America's Most Critical Journal (since 1999)
IRS: Frozen Bodies Still Subject to Income Tax
By Dan Geddes
WASHINGTON—A new IRS rule states that cryogenically preserved bodies (frozen in liquid nitrogen) are still subject to US income tax, "because there remains a discrete chance that their lives and incomes can be restored by advances in medical science."
The ruling states that a US taxable person with “sufficient means to preserve his body” should not "use his or her cryogenically preserved state as an excuse to exempt themselves from their tax obligations."
"Being cryogenically preserved is not an argument for shirking one's US tax obligations," stated IRS spokesman John Sanders. "Most of the 200 people who have been cryogenically preserved since 1967 are high net wealth individuals with sufficient funds to preserve their bodies. They can well afford to pay their fair share of tax on passive income."
Revenue Ruling 2012-55 also allows that the "expenses directly related to the preservation of US taxable persons are deductible up to $100,000 per year, and up to $185,000 for a married couple," provided that they were never divorced, and are cryogenically preserved "within the same facility." 401(K) plans and IRAs can be rolled over indefinitely either to pay for the preservation of the US taxable person’s body or to pay the new tax on their still undecomposed body.
The Congressional Budget Office estimates that closing the loophole for cryogenically preserved people could raise more than $200 million in tax revenue per year.
Some observers saw the new rule as taking aim at Walt Disney (1901-1966), widely rumored to have had his body cryogenically preserved upon his death in 1966.
One anonymous IRS spokesman stated that "Walt Disney has failed to file a tax return since 1966. The new IRS ruling clearly specifies that physical death is not necessarily a reason to terminate a US person's tax obligation. With all the back taxes, interest and penalties, most of the Disney corporation could end up in the hands of the IRS."
"Why should Mr. Disney get to enjoy a relaxing retirement in his cryogenic deep-freeze, while other retirees are forced to take jobs to meet their tax obligations?"
A Disney lawyer stated off the record that: “This is totally absurd. Walt Disney was never cryogenically preserved. That is an Urban Legend.”
In an unusual departure from tradition, Revenue Ruling 2012-55 applies ex post facto to all cryogenically preserved bodies, some dating back to the late 1960's. IRS Spokesman Sanders explained that the ex post facto provision was justified by the US government’s dire current accounts deficit.
“Cryogenically preserved US persons enjoy all the specific benefits of US citizenship. Why shouldn’t they have to pay their fair share of income taxes?”
The Cryonics Institute of America has already filed a case in US Tax Court against the provision that "cryogenically preserved heads" are still subject to tax, even in cases where “the body itself has not been frozen for preservation.”
"It's one thing to say that a cryogenically preserved body might one day be restored and be able to pay their fair share of tax, but a head! How is a thawed out head supposed to get a job, after being unemployed for decades! And in this difficult job market!"
But the IRS is firm in its insistence that "the cryogenically preserved head might still contain a vast wealth of untapped ideas, and this intellectual capital should not escape taxation, just because it was once frozen and is no longer attached to a functioning body."
The IRS did not fail to anticipate the international tax aspects, reaffirming that cryogenically frozen bodies and heads of taxable US persons currently frozen outside the United States remained US persons for tax purposes, and thus still had an obligation to file their US 1040 long form, form 8819, and numerous other forms, depending on their assets.
“If the preserved head or body of a US person renounces its US citizenship, the head or body must continue to file US taxes for a period of ten years before it is finally exempt from its prior US tax filing obligation.”
"Any arguments against this ruling will be deemed frivolous," affirmed IRS spokesman Sanders.
Mr. Disney was unavailable for comment.