Paul L. Caron

Tuesday, August 7, 2007

Antarctica Is Not a Foreign Country for Tax Purposes

Antarctica_3For those, like we in Cincinnati, who are suffering through a road-melting heat wave, I offer five cases decided by the Tax Court yesterday holding that Antarctica is not a foreign country for § 911 foreign earned income exclusion purposes (following Arnett v. Commissioner, 126 T.C. 89, 91-96 (2006), aff'd, 473 F.3d 790 (7th Cir. 2007) (blogged here)):

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So the question becomes, do the contractors and works that worked in Iraq during the transition, when there wasn't a government have to pay back taxies to the USA? If you feel that people working in Antarctica shouldn't be allowed a tax break, for living and working in the most remote and desolate place on the planet that doesn't have a government, then why should the individuals that worked in Iraq have the right to the tax break?

Posted by: John | Dec 6, 2007 4:42:38 PM

I find inconsistencies between the tax law and labor law not troubling in the least, as these bodies of law serve different purposes.

More troubling is the Tax Court's apparent adherence to the idea that the income sourcing rule for "space or ocean activity" under section 863(d) has anything to do with the section 911 income exclusion. Antarctica is outer space, nor is it an ocean. The Tax Court gets the ultimate answer right, however, since Congress evidently has not provided an exclusion from taxable income for income earned in Antarctica, which is not a foreign nation and imposes no taxes on those persons who reside there. The taxpayers score points for creativity, but lose because they should not be allowed to claim relief under a Code provision designed to ameliorate double taxation, when double taxation clearly is no threat for a worker in Antarctica under any set of present circumstances.

Posted by: Jake | Aug 7, 2007 6:02:32 PM

Big Dead Place has an outdated but fuller description of the events leading up to these cases. It is written by a former Antarctic worker, so take it accordingly.

The inconsistency between the tax law and labor law treatment is somewhat troubling (if it is true)--i.e., the employer need not comply with certain U.S. labor law provisions because it is a foreign country for those purposes.

Posted by: John | Aug 7, 2007 9:48:26 AM