains tax to the IRS after the sale of his home. The Telegraph reported the property was likely a home in North London that he bought with his wife in 1999 for 470,000 pounds. They sold it in 2009 for 1.2 million pounds, realizing a gain of 730,000 pounds.

In Britain, profits on the sale of a first home are exempt. But because Johnson was still a U.S. citizen, his tax liability was in the ballpark of about 100,000 pounds, according to tax experts. Johnson declared in 2014 that he would not pay the outstanding bill.

“It's absolutely outrageous,” he said of the amount. “Why should I?”

However, Johnson appeared to relent early last year. British media report that Johnson claimed to have paid his taxes about the time he embarked on a six-day tour of the United States, when he again stated that he would renounce his citizenship. Johnson also said he planned to contact the U.S. embassy to start the process. A spokesperson for the embassy declined to comment, citing privacy concerns.

In April, Johnson released his British tax records in the wake of the Panama Papers leak that details offshore investments and holdings of international political figures. The document shows that he paid 728 pounds in overseas tax from April 2011 to April 2015, though it is not clear to which countries. The document also states that Johnson had no U.S. tax liabilities during that period.

The United States allows citizens living abroad to credit the taxes paid in their country of residence against their U.S. bill. Because Britain’s tax rates are generally higher than America’s, it would not be surprising if Johnson did not owe Uncle Sam any money during those years, said Dianne Mehany, a tax attorney at Caplin & Drysdale.

In addition, she said, back payments of U.S. taxes would be unlikely to appear on Johnson’s British tax return unless he attempted to claim it as a credit against other liabilities.

If Johnson renounced his citizenship without cleaning up his U.S. tax obligations, he would be subject to another tax — the exit tax — that often ends up totaling more than a million dollars.

“The U.S. has taken a hard-line stance,” Mehany said. “If you are a U.S. citizen, you owe U.S. tax.”

Read more:

How Boris Johnson became Britain's top diplomat in the first place

Boris Johnson says the darndest things

Boris Johnson once compared Hillary Clinton to a "sadistic nurse in a mental hospital"

The United States is now becoming one of the world’s largest tax and secrecy havens. Here's why. (Video: Daron Taylor/The Washington Post)