Taxation

The Democrats Abroad Taxation Task Force (TTF) was formed to 1) research U.S. tax policy as it affects Americans living outside the U.S. and 2) consider, develop and execute initiatives aimed at enacting reforms that resolve adverse impacts.

Democrats Abroad has published a "laundry list" of tax code provisions that discriminate against Americans abroad.  The list is here:  smarturl.it/HowToFix23

We fear Congress is too divided to find remedies for each of the many and myriad tax problems we have identified.  But we are determined to demand it of them.

We are committed to Residency Based Taxation as a remedy, requiring little effort by Congress, that addresses the vast majority of the tax problems faced by Americans abroad.

Further, we will continue to promote the elimination of FATCA reporting for the accounts of Americans abroad, the repeal of the Windfall Elimination Provision, an exemption for American business owners abroad from the transition taxes in the 2017 Tax Cuts and Jobs Act and a citizenship remedy for "accidental Americans."

We support tax reforms that help reduce inequality, boost opportunity for all Americans and raise enough revenue, predominantly from those with the greatest ability to pay, to meet public needs.

Democrats Abroad Taxation Task Force

TaxationTF@democratsabroad.org

DA Taxation Leadership:

Carmelan Polce
| Taxation Task Force Chair
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    News

    Dems Abroad on Offshore Account Disclosure, Anti-Abuse mechanisms and Treasury Regulations

    Democrats Abroad has written to Senator Sheldon Whitehouse (D-RI) and Representative Lloyd Doggett (D-TX), sponsors of the 2017 Stop Tax Haven Abuse bill, in relation to measures in the bill involving offshore account disclosure.   Americans abroad face serious problems obtaining everyday banking products and services in their countries of residence (as well as in the United States [1]) arising from foreign financial account disclosure requirements.   In our letter we have outlined our concerns about the 2017 bill and, in anticipation of its re-introduction in the 116th Congress, have offered a range of recommendations for anti-abuse mechanisms to curb tax evasion PLUS protect the ordinary and entirely legitimate financial accounts held by Americans abroad in the countries where we live and work.  This is our letter.

    More Treasury Regulations proposed for implementing the 2017 Tax Cuts and Jobs Act (TCJA)

    On Thursday 13 December 2018 Treasury published proposed guidance on the Base Erosion and Anti-Abuse Tax in the 2017 TCJA.  An easing of rules governing the way foreign financial institutions and U.S. banks should deal with foreign account disclosure laws also factors into the proposed regulations.  Reporting on the proposed rules is herehere and here.

    Democrats Abroad is pleased that Treasury, in providing relief for U.S. corporations abroad, has also given consideration to foreign financial account reporting; this is an issue that significantly impacts U.S. citizens abroad.  We strongly urge Treasury to not only consider regulatory changes to benefit companies that operate outside the U.S. but also to consider further changes that would benefit ordinary American citizens who live and work outside the country.   

    Democrats Abroad Taxation Task Force

     

    [1] Provisions in the USA PATRIOT Act requires holders of U.S. financial accounts to have a U.S. address. Americans living abroad without one are not able to open or retain accounts back home.

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    Dems Abroad requests Congressional Leaders hold hearings on Americans abroad issues early in 2019

    Democrats Abroad has reached out to Democratic members of Congress expect to lead in the House of Representatives on key committees to request hearings early in the 116th Congress examining laws and regulations that harm and discriminate against Americans living outside the U.S.  Our letter is here.  We expect to follow up on this letter once the 116th Congress is seated and especially during a Congressional Door Knock to be held in conjunction with the Democrats Abroad 2019 Annual Global Meeting to be held the first half of the year.

    Further more detailed information about the matters raised in this letter and other grievous discriminations against U.S. citizens abroad that Democrats Abroad has and will continue to bring to the attention of our elected representatives please see the Democrats Abroad 2016 Platform which is posted here.

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    DA demands expat tax reform in the lame duck session

    Democrats Abroad has written to Senator Orrin Hatch, Chairman of the Senate Finance Committee, Senator Ron Wyden, Ranking Democrat on the Senate Finance Committee, Rep Kevin Brady, Chairman of the House Ways and Means Committee and Rep Richard Neal, Ranking Democrat of the House Ways and Means Committee, asking for our transition tax reform recommendations to be included in any technical corrections bill moved in the lame duck session to remedy serious problems arising from the 2017 Tax Cuts and Jobs Act rushed through Congress in December of last year.  Click here to download the letter.

    Our letter goes on to ask for their support for an urgent switch from citizenship based taxation to residency based taxation (RBT).  

