A twofer. First up, from the TaxProf blog, May 12:
Will Tax Complexity Force Pope Leo To Renounce His U.S. Citizenship?
Wall Street Journal Op-Ed: How Many Accountants Does the Pope Have?, by Brandon Mitchener (Tax Fairness for Americans Abroad):
For the first time, the pope is a citizen of the United States. Behind the solemn moment lies an absurdly serious—and seriously absurd—tax question: Will the pontiff, as a U.S. citizen, have to pay U.S. income tax?
The U.S. is unique among developed countries in taxing its citizens on their worldwide income. All Americans who live and work overseas have to file U.S. income tax returns on top of whatever taxes they owe where they live. ... [E]ven if they don’t end up owing any U.S. taxes, many Americans working overseas have to engage specialist accountants to convince the Internal Revenue Service that that is the case.
There’s no exception for foreign government officials, and the pope wouldn’t be the first foreign leader caught in the IRS’s web. Before becoming Britain’s prime minister, Boris Johnson, who became an “accidental” American citizen when he was born in New York, renounced his U.S. citizenship after the IRS demanded he pay tax on the profit from the sale of his home in London. ...
The image of an American pope having to surrender his citizenship to preserve the sovereignty of his mission could help put the nail in the coffin of the fundamentally unfair American tax regime. When the tax laws of one nation reach so far as to claim authority over a spiritual leader chosen to serve Catholics across the planet, it may be time to ask when the U.S. will stop hounding its citizens who live overseas.....
The blogger, Paul Caron is now Dean of Pepperdine's Caruso School of Law but the blog's name retains the former stylings.
And from Virginia La Torre Jeker's Virginia—US Tax Talk, May 9, a slightly different angle of attack:
Does Pope Leo XIV Have to File an FBAR? U.S. Citizenship and God’s Bank
Yesterday, the world welcomed Pope Leo XIV, a U.S. citizen, as the newly elected Pope, marking a historic moment for the Catholic Church. But amid the papal fanfare, a quirky tax question arises: could His Holiness need to file a Report of Foreign Bank and Financial Accounts (FBAR) for the Vatican Bank’s accounts? It’s a wild intersection of tax law and theology, and in this blog post I explore whether Pope Leo’s role as sovereign of the Holy See triggers U.S. tax reporting. Pope Leo XIV not only has the potential to shake up the global Catholic power structure, he has the potential to shake up the global reach of FBAR and FATCA.
Let’s dive into the Vatican Bank, the Holy See’s financial agreements, and what this means for a Pope with a U.S. passport!
What is the Vatican Bank?
The Vatican Bank, officially called the Institute for the Works of Religion (IOR), is a unique financial institution founded in 1942 to manage the Holy See’s assets. It serves Catholic entities like religious orders, dioceses, and Vatican employees, not the general public. Think of it as a private bank for the Church, handling accounts but not issuing loans or credit cards.
As stated in the 2023 IOR annual report, the IOR managed €5.4 billion in assets for 12,361 clients.
The IOR has a colorful history, marred by 1980s and 1990s scandals involving alleged money laundering. Since Pope Francis’s reforms starting in 2013, the Vatican Bank has prioritized transparency, closing questionable accounts and aligning with global financial standards. These changes are crucial to understanding Pope Leo’s potential U.S. tax reporting obligations.
The Holy See and Vatican City: Who’s Who?
To unpack this tax puzzle, let’s clarify the key players. The Holy See is the Catholic Church’s governing authority, led by Pope Leo, and is recognized as a sovereign entity by over 180 countries. Vatican City State is the 44-hectare sovereign territory where the Pope serves as head of state. The Vatican Bank operates under the Holy See but is based in Vatican City.
As Pope, Leo has supreme authority over both entities, including oversight of the Vatican Bank, the IOR. In 2022, Pope Francis mandated that all Holy See assets be consolidated in the Vatican Bank, a policy Pope Leo inherits. This centralized control raises questions about whether Leo’s role equates to signature authority over IOR accounts for FBAR purposes.
FBAR Basics: A Tax Obligation for U.S. Citizens
The FBAR (FinCEN Form 114) requires U.S. persons—citizens, residents, or U.S. entities—to report foreign financial accounts if their aggregate value exceeds $10,000 at any point in the year. Reporting applies to those with a financial interest (e.g., ownership or benefit) or signature authority (e.g., ability to control funds, like signing checks). Penalties for non-compliance are steep: up to $10,000 for non-willful violations and the greater of $100,000 or 50% of the account balance for willful ones, per year.....
