The Taxation Task Force had 2 full days of meetings in Washington DC the week of Monday 17 September. Thanks so much to Rebecca Lammers (DA UK), Tim Lawler (DA Spain), David Miller (DA Denmark), Chip Seward (DA France) and Julian Becker (DA UK) for dashing back and forth across the wet and windy Capitol and for making such valuable contributions to our outreach.
The meetings had the purpose of furthering our efforts to explain how the Internal Revenue Code seriously discriminates against Americans living abroad because many tax laws are regulations have been enacted over time without due consideration for the harm they can do to Americans living outside the U.S.[1] We then review our cornerstone reform recommendation: a switch from our current system of Citizenship Based Taxation to Residency Based Taxation.[2]
Last week’s meetings were focused on House Democrats who, as we know, have been totally and completely locked out of all tax policy writing in the 115th Congress. As the Residency Based Taxation (RBT) proposal being championed by Rep George Holding (R-NC) advances towards bill language it will be important for Democrats to understand the serious problems this critical reform will address for Americans abroad so they can support it.
As you will appreciate, achieving bi-partisan support on anything is a major ask these days so these discussions are very important. Our outreach is concentrated on the influential Dem members of the Ways & Means Committee, members of the Americans Abroad Caucus and members of Congress who have lived abroad or who have strong ties to some of us who do. We hope that within this group we will find co-sponsors for a RBT bill when it is ready. All Congressional outreach is important. Use this guide to call or write to your members of Congress asking them to support RBT.
The question we get most frequently is “When will the Residency Based Taxation be made public?”.
There are still 2 consequential matters left to by resolved. Once they are resolved the Joint Committee on Taxation can complete its work to "score" the proposal so we know what it will cost (the ambition is for it to be revenue-neutral) and the proposal can be converted into the language of a bill. Bills that enact major reforms to existing law are often not terribly easy to read, as they need to make references to all the areas of the existing Internal Revenue Code that require changes to enact the new law. Hopefully we'll get a really good summary of the law in the introduction to the bill that incorporates all the provisions most important to those of us who will be impacted, including: eligibility; transitioning provisions; maintaining Non-resident Taxpayer status; programs for becoming tax compliant; and anti-avoidance mechanisms.
REPATRIATION AND GILTI TAX REFORM UPDATES
Ways & Means Committee members tell us that relief for American business owners abroad from the "transition taxes" in the Tax Cuts and Jobs Act (Repatriation Tax and GILTI Tax) rests in the hands of Treasury. As noted here, there are two sets of guidelines still to come from Treasury on the implementation of Repat and GILTI. We need to remind Treasury that we are eagerly awaiting their action to arrange relief for American business owners abroad. Here is support for "transition tax" activists who want to reach out to Treasury and to Congress.
Lastly, we are going back to Capitol Hill NEXT WEEK for more meetings with House Democrats about the RBT proposal. If you're looking for an opportunity to reach out to YOUR Representative about the need for a switch from Citizenship based taxation to Residency based taxation then now would be a great time.
Please send comments or questions to [email protected].
Thanks for your on-going support.
Democratically yours,
DA TAXATION TASK FORCE
[1] Sadly, we have fresh evidence of this recurring dynamic: the transition taxes (Repatriation Tax and GILTI Tax) built into the 2017 Tax Cuts and Jobs Act will cause enormous financial harm to American business owners abroad. The law, of course, was raced to a vote in record speed and includes a large number of design flaws caused by rushed and non-partisan drafting.
[2] Further, we ask for support for FATCA reform in order to eliminate the reporting of accounts of Americans abroad in their countries of residence, a range of FBAR reforms especially eliminating FATCA and FBAR duplicative reporting, the elimination of the Windfall Eliminations Provision and a citizenship renunciation solution for Americans abroad. We also ask them to join the Americans Abroad Caucus and invite them to meet with us when they travel abroad.