The Tax Times

Thursday, April 23, 2026

Shall I Stay or Shall I Go? - IRS Reports That US Expatriations Rose By 8% To 1,400 In 1st Quarter of 2025!

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Are You Tired of Trump 2.0.
That The Republicans Now Control the House & the Senate.
Are You Sick of Liberal Democrats Trying to Revise Society.
Are You Tired of Government Shout Downs or
Maybe You're A Naturalized U.S. Citizen Or Permanent Resident Who Has Prospered Here, But Would Now Like To Move Back The Old Country For Retirement?

You Might Want to Consider Expatriation?

The Internal Revenue Service said in its notice that the number of people who lost or renounced their U.S. citizenship totaled 1,600 in the third quarter as logged by the U.S. Treasury Department, a 50% increase from the previous quarter.

Included on the list are those who lost U.S. citizenship under Internal Revenue Code Section 877(a) and Section 877A, according to the notice, as well as long-term residents who are treated as losing citizenship under Section 877(e)(2).

According to CNBC the top reason why Americans abroad want to dump their U.S. citizenship include:

Nearly 1 in 4 American expatriates say they are “seriously considering” or “planning” to ditch their U.S. citizenship, a survey from Greenback Expat Tax Services finds.
About 9 million U.S. citizens are living abroad, the U.S. Department of State estimates.
More than 4 in 10 who would renounce citizenship say it’s due to the burden of filing U.S. taxes, the Greenback poll shows.

Should I Stay or Should I Go?

Need Advise on Expatriation?

Contact the Tax Lawyers at

Marini & Associates, P.A.

for a FREE Tax Consultation contact us at:

www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888-8TaxAid (888) 882-9243

When Offshore Trusts Meet IRS Collection: United States v. Kroner

The IRS’s long‑running battle with Florida taxpayer Burt Kroner shows how far the government will go to reach assets held in offshore trusts when a large tax bill goes unpaid. In United States v. Kroner et al., 9:25‑cv‑80877 (S.D. Fla., West Palm Beach), the government sued Kroner, family members, and a Bahamian trustee to repatriate foreign trust assets and satisfy a tax liability topping $27–28 million.

The backstory: cash transfers and Bahamian trusts

The Kroner dispute traces back to cash transfers Kroner received from a former British business associate between 2005 and 2007. According to court filings, he received about $25 million in cash, took the position that the transfers were not taxable, and then moved substantial amounts into Bahamian trusts.

Two structures are central to the current enforcement case:

The Kroner Family Trust 2004, funded with roughly $12.675 million via a series of transfers from 2005–2006.
The Kroner Family 2007 Trust (often referenced as a separate settlement), funded with another $5 million in 2007.

By 2012, the IRS had assessed approximately $13 million in tax, penalties, and interest related to the transfers, and litigation ensued over deficiency and penalties, including the Eleventh Circuit’s decision in Kroner v. Commissioner on section 6751(b) supervisory approval. While the procedural penalty fight was significant, it did not eliminate the underlying income tax, and the government alleges that, over nearly two decades, Kroner’s unpaid balance has ballooned to around $27–28 million with additions and interest.

The enforcement suit: repatriation and injunctive relief

On July 10, 2025, the United States filed a civil action in the Southern District of Florida, United States v. Kroner et al., seeking to collect the assessed liabilities and reach assets held in the Bahamian trusts.

The complaint names as defendants:offshorealert+3

Burt Kroner
Family members Alyson (Allyson) and William Kroner
Equity Trust Bahamas Ltd. as trustee of the 2004 and 2007 Bahamian trusts.dockets.justia+2

The government’s theory is straightforward: although the assets sit in foreign trusts under Bahamian law, Mr. Kroner and his family benefit from them and have sufficient control or influence that a U.S. court can order them to take steps to bring assets back to the United States.

Enforcement of federal tax liens arising from the assessments.
Injunctive relief restricting transfers from the Bahamian trusts.
A repatriation order compelling Kroner to cause sufficient trust assets to be brought into the U.S. to satisfy the IRS’s claim.

Notably, this collection case follows a bankruptcy proceeding in which a Florida bankruptcy court ruled that the Bahamian trusts and their assets were not subject to the automatic stay, clearing the way for separate district court enforcement.

Bahamian law vs. U.S. collection power

A major flashpoint is whether Bahamian law can insulate the trusts from U.S. collection efforts. Kroner’s side has pointed to foreign law constraints and argued that the IRS compromised any secured lien position by filing an unsecured proof of claim in bankruptcy, attempting to undermine the government’s lien‑enforcement posture.

DOJ’s response is that foreign law cannot be used as a shield when a U.S. court has personal jurisdiction over the taxpayer. In March 2026 filings, the government argued that:

The court can order a U.S. taxpayer–beneficiary to exercise whatever rights and powers he has over foreign trust structures to repatriate assets.
Personal jurisdiction over the settlor/beneficiary is enough to support repatriation and injunctive relief, even though the court cannot directly command the foreign trustee

This line of argument echoes earlier repatriation and contempt cases, where courts have jailed taxpayers who refused to bring back offshore assets despite having the ability—at least on paper—to direct trustees or otherwise access the funds.

