Vatican City and Pope Leo XIV U.S. tax obligations
The Catholic Church has made history again by electing the first-ever American pope: the Most Holy Father, Pope Leo XIV (previously Robert Francis Prevost). The election of the pope on May 8, 2025, creates an unprecedented case: an American citizen, as pope, subject to U.S. taxation and disclosure rules. This raises questions about Pope Leo XIV U.S. tax obligations and the intersection of canon law, international law, and U.S. reporting requirements.
A Bill Written Just for the Pope?
In a fascinating twist, Congress introduced H.R. 4501 to address this exact scenario. The bill includes two striking provisions:
- Citizenship protection: “The United States citizenship of any individual elected as the Supreme Pontiff of the Roman Catholic Church may not be revoked.”
- Income tax exemption: “Such individual shall be exempt from taxation under subtitle A of the Internal Revenue Code of 1986 with respect to any taxable year any portion of which he is serving as the Supreme Pontiff of the Roman Catholic Church.”
While charming, these provisions miss the real issue. The real problem is not income tax under Title 26 of the Internal Revenue Code, but rather FBAR obligations under Title 31 of the U.S. Code.
The FBAR Problem
As pope, Leo XIV is the head of state of the Vatican City. Given the centralized and non-democratic structure of Vatican governance, he arguably holds signatory authority over all accounts of the Vatican government and even the Institute for the Works of Religion (commonly known as the Vatican Bank).
Under U.S. law, this creates a staggering obligation:
- FBAR filings (FinCEN Form 114) are mandatory if the aggregate value of foreign accounts exceeds $10,000.
- The penalty for willful non-filing is 50% of the account balance.
FBAR filing requirements for U.S. citizens abroad
That means, in theory, after just two years of non-compliance, penalties could equal the entire assets of the Vatican Bank. While technically the liability rests on him personally, the magnitude of this obligation is almost unimaginable.
Should He Renounce?
The damage is already done—FBAR obligations already exist. But there may be a path forward. Under Section 349 of the Immigration and Nationality Act, becoming the head of a foreign state can be considered an expatriating act if performed with intent to relinquish U.S. citizenship.
This means Pope Leo XIV could argue that he relinquished citizenship the moment he became Supreme Pontiff. To solidify this position, he could apply at a U.S. consulate for a backdated Certificate of Loss of Nationality (CLN). While not strictly required—since relinquishment occurs by law—this document would serve as proof that the U.S. government agrees he is no longer a U.S. citizen.
What About the Reed Amendment?
One might ask whether the Reed Amendment (8 U.S.C. § 1182(a)(10)(E))—which bars certain tax-motivated expatriates from re-entering the U.S.—would apply. Probably not. The Reed Amendment only applies when relinquishment is to avoid U.S. income tax. Since FBAR penalties are a Title 31 obligation, not Title 26 taxation, it is unlikely the amendment would prevent Pope Leo XIV from visiting the U.S. in the future. He could continue to enter as a Vatican or Peruvian citizen.
Internal Perspective
This unusual case highlights why ordinary U.S. expats must remain vigilant about both income tax filing and FBAR compliance. At 1040 Abroad, we help U.S. citizens overseas stay compliant with IRS and FinCEN reporting, no matter how unusual their circumstances. While you might not be the Pope, the stakes for FBAR non-compliance can still be severe.
Conclusion
Pope Leo XIV’s election raises fascinating and bizarre legal questions at the intersection of theology and taxation. While Congress’s lighthearted proposal sought to shield the pope from income tax, the real danger lies in FBAR penalties. His best course may be to claim that becoming the Supreme Pontiff constituted an expatriating act—ending his U.S. citizenship and, with it, his obligations.
