Taxation Task Force Chair

  • September 2018 Residency Based Taxation Campaign Guide for Congressional Outreach - call now!

    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:

    • Residency Based Taxation;
    • an exemption from the “transition taxes” in the 2017 tax law to prevent the destruction of many thousand of companies owned by Americans living abroad;
    • HR 2136, the “Overseas Financial Access Act” – to eliminate the foreign financial accounts of Americans living abroad from reporting under FATCA;
    • HR 1205, the “Social Security Fairness Act” - to repeal the Windfall Elimination Provision that prevents Americans abroad with pensions in their countries of residence from claiming the full amount of Social Security payments owed to them;
    • a remedy for Accidental Americans who want only to shed unwanted U.S. citizenship without lengthy procedures and undo penalties.

    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:  taxationtf@democratsabroad.org

    * 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.   


  • posted about Residency Based Taxation Campaign Pamphlet for your 2018 GOTV and resistance events on Facebook 2018-07-18 06:10:43 -0400
    Residency Based Taxation Campaign Pamphlet for your 2018 GOTV and resistance events

    Residency Based Taxation Campaign Pamphlet for your 2018 GOTV and resistance events

    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 TaxationTF@democratsabroad.org.  

    Thanks for your on-going support!

    Democrats Abroad Taxation Task Force


  • posted about Democrats Abroad Statement in Support of Accidental Americans on Facebook 2018-07-13 11:51:07 -0400
    Democrats Abroad Statement in Support of Accidental Americans

    Democrats Abroad Statement in Support of Accidental Americans

    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.


  • posted about On 15 June Intl Tax Filing Day tell Congress we're double taxed, we vote and we're not happy. Call! on Facebook 2018-06-08 12:43:47 -0400
    On 15 June Intl Tax Filing Day tell Congress we're double taxed, we vote and we're not happy. Call!

    On 15 June Intl Tax Filing Day tell Congress we're double taxed, we vote and we're not happy. Call!

    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 -

    • the Residency Based Taxation proposal under development in the Ways & Means Committee;
    • an exemption from the “transition taxes” in the 2017 tax law to prevent the destruction of many thousand of businesses owned by Americans living abroad;
    • HR 2136, the “Overseas Financial Access Act” – to eliminate the foreign financial accounts of Americans living abroad from reporting under FATCA;
    • HR 1205, the “Social Security Fairness Act” - to repeal the Windfall Elimination Provision that prevents Americans abroad with pensions in their countries of residence from claiming the full amount of Social Security payments owed to them;
    • a remedy for Accidental Americans who want only to shed unwanted U.S. citizenship without lengthy procedures and undo penalties.

    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 taxationtf@democratsabroad.org.


  • posted about New IRS rules for Transition Tax filing, gives us more time to fight for a full exemption on Facebook 2018-06-04 18:41:08 -0400
    New IRS rules for Transition Tax filing, gives us more time to fight for a full exemption

    New IRS rules for Transition Tax filing, gives us more time to fight for a full exemption

    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 taxationtf@democratsabroad.org.


  • posted about DA seeks clarification on the use of Social Security numbers provided on passport applications on Facebook 2018-05-29 11:46:31 -0400
    DA seeks clarification on the use of Social Security numbers provided on passport applications

    DA seeks clarification on the use of Social Security numbers provided on passport applications

    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 taxationtf@democratsabroad.org.

     


  • Democrats Abroad leaders to seek formal support for RBT from the Democratic Party

    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 taxationtf@democratsabroad.org.


  • signed up on Youth Caucus 2018-05-26 22:50:25 -0400

    Youth Caucus Signup

    The Youth Caucus of Democrats Abroad is committed to generating awareness of the concerns of young Americans and the challenges they face for the purpose of informing party policy-making and improving party outreach and organizing. The Youth Caucus will provide a platform for young Democrats abroad - those who are and those who seek to become politically active - to engage in and lead on issues and campaigns important to them.

    STATEMENT OF PURPOSE

    The Youth Caucus will be “youth-led” but open to those of all ages who support these central aims.