    We continue to monitor developments in work by Rep George Holding on RBT and to support that work by educating Congress about the need for expat tax reform and the merits of a switch from citizenship-based taxation to RBT. Our fervent hope is that Holding's year-long work will result in a bill introduced before the end of the 115th Congress. Even though the chance of the bill progressing to a vote is very slim, it will be a major milestone to have an RBT bill to work with going forward.  

    The Democrats Abroad Taxation Task Force is very much looking forward, in the next year, to reaching out to the 116th Congress, so many members of which have the overseas vote to thank for their seats. We will make a special effort to engage with them and continue to persuade the all-important tax writing committees about the need for urgent action on expat tax reform.

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    Tax Advocacy Update as we enter the 2018 Midterm Election Congressional Recess

    Last week the U.S. Senate followed the U.S. House of Representatives into recess until after the 6 November midterm elections. Here are some updates on the advocacy work of the DemsAbroad Taxation Task Force as we leave the regular session of the 115th Congress behind and anticipate the “lame duck” session.

    · The Residency Based Taxation (RBT) proposal being championed by Rep George Holding (R-NC) has been at a standstill since August. We are told that further work on the scoring analysis by the Joint Committee on Taxation (JCT) awaits 1) further releases of regulatory guidance by Treasury on the implementation of the Tax Cuts and Jobs Act, specifically the 2 new “transition taxes” it introduced that impact American business owners abroad (Repatriation Tax and GILTI Tax), and 2) new definitions for what qualifies as a Passive Foreign Investment Company (PFIC), which are subject to highly punitive tax treatment.

    Our hope is that these matters will be resolved in time for JCT to complete its cost analysis and for House Ways & Means Committee staffers to produce a RBT bill to be introduced in the “lame duck” session. We understand that there will be a Tax Cuts and Jobs Act “technical corrections” bill between Election Day and the end of the calendar year, but we do not expect a fix for the “transition taxes” to be a part of that bill.

    We liaise continuously with key members of the House and with our colleague organisations who are also working in support of RBT. If there is any progress made on the RBT proposal we will surely pass it along.

    · Treasury released guidelines for implementing the transition taxes in the Tax Cuts and Jobs Act on 1 August 2018 and opened a 60 day comment period for submissions in response to the guidance. Indications suggest Treasury was inundated with comments from individual and corporate owners of businesses abroad. Thanks to all who made submissions in response to our call for comments. The IRS has very abruptly announced it is holding hearings on the regulations this coming Tuesday 22 October, with witnesses invited to speak for 10 minutes. We anticipate a lively exchange of comments and hope thereafter that the IRS embraces the need for relief for American individuals who own foreign businesses. We will forward any developments.

    · Democrats Abroad has been to Capitol Hill twice since the end of the August recess for meetings with members of Congress about expat tax reform. Our outreach, at this point, is concentrated on a) Democrats on the important House Ways & Means Committee, b) members of the House Americans Abroad caucus or who have a connection to the Americans abroad community, and c) members who are friends of Democrats Abroad or have themselves lived outside the U.S. As Congressional Democrats were fully and completely locked out of the 2017 tax reform process we are finding ourselves spending a lot of time educating members about the new taxes on Americans abroad introduced in the 2017 Tax Cuts and Jobs Act. We use it to reiterate our support for a switch from Citizenship Based Taxation to Residency Based Taxation (RBT), with the goal of finding Democrats who will act as RBT bill co-sponsors when the bill is finally produced.

    Important Democrats Abroad tax reform position papers we leave behind at meetings on Capitol Hill are here and here. Our discussions about the issues are often fruitful and encouraging. On Capitol Hill, however, attention has well and truly shifted to the midterm elections. House offices are manned by a skeleton staff - aides having been re-deployed to electoral efforts in the district - and meaningful responses to policy queries are not forthcoming.

    The most high potency outreach to Congress, however, is from you to your elected officials. And there’s no better time to generate attention from candidates for office than when they are asking for your vote. Our expat tax reform campaign guide provides language for phone calls and written messages of all kinds and we encourage you to consult it for support to communicate with your member of the House of Representatives or Senators.

    Lastly, the other very very important thing you can do to support and progress the tax advocacy work of Democrats Abroad and others to enact a switch to Residency Based Taxation IS TO VOTE. A strong, blue, voter abroad turnout is critical to making our concerns a priority for members of Congress. If you haven’t yet voted for many states it is not too late; go to votefromabroad.org to request a ballot. If you have voted, thanks so much for expanding the profile of voters living abroad and for helping to build that blue wave.

    Please contact us at any time with questions or comments.

    Democrats Abroad Taxation Task Force

    taxationtf@democratsabroad.org

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