Democrats Abroad has written to Senator Sheldon Whitehouse (D-RI) and Representative Lloyd Doggett (D-TX), sponsors of the 2017 Stop Tax Haven Abuse bill, in relation to measures in the bill involving offshore account disclosure.   Americans abroad face serious problems obtaining everyday banking products and services in their countries of residence (as well as in the United States [1]) arising from foreign financial account disclosure requirements.   In our letter we have outlined our concerns about the 2017 bill and, in anticipation of its re-introduction in the 116th Congress, have offered a range of recommendations for anti-abuse mechanisms to curb tax evasion PLUS protect the ordinary and entirely legitimate financial accounts held by Americans abroad in the countries where we live and work.  This is our letter.

More Treasury Regulations proposed for implementing the 2017 Tax Cuts and Jobs Act (TCJA)

On Thursday 13 December 2018 Treasury published proposed guidance on the Base Erosion and Anti-Abuse Tax in the 2017 TCJA.  An easing of rules governing the way foreign financial institutions and U.S. banks should deal with foreign account disclosure laws also factors into the proposed regulations.  Reporting on the proposed rules is here, here and here.

Democrats Abroad is pleased that Treasury, in providing relief for U.S. corporations abroad, has also given consideration to foreign financial account reporting; this is an issue that significantly impacts U.S. citizens abroad.  We strongly urge Treasury to not only consider regulatory changes to benefit companies that operate outside the U.S. but also to consider further changes that would benefit ordinary American citizens who live and work outside the country.   

Democrats Abroad Taxation Task Force

[1] Provisions in the USA PATRIOT Act requires holders of U.S. financial accounts to have a U.S. address. Americans living abroad without one are not able to open or retain accounts back home.

Democrats Abroad has reached out to Democratic members of Congress expect to lead in the House of Representatives on key committees to request hearings early in the 116th Congress examining laws and regulations that harm and discriminate against Americans living outside the U.S.  Our letter is here.  We expect to follow up on this letter once the 116th Congress is seated and especially during a Congressional Door Knock to be held in conjunction with the Democrats Abroad 2019 Annual Global Meeting to be held the first half of the year.

Further more detailed information about the matters raised in this letter and other grievous discriminations against U.S. citizens abroad that Democrats Abroad has and will continue to bring to the attention of our elected representatives please see the Democrats Abroad 2016 Platform which is posted here.

Democrats Abroad has written to Senator Orrin Hatch, Chairman of the Senate Finance Committee, Senator Ron Wyden, Ranking Democrat on the Senate Finance Committee, Rep Kevin Brady, Chairman of the House Ways and Means Committee and Rep Richard Neal, Ranking Democrat of the House Ways and Means Committee, asking for our transition tax reform recommendations to be included in any technical corrections bill moved in the lame duck session to remedy serious problems arising from the 2017 Tax Cuts and Jobs Act rushed through Congress in December of last year.  Click here to download the letter.

Our letter goes on to ask for their support for an urgent switch from citizenship based taxation to residency based taxation (RBT).  

The Democrats Abroad Taxation Task Force is very much looking forward, in the next year, to reaching out to the 116th Congress, so many members of which have the overseas vote to thank for their seats. We will make a special effort to engage with them and continue to persuade the all-important tax writing committees about the need for urgent action on expat tax reform.

Last week the U.S. Senate followed the U.S. House of Representatives into recess until after the 6 November midterm elections. Here are some updates on the advocacy work of the DemsAbroad Taxation Task Force as we leave the regular session of the 115^th Congress behind and anticipate the “lame duck” session.

· The Residency Based Taxation (RBT) proposal being championed by Rep George Holding (R-NC) has been at a standstill since August. We are told that further work on the scoring analysis by the Joint Committee on Taxation (JCT) awaits 1) further releases of regulatory guidance by Treasury on the implementation of the Tax Cuts and Jobs Act, specifically the 2 new “transition taxes” it introduced that impact American business owners abroad (Repatriation Tax and GILTI Tax), and 2) new definitions for what qualifies as a Passive Foreign Investment Company (PFIC), which are subject to highly punitive tax treatment.