    The Youth Caucus will/proposes to:

    • Build political engagement by young Americans Democrats abroad. Initiatives will make young Americans abroad aware of:  voter registration and voting from abroad; issue education, advocacy and activism, especially youth-led and youth-related;  candidates and campaigns, especially those of young Democrats;  US political and election organizing from abroad; and overseas and domestic youth networks, contacts and resources.
    • Sponsor issue-focused Working Groups: The Caucus will engage young Democrats abroad in issues advocacy by inviting them to join teams studying particular issues (eg Environmental Sustainability Working Group) and developing and coordinating youth-led advocacy activities and campaigns.
    • Establish web-based communication channels for on-going youth outreach: A Youth Caucus Blog on the Democrats Abroad Youth Caucus webpage will provide continuous access to the work of the Youth Caucus and facilitate participation by members globally.
    • Work online. Membership will not be constrained by physical location. All general meetings, campaigns, fundraisers etc. will be conducted online via Skype, Social Media, Email, and Online Markets.
    • Encourage caucus members to organize live local events and gatherings for political education and outreach, issues advocacy or socializing.
    • Be youth-led, with a leadership team made up of volunteers from around the world aged between 18 and 35.
    • Engage with US-based Young Democrats or College Democrats groups to share information, advice, intelligence and ideas, build networks and to cross-promote each other.
    Sign up

  • signed up on Hispanic Caucus Signup 2018-05-26 22:49:35 -0400

  • signed up on bc_signup 2018-05-26 22:49:19 -0400

  • posted about DA W&MC submission continues the push for a transition tax exemption on Facebook 2018-05-22 15:32:44 -0400
    DA W&MC submission continues the push for a transition tax exemption

    DA W&MC submission continues the push for a transition tax exemption

    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 taxationtf@democratsabroad.org.


  • posted about DA publishes updates to our FATCA /FATCA Reform Campaign FAQs on Facebook 2018-05-22 06:44:04 -0400
    DA publishes updates to our FATCA /FATCA Reform Campaign FAQs

    DA publishes updates to our FATCA /FATCA Reform Campaign FAQs

    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 taxationtf@democratsabroad.org.


  • DA tells House W&MComm American business owners abroad need a TC&JA "transition taxes" exemption

    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 taxationtf@democratsabroad.org


  • posted about Residency Based Taxation - what is it and why do we support it (updated FAQs) on Facebook 2018-05-08 13:21:48 -0400
    Residency Based Taxation - what is it and why Democrats abroad support it. Updated FAQs

    Residency Based Taxation - what is it and why do we support it (updated FAQs)

    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 TaxationTF@democratsabroad.org.

    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.


  • posted about DA is in DC talking tax reform. Time to call Congress! on Facebook 2018-05-01 07:41:01 -0400
    DA is in DC talking tax reform. Time to call Congress!

    DA is in DC talking tax reform. Time to call Congress!

    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 TaxationTF@democratsabroad.org.


  • posted about Call Congress and talk tax reform on Facebook 2018-04-27 09:17:20 -0400
    DA on Capitol Hill next week to talk tax reform. Back us up! Call Congress next week.

    Call Congress to talk tax reform

    We now understand the extent of the financial horror of the 2017 Tax Cuts and Jobs Act for Americans abroad who own businesses. The two new “transition taxes” they will bear will force many to close the companies that they have worked so hard to build and which sustain their families and prepare them for financial security in retirement. A true tax tragedy. And another call to arms for the Americans abroad community to demand that Congress:

    • find a “transition tax” remedy to prevent the destruction of many thousand of businesses owned by Americans living abroad;
    • work with the members of Congress developing a Residency Based Taxation proposal;
    • co-sponsor HR 2136, the “Overseas Financial Access Act” – to eliminate the foreign financial accounts of Americans living abroad from reporting under FATCA;
    • co-sponsor HR 1205, the “Social Security Fairness Act” - to repeal the Windfall Elimination Provision that prevents Americans abroad with pensions in their countries of residence from claiming the full amount of Social Security payments owed to them;
    • address the needs of Accidental Americans who want only to shed unwanted U.S. citizenship without lengthy procedures and undo penalties.

    Democrats Abroad needs you to back up our efforts by calling your elected representatives and demanding tax reform for Americans abroad.

