Universal Taxation: The IRS has the authority to tax you anywhere for any income derived from any source, whatsoever. This universal power has caught many people by surprise — especially expatriates and resident aliens, when it comes to foreign bank and investment accounts.
Why don't we ask someone more imaginative than me to explain the Universal Tax Jurisdiction of the IRS? Let's say, the creator of Star Trek the Next Generation, and noted tax expert, Gene Roddenberry.
AP: Glad to have you. Can you tell us something about Universal Tax Jurisdiction?
Gene: Absolutely. Basically the 16th Amendment gives the IRS the authority to tax you —as long as you are a US citizen (or non-resident alien) on income on any source from anywhere. So if you make money in the United States, Luxembourg, the moons of Saturn, or say during a game of chance while you were captured aboard the Borg, the IRS has a right to tax all the income.
AP: Really? But I mean, if you make money outside the US why should you have to pay the IRS anything? It's not like you got the benefit of US regulations or policing functions.
Gene: That's just the way it is. Also, if you have any bank or financial accounts in Luxembourg, the moons Saturn or say even somewhere on the Borg, you have to tell the IRS about that account. Even if it didn't make any money — or even if it lost money.
AP: Could you give me a real-life example of how this all works?
Gene: I'd love to. Let's say you are Captain Jean-Luc Picard and you are trying to relax in the Holo-deck. And during a Hernán Cortez conquistotor fantasy sequence, the Holo-Deck malfunctions.
AP: Yeah, who would have seen that coming?
Gene: Yeah, so Moctezuma II actually finds his way off the Holo-Deck and boards the Enterprise. You give chase. But while on deck, Moctezuma sees that he is not in the future home of Mexico City, but rather in deep space aboard some space ship. This totally blows his internal model of the universe away so he collapses and dies.
But jeez, he left all this Aztec gold laying around his body. So you do what any prudent starship captain would do, and give him a proper space burial, sans his valuable trinkets, which you bring back to your quarters to show off as yet another one your Halo-deck trophies in order to make a positive impression any number of ship's doctors or therapist chicks.
AP: That doesn't sound like something either myself or Captain Picard would do.
Gene: Well now see, right there, you just has a taxable event. If Jean-Luc is a U.S. citizen (or even resident alien), he has to report 100% of the treasure trove to the IRS when he goes to sell it in exchange for some Romulan space cocaine.
AP: That really doesn't seem like something I or Captain Picard would do.
Gene: Right. But say you do sell the Aztec gold for space dollars and then you invest it in a bank account in Mos Eisley.
AP: I think you are confusing worlds.
Gene: That's just my point. It doesn't matter which world you're on. If you have a bank account or control it via signatory authority anywhere — and I mean anywhere — you have to report its existence if it is worth over 10,000 US or space dollars.
AP: And you have to report all the income to the IRS.
Gene: Exactly. Now apologize to my estate for this unauthorized, yet fair, usage of my image and/or likeness.
AP: May the force be with you!
Gene: No seriously. Apologize.
AP: Fine. I'm sorry.
Gene: That's better.
AP: That you're such a jerk.
Gene: That's a funny bit when Nemoy does it. Not so funny here.
* * *
And that's about all I have from the interview with Gene. We did discuss the tax implications of a replicator replicating one million space dollars, but good Lord, you really don't want to hear about that.
With apologizes to Gene's estate…