Injunctions, freezes, and a settlement

Early 2026 saw key motion practice over how tightly the Bahamian trusts would be restricted while the case was pending. On one hand, DOJ moved for strong relief, including an offshore asset freeze and repatriation of funds. On the other, the defense argued for access to trust assets for living expenses and contested the scope of any freeze.

Public reports show a middle path:

In February 2026, the court granted a preliminary injunction limiting transfers from the Bahamian trusts and partially freezing the accounts, while allowing a measured flow of funds to the family.
DOJ later agreed to drop its broader bid for a full offshore asset freeze as part of a partial deal governing ongoing trust distributions during the litigation.

By April 2026, Bloomberg and other outlets reported that Kroner and the IRS had reached a settlement resolving the dispute over the frozen Bahamian trust funds. Filings indicate that the resolution followed the court’s injunction and negotiations over access to the foreign trust accounts, though detailed terms were not publicly disclosed.

Practical lessons for planners and taxpayers

For tax professionals and planners working with clients who have offshore trusts or are considering them, Kroner offers several practical takeaways:

Offshore does not mean off‑limits. U.S. courts repeatedly show that they will use personal jurisdiction, the All Writs Act, and federal collection statutes to force repatriation of foreign assets when necessary to satisfy tax or other federal debts.
Trust “control” is broader than formal titles. Even if a foreign trustee appears independent, a settlor or beneficiary with practical ability to influence distributions or trustee decisions may be treated as capable of bringing assets back, with civil contempt as the enforcement hammer.
Bankruptcy does not solve offshore exposure. The fact that a bankruptcy court allowed the Bahamian trusts to sit outside the automatic stay did not prevent DOJ from later pursuing the assets through a targeted district court enforcement case.
Long‑term noncompliance gets very expensive. Kroner’s alleged liability grew from an initial assessment in the low‑teen millions to roughly $27–28 million over time, illustrating how interest and penalties can compound during years of resistance and litigation.news.
Procedure matters, but it is not everything. The earlier Eleventh Circuit opinion in Kroner v. Commissioner on section 6751(b) limited penalty exposure, yet the core income tax liability survived, and the IRS remained willing to litigate aggressively to collect.legacy.

For advisors, the message is clear: clients cannot rely on foreign trust structures or local secrecy laws to escape U.S. tax enforcement once they are under the jurisdiction of a federal court. The better path is proactive compliance, early engagement with the IRS when issues appear, and careful planning that assumes U.S. courts will look through form to substance in offshore arrangements.

Have an IRS Tax Problem?

Contact the Tax Lawyers at

Marini & Associates, P.A.

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888-882-9243)

Sources :

1. https://dockets.justia.com/docket/florida/flsdce/9:2025cv80877/693294

2. https://www.law360.com/cases/68704c94365c8adb5e1824a0/articles

3. https://www.law360.com/tax-authority/articles/2456426/bahamian-law-can-t-shield-trusts-in-28m-tax-suit-doj-says

4. https://www.offshorealert.com/usa-v-burt-kroner-et-al-complaint-to-repatriate-assets-28m-tax-liability-bahamas-trusts/

5. https://dockets.justia.com/docket/florida/flsdce/9:2025cv80876/693292

6. https://flabizlaw.org/wp-content/uploads/2026/01/BK-UCC-CLE-Materials-Wealth-Transfers-and-Fraudulent-Transfers-1.29.26.pdf

7. https://www.law360.com/tax-authority/articles/2439990/doj-drops-bid-for-offshore-asset-freeze-in-28m-tax-suit

8. https://www.law360.com/articles/2439990/doj-drops-bid-for-offshore-asset-freeze-in-28m-tax-suit

9. https://plannedgiving.howard.edu/?pageID=134&Cat=4&docID=1008

10. https://descrybe.ai/case-details/c8240837

11. https://casetext.com/case/kroner-v-commr-of-internal-revenue?p=1&q=48+F.4th+1272&sort=relevance&type=case

12. https://www.plainsite.org/courts/florida-southern-district-court/atlantic-specialty-insurance-company-inc-v-okeefe-painter-architects-llc-et-al/366724sf2/

13. https://www.flsd.uscourts.gov/sites/flsd/files/availablecases/21-CV-81180-RLR.pdf

14. https://www.taxpayeradvocate.irs.gov/wp-content/uploads/2020/07/ARC18_Volume1_MLI_SignificantCases.pdf

15. https://www.justice.gov/archive/tax/usaopress/2008/txdv08_080822-01.pdf

Hyatt’s $300 Million Rewards Tax Fight Gets New Life In Seventh Circuit Appeal - Not Income Under Claim of Right

Hyatt’s long‑running battle with the IRS over the tax treatment of its hotel rewards program fund just took a major turn at the U.S. Court of Appeals for the Seventh Circuit. In Hyatt Hotels Corp. & Subsidiaries v. Commissioner, No. 24‑3239, the court vacated a Tax Court decision that had largely sided with the IRS and sent the case back for a do‑over on some key legal theories. For tax professionals advising brands with loyalty or rewards programs, this is a case to watch.

The core issue: who owns the loyalty fund?