    Download our Guide with everything you need to call, message and write to Congress


  • posted about DA tells Senate Finance Committee that we need a Transition Tax remedy urgently on Facebook 2018-04-22 14:46:59 -0400
    DA tells Senate Finance Committee that we need a Transition Tax remedy urgently

    DA tells Senate Finance Committee that we need a Transition Tax remedy urgently

    The Senate Finance Committee is holding a hearing this week to examine the early stage impacts of the 2017 Tax Cuts and Jobs Act.  Democrats Abroad has made the attached submission to the Committee to register our serious concerns about the new Transition Taxes in the law which have extremely severe financial penalties for Americans abroad who own businesses.  Please see our letter below.

    This is a link to the livestream broadcast of this important Senate Finance Committee hearing: https://www.finance.senate.gov/hearings/early-impressions-of-the-new-tax-law

    You will also find at this link directions to making your own submission on the topic of the new tax law. Submissions are due no later than Tuesday May 8 and can only be forwarded by post. No faxes or emails accepted. Please take this into consideration if you are mailing a submission from abroad.

    Democrats Abroad Taxation Task Force  - taxationtf@democratsabroad.org


    Democrats Abroad

    P.O. Box 15130

    Washington DC 20003

    DemocratsAbroad.org

    Senator Orrin Hatch, Chairman

    Senator Ron Wyden, Ranking Member

    Senate Committee on Finance
    Attn. Editorial and Document Section
    Rm. SD-219, Dirksen Senate Office Building
    Washington, DC 20510-6200

    April 20, 2018

    Dear Chairman Hatch, Ranking Member Wyden, and all Members of the Committee,

    Re: Senate Finance Committee Hearing to examine Early Impressions of the New Tax Law – Tuesday, April 24, 2018

    Democrats Abroad greatly appreciates this important hearing on the early impressions of the Tax Cuts and Jobs Act (P.L. 115-97) and we respectfully request that you accept this report for inclusion in the hearing record. We join other organizations representing Americans living abroad in our serious concern about the impact that new taxes in the Tax Cuts and Jobs Act will have on non-resident Americans who own businesses abroad.

    In 2017 the U.S. Congress included Territorial Taxation for Corporations (TTC) in the group of reforms built into the Tax Cuts and Jobs Act (TCJA). We understand that TTC was implemented in order to help level the international tax playing field for U.S. multinational corporations. Congress also included in the TCJA two new “transition tax” provisions to capture tax on corporate profits long kept out of reach of the U.S. Treasury. These new “transition taxes” are our key concern because they materially threaten the viability of businesses owned by Americans living abroad.

    The TCJA “Transition Taxes”

    15.5% Repatriation Tax - imposed on undistributed (and therefore untaxed by the U.S.) business profits from 1986 through 2017. Overseas resident American business owners declare those undistributed business profits on their 2017 personal tax filing. This is a retroactive imposition of tax that is unrelated to the realization of revenue that might be used to pay the tax.

    GILTI Tax regime – starting in 2018, mandatory declaration of undistributed business profits on the personal tax filings of business owners abroad, taxed at the highest personal marginal tax rate and without access to two critical offsets afforded corporate owners of businesses abroad: 1) a 50% deduction and 2) credits for taxes already paid on the profits to the business’s jurisdiction of incorporation. Further, as with the Repatriation Tax, the GILTI tax is imposed on profits where there may be no realization of revenue to use to pay the tax.

    Clearly, TTC was enacted to strengthen U.S. multinational corporations. We believe TTC’s “transition tax” provisions were never meant to beleaguer ordinary, hard-working Americans living and owning companies abroad. In truth, the Repatriation Tax and the GILTI Tax regime will have an enormously harmful financial impact on the estimated 1 million non-resident Americans who own businesses abroad.[1]

    Transaction Tax impacts on non-resident Americans who own businesses abroad

    Americans living abroad owning and operating businesses are an exceeding diverse group; they are architects, yoga studio owners, retailers, recruiters, beekeepers, IT professionals, film and television producers, music distributors, advertising agency owners, financial service providers and more.[2] When asked in early 2018 about the impact of the TCJA “transition taxes” on their enterprises expat American owners of businesses in their countries of residence provided the following comments:

    My family and I own a small private property development company based in the UK and operating since 2001. The profits of this company are fully taxed in the UK and none of the proceeds have been repatriated to the US as they are used for the continuing financing of the business.