Our hope is that these matters will be resolved in time for JCT to complete its cost analysis and for House Ways & Means Committee staffers to produce a RBT bill to be introduced in the “lame duck” session. We understand that there will be a Tax Cuts and Jobs Act “technical corrections” bill between Election Day and the end of the calendar year, but we do not expect a fix for the “transition taxes” to be a part of that bill.

We liaise continuously with key members of the House and with our colleague organisations who are also working in support of RBT. If there is any progress made on the RBT proposal we will surely pass it along.

· Treasury released guidelines for implementing the transition taxes in the Tax Cuts and Jobs Act on 1 August 2018 and opened a 60 day comment period for submissions in response to the guidance. Indications suggest Treasury was inundated with comments from individual and corporate owners of businesses abroad. Thanks to all who made submissions in response to our call for comments. The IRS has very abruptly announced it is holding hearings on the regulations this coming Tuesday 22 October, with witnesses invited to speak for 10 minutes. We anticipate a lively exchange of comments and hope thereafter that the IRS embraces the need for relief for American individuals who own foreign businesses. We will forward any developments.

· Democrats Abroad has been to Capitol Hill twice since the end of the August recess for meetings with members of Congress about expat tax reform. Our outreach, at this point, is concentrated on a) Democrats on the important House Ways & Means Committee, b) members of the House Americans Abroad caucus or who have a connection to the Americans abroad community, and c) members who are friends of Democrats Abroad or have themselves lived outside the U.S. As Congressional Democrats were fully and completely locked out of the 2017 tax reform process we are finding ourselves spending a lot of time educating members about the new taxes on Americans abroad introduced in the 2017 Tax Cuts and Jobs Act. We use it to reiterate our support for a switch from Citizenship Based Taxation to Residency Based Taxation (RBT), with the goal of finding Democrats who will act as RBT bill co-sponsors when the bill is finally produced.

Important Democrats Abroad tax reform position papers we leave behind at meetings on Capitol Hill are here and here. Our discussions about the issues are often fruitful and encouraging. On Capitol Hill, however, attention has well and truly shifted to the midterm elections. House offices are manned by a skeleton staff - aides having been re-deployed to electoral efforts in the district - and meaningful responses to policy queries are not forthcoming.

The most high potency outreach to Congress, however, is from you to your elected officials. And there’s no better time to generate attention from candidates for office than when they are asking for your vote. Our expat tax reform campaign guide provides language for phone calls and written messages of all kinds and we encourage you to consult it for support to communicate with your member of the House of Representatives or Senators.

Lastly, the other very very important thing you can do to support and progress the tax advocacy work of Democrats Abroad and others to enact a switch to Residency Based Taxation IS TO VOTE. A strong, blue, voter abroad turnout is critical to making our concerns a priority for members of Congress. If you haven’t yet voted for many states it is not too late; go to votefromabroad.org to request a ballot. If you have voted, thanks so much for expanding the profile of voters living abroad and for helping to build that blue wave.

Please contact us at any time with questions or comments.

Democrats Abroad Taxation Task Force

[email protected]

Following on from guidelines published on August 1, Treasury has issued yet another set of guidelines to tax advisers on the Repatriation Tax passed in the GOP 2017 Tax Cuts and Jobs Act.  You can read reporting on the guidelines here or read the guidelines themselves here, but don't expect to find in them ANY RELIEF for American business owners abroad.  

We continue to hear from members who own non-US companies about the financial (and psychological) havoc these new taxes are wreaking on their businesses - and their families.  We carry those tragic stories and case studies with us when we meet with lawmakers about tax reform, so please keep sending us messages about how you, your family and your company are experiencing the new taxes RUSHED into place in the 2017 Tax Cuts and Jobs Act.  

More importantly, however, please keep sending messages to your members of Congress!!  Your Senators and Representative need to hear from you.   You can use the language in this updated campaign guide to reach out to your elected representatives.   The guide also includes a list of members of Congress and key aides driving tax policy writing.  You can write to them as well but nothing is as effective as outreach to your elected representatives.