Hyatt operates a centralized loyalty program funded by payments from Hyatt‑owned and franchisee hotels. These payments go into a dedicated rewards fund used to provide free or discounted hotel stays and other benefits to members. The fund also earns investment income.

Hyatt’s position has been that it does not have a beneficial interest in this fund. According to Hyatt, the money is effectively held and used for the benefit of the participating hotels and loyalty members, and it can only be used for program purposes. The IRS saw it very differently, asserting that roughly $300 million of fund balances and income should be treated as Hyatt’s taxable income, generating about $71 million in additional tax for the years at issue.

At the Tax Court, Hyatt lost that argument: the court agreed with the IRS that the fund income belonged to Hyatt and allowed the Service to pull a large cumulative amount into income via an “accounting method” adjustment. The Tax Court also rejected Hyatt’s alternative method‑of‑accounting arguments, including an attempt to use rules analogous to the trading stamp (premium) method.

What the Seventh Circuit said

The Seventh Circuit did not simply affirm or reverse on the same grounds. Instead, it took issue with how the Tax Court framed and analyzed the case.

Two aspects of the opinion deserve particular attention:

· The claim of right doctrine

· The trading stamp / premium method and “other property”

Claim of right: more than a failed trust

Hyatt did not rely solely on a formal trust theory. It also argued that, under the claim of right doctrine, the amounts in the fund were not currently taxable to Hyatt because its control was significantly constrained and the funds were burdened by obligations to provide future rewards.

The Tax Court focused heavily on whether Hyatt had established something like a trust or similar arrangement, concluded that Hyatt had not, and largely treated that as the end of the matter. The Seventh Circuit held that was legal error. The presence or absence of a formal trust does not substitute for a thorough claim‑of‑right analysis.

In other words, even if Hyatt technically “owns” the fund for some purposes, the Tax Court still needed to address whether, given the restrictions and obligations attached, Hyatt had income under the claim of right doctrine in the years in question. The Seventh Circuit declined to perform that fact‑intensive analysis itself and instead vacated and remanded for the Tax Court to do it properly.

Trading stamp method: are points “other property”?

Hyatt also argued that its rewards program should be accounted for using a trading stamp / premium‑type method, which essentially allows a taxpayer to recognize income currently but deduct a reasonable estimate of the future cost of redeeming points, premiums, or similar obligations.

The Tax Court rejected this on the categorical ground that the statute and regulations apply only where the stamp or premium is redeemable for “merchandise, cash, or other property,” and it read “other property” to mean tangible property. Because Hyatt’s points are redeemable for hotel stays and services, the court concluded they fell outside the regime.

The Seventh Circuit disagreed. It held that nothing in the text required “other property” to be tangible and that the Tax Court erred as a matter of law by reading in a tangibility requirement. That does not automatically hand Hyatt a win on the method question—Hyatt still must satisfy all the statutory and regulatory criteria—but it removes a key legal barrier that would have excluded many modern loyalty programs from trading stamp‑style treatment simply because they provide stays, miles, or services rather than physical goods.

Why this matters beyond Hyatt

The implications of this case extend well beyond one hotel chain. Many industries now run large‑scale loyalty programs—hotels, airlines, retailers, financial institutions—and many centralize contributions from affiliates or franchisees into a common fund.

Several themes emerging from Hyatt are likely to be important for those programs:

· Form vs. substance of the fund
The Seventh Circuit’s criticism of the Tax Court’s “no trust, taxpayer loses” approach signals that the analysis cannot end with labels. Restrictions on use of funds, contractual obligations to affiliates, and program documents may all be relevant in deciding when and to whom income is recognized.

· Claim of right in the loyalty context
Loyalty funds often sit on substantial “breakage” and accumulated balances that are not immediately needed to pay redemptions. Hyatt suggests that courts must confront how the claim of right doctrine applies to those amounts when they are subject to real limitations and future obligations. That could affect both inclusion timing and whether some amounts are ever income to the program operator at all.

· Method‑of‑accounting options
By rejecting a bright‑line tangibility requirement for “other property,” the Seventh Circuit opens the door for loyalty programs that provide services (like travel or lodging) to argue for a trading stamp‑style method where the statutory conditions can be met. That could provide better matching between program revenues and redemption costs and reduce large one‑time inclusion adjustments.

What to watch on remand

The Tax Court now must revisit Hyatt with two clear instructions: actually analyze the claim of right question and reconsider trading stamp eligibility without a tangibility gloss.

On remand, key questions will include:

· To what extent did Hyatt truly have unrestricted control over the fund versus holding it under meaningful contractual or practical constraints?

· How do the loyalty program documents allocate rights and obligations between Hyatt and participating hotels?

· Can Hyatt demonstrate that its rewards points and redemptions fit within the statutory and regulatory framework for trading stamp / premium accounting, now that “other property” is not confined to tangibles?

For tax advisors, this is a good moment to inventory clients’ loyalty and rewards structures, especially where there is a centralized fund, significant breakage, or complex affiliate arrangements. Program documents, funding mechanics, and financial statement treatment will all be relevant if the IRS challenges the income characterization or method of accounting.

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