    Massachusetts voter living in the UK

    I am a widow, mother of 2 children (ages 16 and 22). My husband was a Canadian glass artist he did not have a pension. I am and have been a self employed graphic designer for many years. I have no pension. My corporation is just me. It holds my savings which are now being taken away by this tax.

    Wisconsin voter living in Canada

    I operate my company with just myself and my spouse and make minimal profit ($20,000 PA at the most after all UK taxes have been paid) and most recently a loss, none the less I file my US taxes at a cost of $1000 each time and now I find I might be hit with an extra US tax making my company potentially nonviable.

    American living in the UK

    I run a technology company from Hong Kong with offices in three territories (China, HK and Taiwan). We have 10 employees and are an exceedingly small company who struggle every day to meet bills and grow our company. But we have big dreams and want to succeed. Don't snuff out small business owners like myself. We are the past, present and future of American business both at home and abroad.

    New Jersey voter living in Hong Kong

    As an architect, I established my small office of 6 employees as a Professional Corporation. This means that the US government is attempting to take a percentage of my savings, which will be needed to weather downturns in the market, which greatly affects my ability to retain employees and keep my business open. I have no home office in the US, nor is there any way for me to benefit from the large corporation tax breaks. This is simply the US siphoning away the funds I need to keep my business up and running.

    Massachusetts voter living in Canada

    I have been in Canada for several decades, except for 1997-2001 when my wife and I lived and worked in the U.S. For the past 11 years I have been doing IT consulting for the Canadian government, which required having a corporation. I have built up savings within the corporation which are meant for my retirement, and it operates solely within Canada, i.e. not a branch operation of any U.S. company. It was a shock to learn from my accountant that I am facing a tax of about $12,000 on my retained earnings, as a result of the subject legislation.

    North Carolina voter living in Canada

    My family business is a simple IT training and consulting corporation that employs me and my husband only. We file and pay taxes in Australia and the US as required. This new tax can ruin us, and if we were simply living in the US, would not apply to us. This is unfair.

    California voter living in Australia

    I have a little landscaping business with 5 employees. I am very proud of the work we do, but keeping on top of all of the paperwork is a struggle for me. I am happy to pay my fair share of taxes, but this law is not fair.

    California voter living in Canada

    My business is a one person marketing consulting corporation in which I maintain a simple portfolio to save for my retirement. This is a travesty.

    Vermont voter living in Canada

    I am a VERY small business owner, running a private counselling practice out of my home. I am very worried that the new laws will be punitive. I already have to pay a tax accountant more than $600 CDN each year for preparing my US tax returns yearly. My fear is that the increased complexity will not only raise the amount I need to pay them, but will result in my needing to pay taxes twice on the same money.

    Massachusetts voter living in Canada

    My business, REDACTED, is a values based business with a focus on sustainability. We make the best REDACTED in Vancouver, BC and strive to be the best employer in our industry. The livelihood of my family and the 100 staff that REDACTED employs is in danger from this policy mistake.

    Washington state voter living in Canada

    I am a small business person with a trading company and some small service businesses. I declare my businesses and income and pay the taxes due both locally and to the US Treasury. Although I have lived overseas for over 40 years, I am proud to be an American and to support the government with my tax dollars. But this latest abomination of a regime is putting an unbearable burden on me and countless other Americans for little tangible benefit. We’re the small worthless fish being swooped up by a giant drift net meant to catch the larger valuable prey, and we’re being left to suffocate and die for lack of interest. Please help us.

    Wisconsin voter living in Taiwan

    I am a practicing physician. I am shareholder in our small incorporated family owned medical business. This Canadian only corporation serves only local people, and the income from this stays in Canada and is effectively our only pension. The Repatriation/GILT is unfair taxation! We have diligently and without fail filed our US Tax returns all the years that we have been required to do so in addition the Treasury Department forms at excess cost to us.