REMINDER:   The Open Comment period on Treasury's August 1, 2018 Repatriation Tax and GILTI Tax guidelines closes on Tuesday, October 9, 2018.  Transition Tax campaigner Monte Silver has prepared this advice to assist those who wish to make a submission to Treasury.   We urge all owners of foreign companies, whether they live in the US or outside the US, to make a submission.  

IMPORTANT:  There are 2 further sets of Repatriation and GILTI Tax guidelines coming from Treasury!  We don't know as yet whether those guidelines will include relief for individuals who are shareholders in foreign corporations.  Hearing from those gravely impacted by these "transition taxes" reminds Treasury that relief is desperately needed.

Please send comments and questions to [email protected]

Summer 2018 is ending with House Republicans announcing Tax Cuts 2.0. It's a bill that makes permanent the 2017 Tax Act’s temporary cuts to individual tax rates, expands tax-free savings options and adds incentives for investing in start up businesses. It does not, at this point, include a provision to enact Residency Based Taxation (RBT).  Call or write Congress and demand one!

Those working on the RBT bill that was meant to be a component of Tax Cuts 2.0 told us last week that it was incomplete* and so we are disappointed but not surprised by the announcement.

Democrats Abroad will be on Capitol Hill next week to keep up the pressure on lawmakers. We will be making the case for these reforms critical to the Americans abroad community:

You can support our work by calling your elected representatives this week and asking for their support. ALL YOU NEED IS IN THIS CAMPAIGN GUIDE.

Send questions or comments to the Taxation Task Force:  [email protected]

* New Passive Foreign Investment Company (PFIC) definitions are coming from Ways & Means Committee staffers and new Transition Tax regulations are coming from Treasury. These will dovetail with provisions in the RBT bill.   

The Taxation Task Force encourages Democrats Abroad Country Committees and Local Chapters to print some of these tri-fold, double-sided pamphlets about our Residency Based Taxation advocacy campaign to distribute at your events.  It explains our campaign and provides languagesupporters can use to call or write to their elected representatives.

You can download a PDF version here.

Please send questions or comments to [email protected]  

Thanks for your on-going support!

Democrats Abroad Taxation Task Force

Democrats Abroad was invited to be a part of a roundtable convened by Dutch politician and member of the European Parliament, Sophie In’t Veld, to discuss issues raised in a paper examining the Foreign Account Tax Compliance Act (FATCA) and its application to the international community and European affairs.   Democrats Abroad does NOT involve itself in host country politics or policies and so has declined the invitation.

Democrats Abroad acts as the Democratic voice of all Americans abroad. The community of Americans abroad is as diverse in age, economic status, race, marital status, sexual identity and political persuasion as any other American community.

Uniquely, however, the community of Americans abroad also includes a cohort of U.S. citizens who have little or no connection to the United States other than by accident of birth - "Accidental Americans."  Having no association or affiliation with U.S. culture or identity, nor a desire to maintain such artificial and bureaucratic ties, Accidental Americans bear the consequences of a citizenship condition that was not of their making.

Democrats Abroad acknowledges that the only remedy on offer to Accidentals currently requires them to incur significant effort and considerable, material cost to renounce their American citizenship.  This is an effort no other nation on Earth imposes.

Democrats Abroad takes an interest in all Americans living abroad – those who are living abroad temporarily; those who are living abroad indefinitely; and those whose lives have always been firmly rooted in countries other than the U.S.  We support policies that free and empower Americans to make responsible migration and citizenship decisions in the interest of themselves and their families.  Democrats Abroad supports a citizenship renunciation remedy for Accidental Americans consistent with this view and we stand with Accidental Americans in their work to secure one.

The 15 June U.S. tax filing deadline for non-resident citizens is upon us - making this the perfect time to raise our voices and remind Congress that we’re NOT HAPPY that the Americans abroad community was completely forgotten in the 2017 "tax reform". And worse, we were subjected to yet another punitive tax provision because tax writers, once again, didn’t stop to consider the impact of complex new tax provisions on Americans abroad.

