Mid-Summer expat tax reform updates

Mid-summer is by no means the most dynamic time of the year on Capitol Hill but we are expecting a few interesting things to happen for Americans abroad in the time between the end of Congress’s Fourth of July recess and its August recess.

Legislation

Americans Abroad Caucus co-chair Representative Carolyn Maloney (D-NY12) is expected to re-introduce the two bills of interest to Americans abroad:

  • Commission on Americans Living Abroad Act, which would form a standing commission to review laws that have adverse impacts for Americans abroad and to prevent new laws from being enacted that inadvertently harm non-resident Americans; and
  • Overseas Americans Financial Access Act, which exempts from all FATCA reporting the accounts of Americans abroad in the countries where they live.

Work on legislation to enact Residency Based Taxation (RBT) is currently in the hands of Ways and Means Committee staffers, i.e. lawyers who have been briefed by our RBT champions on the House Ways and Means Committee, Democrats Abroad, and all of our colleague organizations advocating for expat tax reform.  They are taking a fresh view of the policy aims, have undertaken preliminary work on the 2019 bill and are making it a “high priority August recess project”.  In our view this is really great and important. 

Because the bill that results - developed on the basis of advice from all the Americans abroad tax reform activists - will end up being a W&MC work product.  Reform proposals often run into serious roadblocks when they reach the Ways and Means Committee staffers.  Having the bill originate with W&M gives it a much better chance of getting through to the Committee review process which is a critical step along the path.

We will keep calling and emailing and pushing for updates on the legislation as it develops.  As always, RBT activists keen to see a great bill emerge should focus their outreach efforts on their members of Congress.  This campaign tool will help.

Tax Treaties

This week (commencing Monday 15 July) the Senate is expected to hold votes to ratify updates to existing tax treaties with Japan, Spain, Switzerland and Luxembourg.  As you may know, the Senate has not voted on any tax treaties since Senator Rand Paul took office in 2006.  Sen. Rand is expected to withhold his vote on these treaties, but they are expected to generate enough support for ratification.

Democrats Abroad has not reported on the changes to those treaties, but it may interest our members and other Americans living in these four countries to understand the changes that may affect them.  Those interested should contact the country committee chair to discuss.

National Taxpayer Advocate

After 18 years in the position Nina Olson is retiring as the IRS National Taxpayer Advocate.   Ms. Olson has published an annual report to Congress known as The Purple Book which includes recommendations for improving service to taxpayers.  She has included non-resident taxpayers in her assessment of IRS services, including calling repeatedly for reforms to FATCA and FBAR reporting.  The 2019 Purple Book, published in February of this year, was no exception. 

Our analysis of the recommendations suggests the following items are noteworthy for American taxpayers abroad:

#14 - Provide additional time for non-resident taxpayers to make adjusted claims due to math errors

#12 - Reconcile FBAR and FATCA reporting and eliminate duplication - this has been included amongst Olson's recommendations since at least 2014.

#40 - Allow for a period of notice and comment prior to the signing of new FATCA IGAs (in recent weeks the U.S. signed its most recent FATCA IGA with the Seychelles)

#46 - Require the IRS to address comments made by the National Taxpayer Advocate on proposed rules before enacting them

Ms. Olson’s last day as National Taxpayer Advocate is Wednesday July 31, 2019.  Her successor has not as yet been appointed.  We thank her for her service and wish her well.

Please send comments and questions to taxationtf@democratsabroad.org.

DEMOCRATS ABROAD TAXATION TASK FORCE