    California voter living in Canada

    I run a one-person incorporated consulting business. I have worked part-time for the past nine years, with the specific purpose of putting money aside to send my two daughters to college in the US. Any additional penalizing taxes paid out of my corporation will be a direct hit to the tuition funds I have worked hard to save, and result in a higher need for federal financial aid.

    Illinois voter living in Canada

    I am the owner of a small software development business that has never done any business in the U.S., yet still reports to the U.S. IRS, and will continue to do so as long as deemed that the cost is within reason. My options are simply to shut it down or expatriate.

    California voter living in Sweden

    All of these comments, and several more not listed here, demonstrate that many Americans business owners living abroad fear that this additional tax burden will force them to close their businesses[3]. In addition to the new transition tax burden American business owners abroad will bear, they are also being subjected to even greater tax filing/compliance costs. The new rules for calculating the “transition taxes” are exceedingly technical and organizing accurate filings is proving very time-consuming and complex. U.S. expat tax professionals hired to prepare these filings are passing on to American business owners abroad the additional cost of their time and labor, enlarging the financial burden the new TCJA taxes places on the taxpayer.

    Further, while U.S. corporations establish subsidiary businesses abroad in order to expand the operations and profitability of their U.S.-based parent company, U.S. citizens abroad establish businesses in their countries of residence in order to build a life and future abroad.

    These are desperate cries from your constituents for help.

    I set up my business only in June last year (2017) as a stop-gap to enable me to earn consulting fees during a period of unemployment following involuntary redundancy. I am earning a fraction of what I earned when employed (about 75% less), yet I am now faced with the cost of employing a tax preparer to deal with the complexity of earning my small income through a UK limited company that I own rather than through a UK company owned by someone else. On 2017 income of about US$15,000, I expect a bill from a tax preparer in excess of US$2,000, more than 10% of my total income, only to comply with the filing burden placed on me as UK business owner who happens to possess a US passport. I can’t even estimate what the cost will be if any US taxes are owed.

    I have lived outside the United States for nearly 25 years and have filed my tax returns and FinCen and FATCA forms without the assistance of a tax preparer for the last 15 years. Now, at a time when I am on significantly reduced income, I am being penalised for being a US citizen earning money the wrong way.

    Virginia voter living in the UK

    As a simple freelance consultant to the life sciences industry, I only established a British limited company on the request of my corporate clients to ensure compliance with local employment regulations and law. I have no employees and no teams of accountants and finance advisors. Between the transition tax and the small fortune I will spend on tax accountants, my financial position will suffer detrimental damage – not only will I suffer a significant income loss, the reduced income will severely impact my likelihood of being able to re-mortgage my home and potentially force me and my wife to sell our home at a loss. I have been fully compliant with US tax and reporting laws for the 10 years of living overseas – this law however has the potential to financially destroy millions of Americans like myself in a matter of months.

    I beg you, PLEASE PLEASE PLEASE PLEASE PLEASE PLEASE remove innocent overseas US business owners from this broad net of unintended taxation. I believe it was not intended to financially destroy people like me, but it is has the potential to do exactly that.

    Arizona voter living in the UK

    We believe strongly that a remedy is needed to exempt these taxpayers from a potentially crushing new tax liability - one that Congress never intended.

    Transaction Tax 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 thank you for considering our views. If you have any questions regarding this letter or would like to discuss the matter further, please do not hesitate to contact either me or Democrats Abroad’s Carmelan Polce who can be reached at Carmelan@democratsabroad.org.

    Sincerely,

    Julia Bryan
    International Chair
    Democrats Abroad
    chair@democratsabroad.org

    Democrats Abroad is the branch of the U.S. Democratic Party for Americans living outside the U.S. Democrats Abroad has members in over 190 countries and official country committees in 53 nations on six continents. Democrats Abroad’s main activity is helping overseas Americans register to vote in U.S. elections. We host our own voter assistance website to aid Americans in that process - www.votefromabroad.org. We often cooperate with U.S. Embassies and Consulates in our countries to encourage voter participation on a non-partisan basis. You can find out more information about us at www.democratsabroad.org or on our Democrats Abroad and Democrats Abroad country committee Facebook pages.

