May Meetings with Congress on Tax Reform for Americans Abroad

Thank you for your interest in the work of the DemsAbroad Taxation Task Force working to persuade lawmakers and regulators to reform areas of the U.S. Internal Revenue Code that harm Americans living outside the U.S.  We are grateful to those who took the time to participate in our Congressional CallStorm this week, calling elected representatives at the same time we were meeting in their offices.   Your voices are of paramount importance to the success of our work convincing Congress to reform the tax code and eliminate the areas that discriminate against non-resident taxpayers.

May 2018 Congressional Door Knock

Our meetings were with members on both sides of politics and in both houses of Congress.  Here are our takeaways:

Residency Based Taxation –

The Residency Based Taxation proposal being championed by Rep George Holding (R-NC) is now with the staff serving the House Ways & Means Committee who deal with technical tax matters.  Ideas proffered to the committee to prevent abuse of the law for tax avoidance purposes are being converted by the tech staff into legislative provisions.  We expect to see another draft of the proposal in the coming weeks and then it will be ready to go to the Joint Committee on Taxation for costing (known as “scoring”).  At the same time the draft legislation will be distributed to House members for the purpose of attracting co-sponsors.  Dems Abroad expects to assist by recommending members we know from our Door Knocking to be interested in supporting this important reform for Americans abroad.

Tax Cuts and Jobs Act -

Another matter we spent a good deal of time discussing on the Hill was the Tax Cuts and Jobs Act, specifically the new “transition taxes” built into the law to take the U.S. from our current system of corporate taxation to a system of Territorial Taxation for Corporations.  Unfortunately, these taxes will have an existential impact on Americans abroad who own companies.   See here for an explanation.  Our discussions with lawmakers confirm what we already knew to be true – GOP tax writers’ only goal was to push through a tax cut for large corporations as quickly as possible.  That so many drafting errors and oversights were the result is no surprise; but what is surprising – and appalling - is that Congressional Republicans have no plans to introduce a “corrections bill” any time soon.    Our only option is to badger them into doing it.  So whether or not you are a small to medium-sized business owner, please join in this important campaign demanding a transition tax remedy.

Democrats Abroad will continue our push in two ways.  Firstly, by taking to the airwaves.  We are planning a mass media campaign to draw attention to the harm that these taxes will do to Americans abroad who own businesses.  We’ve heard from hundreds of them (many of whom are quoted in this submission we made to the 24 April Senate Finance Committee hearing on the new tax law) and they are terrified that the taxes may force them to close their businesses.  We think this is a story worth telling.  Secondly, we are working with the House Americans Abroad Caucus on a Congressional “sign on letter” in which the signatories note their concern about the issue and call upon Treasury and the IRS to establish a regulatory remedy.  The letter should be ready in the next week.  It will be “open” for signatures for 2-3 weeks – during which time we will encourage you to message your members of Congress and ask for their support.  Please stay posted.

Also -

Our other messages for members of Congress included a request for their support for:

  • A “same country exception” from FATCA reporting for the accounts of Americans abroad in their countries of residence;
  • A Commission on Americans abroad, which would examine existing and proposed laws that discriminate against Americans abroad and propose a remedy;
  • The Social Security Fairness Act, which would repeal the Windfall Elimination Provisions, a law responsible for cutting the social security payments of Americans abroad who also generate retirement benefits from the statutory retirement programs in their countries of residence;
  • A mechanism for Accidental Americans to shed their unwanted U.S. citizenship without the enduring financial penalties or lengthy procedures;
  •  Reforms to the Foreign Bank Account Report (FBAR) reporting requirement for Americans abroad in their bona fide country of residence, especially redressing the enormous and out-of-proportion civil and criminal penalties for non-compliance.

Please contact us at any time with questions and comments:  taxationtf@democratsabroad.org