Roger Ver, a prominent early Bitcoin adopter, recently resolved a long‑standing dispute with the U.S. Treasury over unpaid taxes. The settlement, reached through a deferred‑prosecution agreement, required Ver to pay back taxes and penalties, after which the government agreed to drop criminal charges. The case highlights several common misunderstandings about U.S. tax obligations for former citizens and residents.
What the government alleged
- After renouncing U.S. citizenship in the early 2010s, Ver allegedly retained ownership of U.S. corporations that held Bitcoin.
- The Internal Revenue Service (IRS) claimed he sold roughly $240 million of crypto tokens without reporting the transaction, resulting in an estimated $48 million tax shortfall.
- The agreement with prosecutors required Ver to acknowledge the tax liability and settle the amount owed; no prison time was imposed.
Key tax concepts for former U.S. citizens
| Issue | What the law requires |
|---|---|
| U.S. source income | Even after expatriation, any income earned from U.S. sources—such as rental income from U.S. real estate or dividends from U.S. stocks—remains taxable. |
| U.S. corporate entities | U.S. corporations (including LLCs taxed as corporations) are subject to U.S. tax on worldwide income regardless of the owner’s residency. |
| Dividends and interest | Non‑resident aliens may face withholding at up to 30 % on U.S. dividends, depending on tax treaties. |
| Estate tax | U.S. situs assets exceeding $60,000 are subject to U.S. estate tax at the time of death, even for non‑citizens. |
| Exit tax | When a U.S. citizen renounces, the IRS treats the individual as having sold all worldwide assets at fair market value. If the net unrealized gain exceeds a threshold (approximately $600,000 in recent years), an “exit tax” is imposed on the excess. |
| Timing | Renouncing before substantial asset accumulation can reduce or eliminate the exit tax liability. |
Practical implications
- Asset restructuring: Many expatriates move U.S.‑situated assets into foreign‑owned entities or trusts before renunciation to avoid ongoing U.S. tax reporting and estate exposure.
- Corporate considerations: Maintaining a U.S. corporation after expatriation continues to generate U.S. tax filing obligations (Form 1120, information returns, etc.). Some choose to dissolve or convert the entity to a foreign structure.
- Residency vs. citizenship: Obtaining a second passport or residency does not automatically shield one from U.S. tax on U.S. source income. The tax nexus is tied to the source of the income, not the holder’s nationality.
- Extradition myths: Lack of an extradition treaty does not guarantee immunity. The U.S. has secured extraditions from countries without formal treaties, and it can pursue civil enforcement (e.g., asset seizures) worldwide.
Lessons from the Ver case
- Do not assume tax obligations disappear after renunciation – U.S. tax law continues to apply to U.S. source income and certain assets.
- Plan the timing of expatriation – Early renunciation can avoid the exit tax and simplify future compliance.
- Structure holdings before renouncing – Moving U.S. assets into foreign entities can reduce ongoing U.S. tax reporting and estate exposure.
- Expect enforcement – The IRS has a track record of pursuing former citizens for back taxes, including through international cooperation.
The resolution of Roger Ver’s case underscores that while expatriation can provide greater personal and financial flexibility, it does not eliminate all U.S. tax responsibilities. Proper planning and legal structuring are essential to avoid costly penalties and potential criminal exposure.