    APPENDIX 1 – Sampling of businesses run by Americans abroad

    I am an architect running a small home based practice with my Canadian spouse.

    New Jersey voter living in Canada

    I co-own a small yoga studio. We offer yoga and meditation classes and struggle to maintain a business in Toronto, Canada's most expensive city.

    Ohio voter living in Canada

    I simply own some souvenir stores in Quebec City.

    Ohio voter living in Canada

    I am a small business, just a one woman Recruitment firm – and a single mother.

    California voter living in Canada

    I am a beekeeper in Canada partnering with my Canadian husband.

    Ohio voter living in Canada

    [I work] as a producer and director of film and television. I am merely an individual artist and creator bringing content to the U.S. and international markets.

    California voter living in Canada

    My business... was established in 1992 and provides distribution services for small, independent music labels. I have lived in London since 1986.

    New York voter living in the UK

    I run a small advertising agency working locally.

    New York voter living in Switzerland

    Psychological assessment and therapy for clients in Calgary, Alberta area. I am the sole owner of my business and sole provider of therapeutic services.

    Oregon voter living in Canada

    The business that my wife and I run, REDACTED, is a company dedicated to helping social enterprises to grow and to increase their positive impact on society and the environment. We employ 15 people, including a number of Americans, in Singapore, where we have lived for the past 14 years.

    New York voter living in Singapore

    I and my siblings own a very small corporation incorporated in Canada created solely for the purpose of splitting a small oil royalty between the eight children. Without the corporation, we would have had to sell the mineral interests because they don't generate enough money, and would have foregone our inheritance.

    Utah voter living in Canada

    APPENDIX 2 – Americans abroad must reconsider plans to start businesses given the new tax burden imposed by the Tax Cuts & Jobs Act.

    I am a stay at home mom, and earn a little money for our family freelancing (writing, editing, and translating) from home. I am hoping to start a small market farm business this year also in Chilliwack, BC, Canada where I live with my husband and two boys.

    Colorado voter living in Canada

    I am currently a student, but planning to go into private practise as a therapist. So I am not a current business owner and the US Tax law may prevent me from operating in private practice as I hope to do.

    California voter living in Canada

    I am an American married to a Dutch national, my “business” is that I am registered as a single-person company: a freelance graphic designer. I have freelanced on and off for several years, whenever I was in-between full time jobs. Currently I am unemployed and do not have any freelance income, these laws have the power to destroy me and my family financially. They limit my prospects for the future… I don’t dare try to grow a business in any way because it will end up hurting my family in the end. I can’t save for my retirement, my child’s education… the American tax laws are devastating to well-meaning citizens overseas that are caught in the unintentional crossfire.

    New York voter living in The Netherlands

    I am a software engineer that works on embedded electronics. I have aspirations to start a small, consulting side company where I may be able to work on my own devices and electronics. Taxes in Denmark are quite high, and I have a large burden on any amount that I may be able to use on my start-up, but adding another tax burden on top of this completely destroys all incentive for me to even start. I am forced to remain a hobbyist that cannot use my engineering expertise outside of my current primary income, with little hope of driving my future career.

    Montana voter living in Denmark



    [1] In 2014 research published by Democrats Abroad approximately 20% of respondents identified themselves as “Self-employed/Business Owner.” Given Department of State estimates that 6.5 million voting age Americans live abroad, we estimate that perhaps a million American citizens are impacted by the “transition taxes” in the Tax Cuts and Jobs Act.

    [2] See Appendix 1 – Sampling of businesses run by Americans abroad.

    [3] Appendix 2 contains comments from Americans living abroad who had planned to start businesses in their countries of residence but who may cancel those plans because of the Transition Taxes.


  • signed up on Tiny Actions Signup 2018-04-06 09:12:27 -0400

  • Important updates on FATCA and on provisions in the Tax Cuts and Jobs Act that impact Americans abroad

    On Monday 2 April there were two important developments related to expat taxation:

    1. Supreme Court denies reviewing FATCA lawsuit

    The Supreme Court announced on Monday 2 April that it will not review the decisions of the lower courts on the FATCA constitutional challenge.  The denial of certiorari means that the issue did not rise to the level, at this time, that merits the Court's review. 

