First Aired: July 12, 2000

Plot: Peter gets audited by the U.S. Internal Revenue Service and is denied a tax refund. His plans to build a backyard pool are further derailed when a request for a zoning variance leads to Mayor Adam West revealing that Peter’s house is not even part of the United States.

Peter declares his house to be the new microstate of “Petoria.” He spends a night in Quahog insulting a bartender and bringing beer out into the streets, stepping on grass that can’t be touched and violating numerous laws such as littering, sexual harassment, vandalism, etc. He flaunts his diplomatic immunity by singing a parody of MC Hammer’s song “U Can’t Touch This” and mentions that he can’t be sued by Hammer.

On the advice of the diplomat from Iraq, he annexes Joe’s pool and calls it “Joehio.” Days later, when Chris tries to go to school, he is turned away because the United States military surrounds and blockades the nation of Petoria with tanks and missiles. Further, all electricity and water has been cut and Lois home schools the kids. Peter is forced into negotiating for a repatriation, after Lois and the children leave him to the US, under the threat of “Operation: Bomb the Crap Out of Your House” (according to the General, “the guy who makes up the names is on vacation” and “my grammar sucks”). After some negotiations, Peter ends up repatriating his country and returning Joe’s pool. Grateful to Peter, Lois promises to scratch his back with a matchbook every night. In the end, all the events of the episode turn out to have been filmed and used ever since in social studies classes 200 years in the future.