Let’s call Washington and remind Congress that we’re out here, we vote and we need their support for -

We all need to call Congress and make our voices heard.

All you need to make your voice heard on 15 June - International Tax Filing day is in this Campaign Guide.

Send any questions or comments to the DA Taxation Task Force at [email protected]

On Monday 4 June the IRS made an announcement regarding new rules for Americans who must include Repatriation Taxes in their 2017 tax filing, due next Friday 15 June.  On advice from international tax lawyer Monte Silver, our understanding of the impact of the change is as follows:  As long as the taxpayer has less than $1m in Repatriation tax liability (which covers persons with about $6.5m in cash or $12.5m in non-cash or a mix of cash and non-cash non-repatriated profits) then they can delay their first payment by 1 year without incurring penalties (though there will be interest accruing) or having the entire liability accelerated (due and payable immediately).  That gives us another year to work on a remedy before the worst of the transition taxes cut in for those who can least afford to pay.

Whilst this relief is welcome, it was a grave mistake for the 2017 Tax Cuts and Jobs Act to impose "transition taxes" on American business owners abroad.  The provisions were enacted with no thought given to the impact on Americans living abroad.  These taxes will cause enormous financial harm and force many Americans abroad to close their businesses.

Democrats Abroad, in association with the other Americans abroad advocacy groups, have been working for months to draw attention to this serious situation and demand a remedy.  Nothing less than an amendment by Congress granting a full exemption for Americans abroad from the TCJA transition taxes will be acceptable.  The law is double-taxing American business owners abroad - which does nothing to expand job growth and create economic opportunity.

It's not just unfair.  It is damaging to U.S. business interests.  Errors in tax policy writing like this underscore the urgent need for Congress to act decisively by passing a bill to enact a switch from Citizenship-based Taxation to Residency Based Taxation (RBT).

Under RBT Americans abroad will continue to report their U.S.-based income to the IRS, but will not report the income they earn and already pay tax on in their countries of residence.  THAT'S what we have been working so very hard on.  And then these new taxes came along!  RBT remains the reform Americans abroad are waiting on.  

Fortunately there is serious work going on in the House Ways & Means Committee on an RBT bill.  We look forward to seeing our RBT advocacy work result in a bill on the floor of the House of Representatives this year.  We are working hard to see that happen.

Please send questions or comments to [email protected]

In March 2018 the IRS issued a notice on how it will implement the Passport Revocation Provision passed by Congress in 2015 as part of the FAST Act.  Democrats Abroad and other groups representing Americans living outside of the U.S. provided input into the establishment of the rules and are generally pleased at the way the due process provisions protect Americans living abroad, especially those in conflict or otherwise unstable zones or in vulnerable positions.   

Provisions in the code implementing the passport revocation provision also require Americans to include their Social Security numbers (SSNs) on passport and passport renewal applications or face a $500 fine.  We have some concerns and questions about the use of SSNs and other and they are reflected in this submission to the House Ways & Means Social Security Subcommittee hearing on Social Security numbers and securing Americans' identities.  We call on Congress to help us seek clarification from the State Department, Treasury, the IRS and Social Security Administration on: the use of SSNs; sharing of SSNs; obtaining SSNs from abroad; SSNs as federal ID; protection of expat Americans' SSNs from theft; and process for expat Americans for obtaining and challenging SS reports. 

We hope for responses to our questions and will report back with comments from Congress or the agencies relevant to this inquiry.

Please send comments or questions to [email protected]

At the DA annual meeting the leaders of the Democratic Party Committee Abroad (DPCA or Democrats Abroad) ratified this resolution to call upon the Democratic Party to provide formal support for a switch from the current U.S. system of Citizenship Based Taxation to Residency Based Taxation.   Next a resolution signalling that support will be submitted to the Democratic National Committee for presentation at their next meeting of party leaders (August).

Please send questions or comments to [email protected]

Democrats Abroad continues its work pushing the House Ways & Means Committee to exempt American business owners abroad from the “transition taxes” built into the 2017 Tax Cuts and Jobs Act.