    If the Court had heard the case (Crawford et al v U.S. Treasury) then the question of whether FATCA violates 4th, 5th and 8th Amendment protections of the U.S. Constitution, as well as whether the Intergovernmental Agreements that implement FATCA are enforceable without Senate ratification, would have been addressed.  Many would have welcomed an answer to these questions.  

    However, the Court's decision makes no difference at all to our work advocating for relief for Americans abroad from the enormous burden brought by FATCA.  We continue our support of H.R. 2136 - the Overseas Americans Financial Access Act - which would eliminate all FATCA disclosure of the accounts of Americans living abroad in our countries of residence.  We will continue to ask members of the House to support the bill and encourage our friends in the Senate to introduce a parallel bill.

    2. IRS issues guidance on Transition Tax filing extension

    Further to our recent communications about the imposition of further tax burdens on Americans abroad built into the 2017 Tax Cuts and Jobs Act, on Monday 2 April the IRS issued guidance affirming that 15 June 2018 is the deadline for filing and payments due in relation to the Repatriation Tax for taxpayers with a 15 June filing deadline (as opposed to the 17 April 2018 filing deadline).  This provides some relief for the non-resident owners of businesses abroad who face not only the Repatriation Tax but also a new GILTI tax regime as a result of the switch to a system of Territorial Taxation for Corporations enacted by Congressional Republicans in December.  

    We strongly encourage Americans abroad whose businesses fall under the definition of Controlled Foreign Corporations (consult your accountant or tax advisor) to take part in our grassroots campaign demanding relief from these "transition taxes" for Americans abroad.  Take the time to draft a few sentences that explain how your business will be impacted.  Many businesses abroad will not survive if forced to bear this additional tax burden and Congress needs to hear that.

    Please push this campaign out to your friends and over your social media channels.  The flow of letters has dropped off materially since the campaign was launched 2 weeks ago; this is not the time to let up!  Let's keep up the pressure on lawmakers and regulators.  You can participate in the campaign even if you are not the owner of a business.

    As always, please send any questions or comments to TaxationTF@democratsabroad.org and thank you for your on-going support for our tax advocacy work.

     

    Democratically yours,

    DA TAXATION TASK FORCE

    Julia Bryan - ex-officio (Czech Republic)

    Jennifer Cederwalls (Sweden)

    DeeDee Gierow (Sweden)

    Rebecca Lammers (UK)

    Carmelan Polce - Chair (Australia and New York)

    Michael Ramos (Australia)

    Joe Smallhoover (France)

    Orlando Vidal (UAE)


  • posted about Taxation Task Force - Report of March 2018 Congressional Door Knock on Facebook 2018-03-15 17:38:14 -0400
    Taxation Task Force - Report of March 2018 Congressional Door Knock

    Taxation Task Force - Report of March 2018 Congressional Door Knock

    During the week commencing Monday March 5th, 2018  the Dems Abroad Taxation Task Force led a hardy delegation of Democrats Abroad through the halls of Congress to talk about expat tax reform. Our Leave Behind Pack profiles our discussion agenda nicely.

    So here are our takeaways.

    · Residency Based Taxation – is generating some genuine action! In the office of Rep George Holding (R-NC) we received a short description of an RBT proposal hewn from discussions with a range of Americans abroad organisations. It needs development in order to generate support from, for example, those frightened by the prospect of inadequate anti- tax avoidance provisions. We learned this in subsequent discussions = Congressional reality check! So our work to persuade Congress that RBT is a justified policy shift that can be implemented responsibly has taken yet another step forward.

    · Tax Cuts and Jobs Act transition taxes - the “Repatriation Tax” and the accompanying GILTI Tax regime is being brought to lawmakers’ attention by many frightened and angry business owners abroad, thank goodness. The good news is that, despite the new provisions being exceedingly complex and difficult to explain, the need for a “fix” is well understood. The bad, sad, sorry news is that it is on a long list of TC&JA flaws that will not be fixed in the short term.

