“No country is an island to itself.” Cross-border tax cooperation and compliance are crucial to the health of the United States economy and the protection of its tax base. Yet, foreign courts administering cross-border insolvencies may deny a U.S. tax claim, even when such claims are treated as secured claims under local law. In a similar vein, a U.S. bankruptcy court recently refused to recognize the tax claim of a foreign government in reliance of the anachronistic common law doctrine, known as the “revenue rule.” To ensure other governments extend the U.S. the necessary cooperation it will need to collect its tax claims in the cross-border context, this Article recommends that the U.S. government: (1) revoke the revenue rule; or at minimum grant an exclusion to employee pension and insolvency related claims; (2) amend its current network of bilateral tax treaties to incorporate specific provisions to provide mutual assistance in the collection of tax claims in cross-border insolvencies; (3) initiate a dialogue with the member nations of the Organization for Economic Cooperation and Development to create measures that protect the tax base of every nation without discouraging competition or the cross-border flow of business, capital, and ideas.
- Chapter 15,
- Revenue Rule,
- Cross-Border Taxation,
- International Bankruptcy
Available at: http://works.bepress.com/mathews_vattamala/2/