Antarctica, not a foreign state

by wonderfullyrich on January 12, 2006

I’m currently living 9000 miles away from the country to which I hold citizenship, in a place that is wholly surrounded by more then one ocean,  which is between two and three times the size of the continental United States, has no government, is not owned by anyone by international treaty, an to which no sane person would live their life on, and yet it is not considered a foreign state by our lovely Internal Revenue Service.  (No offense to those in league with them, but this is a ridiculous piece of work.)  Some where along the way a bureaucrat decide that work in Antarctica did not qualify as a foreign state and those who work here were not eligible for the foreign earned income exclusion.  This is the same credit that contractors in Afghanistan, Iraq, and a bunch of other foreign countries use to make “tax free” money.  (Countries I might note that have lacked a government at one time or another.)

Apparently while here in McMurdo we are not really in McMurdo at all, it seems we officially in Virginia, or that’s where we are getting paid from and where our unemployment would be coming from if we filed.  I seem to be having a physic’s issue with this law code, but I admit that physic was never the United States Code or Internal Revenue Code’s strong point.

Surprisingly enough it’s taken me almost 3 months to find out about this.  I found out because the guy I’m replacing is one of many litigants suing the IRS for there rather ridiculous point of view.  This is a view that I must mention is exclusive to the IRS, other courts have rule Antarctica qualifies as foreign country and indeed we have signed a treaty to this effect so it’s rather odd that one department decides change go against the general policy of the government. 

I’ll tell you the brief bit of what I have heard.  Someone from who over wintered here apparently got audited not in 2001 or 2002 by a Milton Freedman (no relation to the economist, so far as I know).  Milton apparently found tax code that backed up his claimed that Antarctica is not considered a foreign state and you can’t use the exemption.  This blew up into a negative public relations issue for them when several of those who have been threaten by the IRS for back taxes and fines took the IRS to Tax court where it’s been for several years.  The current status of the litigation seems to be in the favor of the plaintiffs, given the last time someone was in court the judge had harsh words for the IRS on this matter.  Unfortunately though, there seems to be some divide and conquer methods going on here and this may remain an open issue, or indeed they may get away with this for quite a time.  Right now the details remain unclear.

Of course I’m bickering a bit when I talk about this.  It’s a pain to have to think about so much of my check being garnished when it’s even hard to vote down here.  I’m quite sure this has been brought up with a few of the Distinguished Visitors who were down here not long ago.  So maybe something will eventually get done about it.  For those who come down for money though, this is a big issue.  Of course if you were coming down for money, your a heck of a lot more inclined to go to work for KBR, or Halliburton in Iraq or Afghanistan as we don’t really roll in the money like they seem to.  We tend to roll in snow and volcanic ash… :)

Chipotle

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