Taxation

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

We believe the 115th Congress has an opportunity to enact common sense reforms that clarify and simplify filing and make the tax code fairer for all Americans.  Our support for any tax reform – and certainly any package of reforms - will depend on how it aligns with our Democratic Party values.

We do not believe tax reform should be used to re-structure the federal government by starving programs that conservatives don’t like or that benefit indigent, elderly or otherwise vulnerable Americans.

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

DA Taxation Leadership:

| Taxation Task Force Chair
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    News

    12 mos to get Congress to exempt Americans abroad from the TCJA “transition taxes”. Write them NOW!

    Committed activism by Americans abroad has succeeded in persuading Treasury to give us a 12 month reprieve from "transition tax" payments due under the 2017 Tax Cuts and Jobs Act (TCJA).  All your letters to Treasury and Congressional leaders helped us achieve this important campaign milestone.  We now focus our outreach on Congress.  Please help by writing to Congress now. Here's how.

    The 2017 TCJA was drafted in such haste that a great many errors were made.  The transition taxes in the law introduces will cause great harm to Americans business owners abroad.  Congress is being lobbied heavily by groups like us seeking to have the errors that impact them addressed in a "corrections bill".  We need an exemption from the Repatriation Tax and GILTI Tax regime in that "corrections bill"!

    The "corrections bill" may be introduced some time over the summer as an attachment to a bill renewing funding for a government department or agency, or it may be introduced in the "lame duck" session after Election Day (or other).  In any case, we have to use the time we have to keep our demands front of mind for Congress. 

    Whether you are an American business owner abroad or not, we ask that you participate in our Phase 2 campaign of outreach to Congress demanding an exemption from the "transition taxes" in the TCJA.  Please use this information and email message template to write to the key Congressional leaders noted AND ALSO TO your House and Senate members.

    Please let us know if you receive a communication back.  Send it, or any questions or comments, to us at taxationtf@democratsabroad.org.

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    On 15 June Intl Tax Filing Day tell Congress we're double taxed, we vote and we're not happy. Call!

    The 15 June U.S. tax filing deadline for non-resident citizens is upon us - making this the perfect time to raise our voices and remind Congress that we’re NOT HAPPY that the Americans abroad community was completely forgotten in the 2017 "tax reform". And worse, we were subjected to yet another punitive tax provision because tax writers, once again, didn’t stop to consider the impact of complex new tax provisions on Americans abroad.

    Let’s call Washington and remind Congress that we’re out here, we vote and we need their support for -

    • the Residency Based Taxation proposal under development in the Ways & Means Committee;
    • an exemption from the “transition taxes” in the 2017 tax law to prevent the destruction of many thousand of businesses owned by Americans living abroad;
    • HR 2136, the “Overseas Financial Access Act” – to eliminate the foreign financial accounts of Americans living abroad from reporting under FATCA;
    • HR 1205, the “Social Security Fairness Act” - to repeal the Windfall Elimination Provision that prevents Americans abroad with pensions in their countries of residence from claiming the full amount of Social Security payments owed to them;
    • a remedy for Accidental Americans who want only to shed unwanted U.S. citizenship without lengthy procedures and undo penalties.

    We all need to call Congress and make our voices heard.

    All you need to make your voice heard on 15 June - International Tax Filing day is in this Campaign Guide.

    Send any questions or comments to the DA Taxation Task Force at taxationtf@democratsabroad.org.

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    New IRS rules for Transition Tax filing, gives us more time to fight for a full exemption

    On Monday 4 June the IRS made an announcement regarding new rules for Americans who must include Repatriation Taxes in their 2017 tax filing, due next Friday 15 June.  On advice from international tax lawyer Monte Silver, our understanding of the impact of the change is as follows:  As long as the taxpayer has less than $1m in Repatriation tax liability (which covers persons with about $6.5m in cash or $12.5m in non-cash or a mix of cash and non-cash non-repatriated profits) then they can delay their first payment by 1 year without incurring penalties (though there will be interest accruing) or having the entire liability accelerated (due and payable immediately).  That gives us another year to work on a remedy before the worst of the transition taxes cut in for those who can least afford to pay.

    Whilst this relief is welcome, it was a grave mistake for the 2017 Tax Cuts and Jobs Act to impose "transition taxes" on American business owners abroad.  The provisions were enacted with no thought given to the impact on Americans living abroad.  These taxes will cause enormous financial harm and force many Americans abroad to close their businesses.

    Democrats Abroad, in association with the other Americans abroad advocacy groups, have been working for months to draw attention to this serious situation and demand a remedy.  Nothing less than an amendment by Congress granting a full exemption for Americans abroad from the TCJA transition taxes will be acceptable.  The law is double-taxing American business owners abroad - which does nothing to expand job growth and create economic opportunity.

    It's not just unfair.  It is damaging to U.S. business interests.  Errors in tax policy writing like this underscore the urgent need for Congress to act decisively by passing a bill to enact a switch from Citizenship-based Taxation to Residency Based Taxation (RBT).

    Under RBT Americans abroad will continue to report their U.S.-based income to the IRS, but will not report the income they earn and already pay tax on in their countries of residence.  THAT'S what we have been working so very hard on.  And then these new taxes came along!  RBT remains the reform Americans abroad are waiting on.  

    Fortunately there is serious work going on in the House Ways & Means Committee on an RBT bill.  We look forward to seeing our RBT advocacy work result in a bill on the floor of the House of Representatives this year.  We are working hard to see that happen.

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

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    DA seeks clarification on the use of Social Security numbers provided on passport applications

    In March 2018 the IRS issued a notice on how it will implement the Passport Revocation Provision passed by Congress in 2015 as part of the FAST Act.  Democrats Abroad and other groups representing Americans living outside of the U.S. provided input into the establishment of the rules and are generally pleased at the way the due process provisions protect Americans living abroad, especially those in conflict or otherwise unstable zones or in vulnerable positions.   

    Provisions in the code implementing the passport revocation provision also require Americans to include their Social Security numbers (SSNs) on passport and passport renewal applications or face a $500 fine.  We have some concerns and questions about the use of SSNs and other and they are reflected in this submission to the House Ways & Means Social Security Subcommittee hearing on Social Security numbers and securing Americans' identities.  We call on Congress to help us seek clarification from the State Department, Treasury, the IRS and Social Security Administration on: the use of SSNs; sharing of SSNs; obtaining SSNs from abroad; SSNs as federal ID; protection of expat Americans' SSNs from theft; and process for expat Americans for obtaining and challenging SS reports. 

    We hope for responses to our questions and will report back with comments from Congress or the agencies relevant to this inquiry.

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

     

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