The Ways & Means Committee is holding a series of hearings on tax reform, the latest (May 23 2018) of which is focussing on small business. Click here for more information.

Democrats Abroad made this submission to the hearing. It draws attention to the material harm done by the transition taxes built into the Tax Cuts & Jobs Act that mistakenly hit Americans abroad who have small to medium sized businesses in their countries of residence. It also outlines our proposed remedy: an exemption from the tax for bona fide non-resident Americans.

All Americans abroad who own businesses impacted by the transition taxes are encouraged to 1) use this grassroots campaign tool to write to relevant lawmakers and regulators to demand a remedy, and 2) make your own submission to the Ways & Means Committee hearing on tax reform and small business.

Please send questions or comments to [email protected].

This is a link to our FATCA and FATCA reform campaign FAQs, updated for developments in our campaign in support of Residency Backed Taxation and other.  

Please send questions or comments to [email protected]

The Ways & Means Committee of the U.S. House of Representatives is holding a hearing on Wednesday May 16, 2018 entitled "Hearing Series on Tax Reform:  Growing our Economy and Creating Jobs".  You can find more information about it here.

Democrats Abroad has prepared this submission to the hearing, outlining our concerns about the "transition taxes" introduced in the 2017 Tax Cuts and Jobs Act, profiling comments from American business owners abroad who are being hurt by the new taxes and demanding this urgent remedy:

"We believe Americans overseas with interests in foreign corporations should be exempt from the Repatriation Tax and from the GILTI Tax regime for any given year so long as:

(1) they meet the conditions required for exemption under IRC Section 911, and

(2) they are individual U.S. Shareholders.

This solution both achieves the U.S. Congress's goal of capturing corporate tax it has been long-denied, and recognizes that the profits of businesses owned by Americans living abroad were never meant to be repatriated to the U.S. because they are needed to sustain the underlying business entities and the American expatriate families who rely upon them.

We strongly urge Congress to correct this unintended tax burden which harms Americans and their opportunities for personal savings and economic growth. American business owners abroad should be exempted from these transition taxes so they can remain positioned to manage and grow their businesses and take care of their families."

We urge you to read the whole of our submission and follow these instructions to make your own submission to the hearing, especially if you are the owner of a Controlled Foreign Corporation and will be impacted by the Act.

Please send questions or comments to the Democrats Abroad Taxation Task Force at [email protected]

Thanks to everyone who has contributed to our campaign in support of a switch from our current system of Citizenship Based Taxation to Residency Based Taxation by calling, message or writing to Congress.  If you have yet to do so, or feel compelled to reach out to your elected representatives again, this guide has all the information you need.

If you're not sure what Residency Based Taxation is and so are not sure whether you should act in support of this campaign then we encourage you to examine our Residency Based Taxation Frequently Asked Questions.  And if you still have questions please contact us at [email protected]

Our campaign in support of an urgent remedy for American business owners abroad who face TWO NEW TAXES because of the 2017 Tax Cuts and Jobs Act carries on.  This was a horrific drafting error made because of the extreme haste with which Congressional Republicans drafted and passed the 2017 tax law.  Our discussions with Congress the first week of May suggests the law contains HUNDREDS of such errors!  We need as many voices as possible drawing attention to this one so that, should the Republicans get their act together and introduce a "corrections bill" to make these many fixes, that an exemption for Americans abroad from these crushing new taxes is included.  Whether you are the owner of a controlled foreign corporation or not, please click here to send a message to lawmakers and regulators who can implement a fix.

You can sign up for regular updates from the DA Taxation Task Force here.

DA is door knocking Congress this week to demand urgent reforms to the ways the U.S. tax system harms Americans abroad.  It is critical for Congressional offices to be hearing from Americans living abroad right now to back up our message.

Download this Guide which has all the information you need to call, message or write to your elected representatives about the urgent need for tax reform for Americans abroad.  

We need a "storm" of calls to rain down on Capitol Hill to make a difference.  Please make your calls to your Senators and member of the House of Representatives and share this other Americans abroad.  And then request your ballot for the 2018 midterm elections.  

Please send questions or comments to [email protected]