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
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)