    Congress must pass an Omnibus appropriations bill no later than 23 March and the halls of Congress are filled with people pleading for urgent remedies for parts of the law that hurt themselves or their industry. The vast majority will go away empty-handed. But SEE BELOW for what to do next about Repatriation and GILTI Taxes.

    · FATCA Reform – we continue to talk about HR 2136, the “Overseas Americans Financial Access Act” as a remedy for the problems caused by FATCA, whose problems we no longer need to explain. We did, however, find ourselves briefing Congress on the FATCA judicial challenge. Despite Senator Rand Paul being a plaintiff in the lawsuit challenging FATCA on constitutional grounds, awareness of the case, Crawford et al v US Treasury, is very low.

    As you may know from previous Task Force reports, the Crawford plaintiffs have asked the Supreme Court to review the decision of the lower courts to reject the case for lack of standing. The parties have now filed their pleadings to the Supreme Court. You can find them here.

    For the sake of clarity, Democrats Abroad would be pleased for the U.S. Supreme Court to review Crawford et al on its merits and, once and for all, resolve the question of whether FATCA is constitutional in regards to the fourth amendment (unreasonable searches and seizures), fifth amendment (equal protection) and eighth amendment (excessive fines), as well as the Intergovernmental Agreements.

    · WEP repeal – we continue to promote sponsorship of HR1205, the “Social Security Fairness Act” which would eliminate the impact of the Windfall Eliminations Provision (WEP). The law has 176 co-sponsors and robust awareness. We will keep pushing.

    We also keep pushing HR 2710, the act that would establish a Commission on Americans Abroad and perhaps prevent the establishment of laws and regulations that unintentionally hurt Americans abroad. Which brings us back to the newest law that, because of hasty drafting and inadequate consideration, has unintended adverse consequences for some Americans abroad -

    REPATRIATION/GILTI TAX: HURTS BUSINESS OWNERS ABROAD - ACTION REQUIRED!

    Because Congress will not act urgently to enact a remedy, a diverse group of Americans abroad organisations is asking the Treasury/IRS to delay the law’s implementation. If you are a business owner abroad you are encouraged to participate in this grassroots campaign urging Treasury/IRS to issue a Notice that:

    1. Delays Repatriation Tax payment until the IRS issues adequate guidance.

    2. Provides an exemption from the Repatriation/GILTI tax for Section 911 (non-resident) Americans.

    The email-writing campaign outreach is to relevant directors at Treasury and the IRS plus the leaders of the Senate Finance Committee and House Ways and Means Committee. You should also send this message to your elected representatives in both Houses regardless of their committee assignments. Please contact us with any questions.

    BACK TO THE DOOR KNOCK

    We also discussed –

    · Accidental Americans and the need for relief from the tax burdens inherent in renouncing US citizenship.

    · Disenfranchised Americans born abroad – there are still 13 states which deny the UOCOVA right to vote to citizens who are born abroad and have never lived in the state. It shocks me how little concern this raises in many Congressional offices where aides respond that it is an issue that should be taken up with the state.

    · Americans Abroad Caucus – we’re not even certain the caucus has been re-certified in the 115th Congress and it is more than half over! This caucus is suffering from neglect and may need an urgent re-boot.

    A big thank you to Chip Seward, Becca Young, Jeffrey Cheng, Ken Sherman, Connie Borde and Martha McDevitt-Pugh for door knocking Congress with the DA tax team last week. You guys were great!

    A big thank you also to those who contributed to the Door Knock preparation and materials.

    Thanks again to all of who continue to support the work of the Taxation Task Force.

    Please contact us at any time with questions.

    DA Taxation Task Force

    taxationtf@democratsabroad.org

    Julia Bryan - ex officio (Czech Republic)

    Jennifer Cederwall (Sweden)

    DeeDee Gierow (Sweden)

    Rebecca Lammers (UK)

    Carmelan Polce - Chair (Australia and New York)

    Michael Ramos (Australia)

    Joseph Smallhoover (France)

    Orlando Vidal (UAE)


Social justice advocate and campaigner. On a work assignment in New York. Home is Sydney. Votes in Pennsylvania.