Savvy U.S. taxpayers have traditionally attempted to bypass U.S. taxation on foreign sourced income by hiding behind foreign entities and retaining income offshore. This income could then be deferred indefinitely, or repatriated in years where amnesty or more favorable tax conditions exist. Outbound U.S. taxation rules are therefore primarily concerned with preventing the deferral of U.S. recognition of foreign sourced income in these situations.

In addition, for U.S. persons who are subject to foreign taxes on their foreign sourced income, outbound U.S. tax rules allow a dollar for dollar credit for foreign taxes paid in order to prevent double taxation.