Democrats Abroad work through the dog days of summer has set up tax reform activists for a powerful drive through the autumn months to get tax relief for U.S. citizens abroad into the 2021 Budget Reconciliation Bill.
Read on for updates on:
- Expat tax relief currently being drafted into legislative language for the 2021 Budget Reconciliation Bill;
- GILTI Tax research findings being used to persuade Congress to also include GILTI Tax relief in legislation this year;
- Discussions with the IRS to secure access for Americans abroad to IRS online accounts and other service portals, and to halt automatic assessment notices; and
- Planning for DA webinars in the coming months about restoring U.S. tax compliance.
Americans Abroad Tax Relief and the Budget Reconciliation Bill
Expanding on DA tax advocacy updates published at the beginning of August, Democrats Abroad is delighted that we now have support from these critical members of the all-important House Ways and Means Committee for including in the Budget Reconciliation Bill a tax filing modification for Americans abroad who owe no U.S. tax:
Rep Don Beyer (D-VA-08)
Rep Judy Chu (D-CA-27)
Rep Suzan DelBene (D-WA-01)
Rep Jimmy Panetta (D-CA-20)
Rep Brad Schneider (D-IL-10)
Rep Brendan Boyle (D-PA-02)
Rep Danny Davis (D-IL07)
Rep Tom Suozzi (D-NY03)
Rep Mike Thompson (D-CA05)
This achievement is the direct result of the presentations made by dozens of Democrats Abroad members who vote in the districts of these Representatives, participating in Tax Talk Zoom discussions with the Representatives about their experiences with U.S. taxation. Hearing directly from constituents about double taxation, barriers to banking, saving and investing and the inordinate complexity of filing taxes from abroad changed hearts and minds and has put us in a strong position to secure tax relief for Americans abroad this year.
But there is far more work to do:
- We are now working with the Congressional champion for this legislation, Rep Beyer, on language for the Bill. We will remain engaged in the development, and then actively drive adoption, of the reform language.
- We are following up with the legislative staff of the other reform sponsors listed above to reinforce their support.
- We are scheduling MORE Constituent Abroad Zoom discussions with members of Congress about U.S. taxation, most especially to cultivate parallel support in the Senate. Also we are scheduling Tax Talk Zooms with members whose committee positions enable them to provide mission-critical support for GILTI tax and financial account reporting reforms.
The work is entering a critical phase and we need your support. If you are a DA country committee, local chapter or global caucus leader, please share our updates with your members and on your social media channels. If you support tax relief for Americans abroad, please to write to your elected reps about the need for relief and encourage all others interested in expat tax reform to do so as well. This guide tells exactly how to do that.
GILTI Tax Relief for Americans abroad who own small to medium size businesses
Thank you to those who supported the work of Democrats Abroad to persuade Congress to stop GILTI Tax from destroying many thousands of small businesses owned by Americans abroad by sharing the DA GILTI Tax Research survey. We will soon publish the research and use it to advocate for GILTI Tax relief.
GILTI (Global Intangible Low Tax Income) Tax was introduced in the 2017 Trump Tax Cuts for large corporations and high earners. It was designed by lobbyists for U.S. multinational corporations and so features an assortment of offsets, discounts and deductions for large corporations with profitable offshore subsidiaries that ensure that little to no tax is owed. Unfortunately for Americans abroad with small businesses, the tax is also assessed on the profits of their companies but provides them with NO ACCESS to the offsets, discounts and deductions afforded to large U.S. multinationals with companies registered abroad.
The exceedingly complex calculation required to arrive at a company's GILTI Tax liability demonstrates that it was never meant for the profits of the small to medium size businesses owned by Americans abroad. Aside from GILTI Tax owed, the tax return preparation cost is crushing. After 3 years of advocacy, in July 2020 Treasury issued new guidance giving small to medium size businesses an avenue for claiming the same offsets, discounts and preferential corporate tax rate available to multinational corporations. Whilst Treasury provided regulatory relief, the cost to small businesses to access that relief - an even more higher tax preparation cost - made the relief commercially inaccessible (far too expensive) for most. Our research indicates only 1 in 4 are able to use it.
We will use this and other findings from the GILTI Tax research to persuade Congress to create a GILTI Tax carve out for the small businesses of Americans abroad. Tax Talk Zooms for constituents of Representatives serving on the Small Business Committee scheduled in September give us the perfect opportunity to make the case.
IRS National Taxpayer Advocate embraces the DA call for improved IRS service for Americans abroad
In response to our letter to National Taxpayer Advocate Erin Collins seeking support for improvements to a wide range of IRS service failures for Americans abroad, Democrats Abroad met with the Taxpayer Advocate Services Attorney Advisor Group Manager to discuss our concerns. We believe the meeting was fruitful. The TAS had clearly examined our complaints and recommendations very closely. The follow up questions were thoughtful and penetrating. We understand that rectifying the inaccessibility of IRS online accounts and service portals to Americans abroad is a high priority, along with the cessation of automatic assessment notices. Although we are pleased these matters have attracted the urgent attention of the TAS, our letter included a great many other service lapses that we will continue to pursue. Americans abroad are an exceedingly under-serviced community. We cannot be expected to maintain high levels of tax compliance until Congress and the IRS address the shortcomings we have presented.
DA Tax Compliance Webinar coming
Accessible support, practical guidance and reliable advice from the IRS for Americans abroad has been woefully inadequate for many years, leading to tax compliance lapses. We know from years of research and engagement, that Americans abroad who are not tax compliant limit their engagement with the U.S. government, forgo essential consular services and harbour intolerable levels of stress and fear. This is dangerous and unacceptable. Democrats Abroad is planning a webinar to provide practical advice to Americans abroad who are behind on tax filing. Please look out for announcements. If you are a DA country committee, local chapter or global caucus leader, please share the Webinar with your members and on your social media channels.
Sign up at this webpage to receive regular updates on the work of the DA Taxation Task Force.
DEMOCRATS ABROAD TAXATION TASK FORCE