....MUCH MORE
Also at Virginia—US Tax Talk:
WEBINAR: Learn All About FBAR and Pope Leo XIV’s FBAR Duties With Accounts at God’s Bank
Il Papa can probably skip another of her recent posts: "Additional Child Tax Credit, Americans Abroad: IRS Is Watching Closely".
"‘Cashed-up’ Mother Teresa kept Vatican Bank afloat – journalist "
First posted November 13, 2017
"‘Cashed-up’ Mother Teresa kept Vatican Bank afloat – journalist "
No bail-ins at the IOR !
From RT:
...MOREMother Teresa had such huge savings in the Vatican Bank that if she had withdrawn her funds the institution could have defaulted, according to an Italian journalist.Gianluigi Nuzzi’s newly-released book, ‘The Original Sin,’ digs into the Vatican’s darkest secrets and details how, when American archbishop Paul Marcinkus was appointed president of the Vatican Bank, Mother Teresa was believed to have “by far the most cashed up account.”
"If only Mother Teresa had closed the accounts or transferred them, the institute would have risked default," Nuzzi writes, La Presse reports.
The Italian author went on to say how the discovery of Mother Teresa’s bank account is proof of Marcinkus’ long-standing meddling in Vatican affairs.
"There is a power block in the Vatican that obstructs Pope Francis' reforming action just as it did with Benedict XVI – it existed with Marcinkus and his parallel management of the IOR – and it still exists today," Nuzzi said.
"Her [Mother Teresa] account in the Vatican bank is proof that these gentlemen were and still are within the Curia and they trust them. They were also trusted by Mother Teresa, who, as is told, entered the Ior by a secondary door and was welcomed by Monsignor De Bonis, Marcinkus's right arm."...
Previously on the Istituto per le Opere di Religione:
April 2014
"Con men stopped entering Vatican bank with €3 trillion of fake bonds"
June 2012
Bizarre Goings-on at the Vatican Bank (again)
September 2010
Italian police seize $30M from Vatican in probe
Hey! It's the 80's all over again!
October 2011
Pope Joins #OccupyWallStreet: "Vatican calls for global financial authority"
I know resurrections are more common in Jerusalem but maybe Il Papa thinks he can get Banco Ambrosiano up and running again....
...From Wikipedia:
Banco Ambrosiano was an Italian bank which collapsed in 1982. At the centre of the bank's failure was its chairman, Roberto Calvi and his membership in the illegal Masonic Lodge Propaganda Due (aka P2). Vatican Bank was Banco Ambrosiano's main shareholder, and the death of Pope John Paul I in 1978 is rumored to be linked to the Ambrosiano scandal, giving one of the subplots of The Godfather Part III. Vatican Bank was also accused of funneling covert United States funds to Solidarity and the Contras through Banco Ambrosiano....MOREOn June 19, 1982 the BBC reported on 'God's Banker
"The body of a top Italian banker has been found hanging from Blackfriars Bridge in London"The Guardian updated the story in 2003's "Who Killed Calvi".
Prior to that the Institute for Works of Religion (aka The Vatican Bank) laundered Gambino Family heroin profits.
More recently we had this Dec. 2010 headline "Vatican Bank hit by financial scandal... again"
So the Pope, Queen Elizabeth and Lloyd Blankfein walk into a bar...
And finally:
June 2017
Yesterday I Learned About ATMs
It started with Paul Murphy at Alphaville's Markets Live:...
...Which of course lead to the question "Do the Vatican Bank ATM's really have instructions in Latin?"
(I had heard that from a less-than-reliable-source)
As it turns out, the answer is:
Yes, Latin is one of the language options.
In fact there's even a TIL thread at reddit.
Which managed to stay on topic for about four comments:
Pope: Why do I have to push "1" for Latin? It should only be Latin! If you're gonna come here, learn the language! Foreigners!And from there it just descended into madness.
"And then they ask 'Are you sure you want to withdraw $DCXLII?'"
"$642? The ATMs in the Vatican give out ones!?"
Smallest note in the EU is €5 Maybe it's €640 and two Hail Marys?
"Romanes eunt domus."
The line is "People called 'Romanes' they go the house." "Romanes" is not a Latin word; he pluralized a second declension word as if it were third declension, so it doesn't translate to anything.
"Eunt?? What is eunt???"
3rd person plural present active of the verb 'eo, ire', meaning to go.
Until Il Papa decided to show off by making a withdrawal:
