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.

We undertake research-based advocacy to describe the problems U.S. taxation causes Americans abroad and support our reform recommendations.  Our latest research on the tax filing and financial account reporting experience of Americans abroad was published in March 2019.  Click here to download the report.

Democrats Abroad has published a "laundry list" of tax code provisions that discriminate against Americans abroad - with accompanying reform recommendations on how to fix them.  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

    Mid-Summer expat tax reform updates

    Mid-summer is by no means the most dynamic time of the year on Capitol Hill but we are expecting a few interesting things to happen for Americans abroad in the time between the end of Congress’s Fourth of July recess and its August recess.

    Legislation

    Americans Abroad Caucus co-chair Representative Carolyn Maloney (D-NY12) is expected to re-introduce the two bills of interest to Americans abroad:

    • Commission on Americans Living Abroad Act, which would form a standing commission to review laws that have adverse impacts for Americans abroad and to prevent new laws from being enacted that inadvertently harm non-resident Americans; and
    • Overseas Americans Financial Access Act, which exempts from all FATCA reporting the accounts of Americans abroad in the countries where they live.

    Work on legislation to enact Residency Based Taxation (RBT) is currently in the hands of Ways and Means Committee staffers, i.e. lawyers who have been briefed by our RBT champions on the House Ways and Means Committee, Democrats Abroad, and all of our colleague organizations advocating for expat tax reform.  They are taking a fresh view of the policy aims, have undertaken preliminary work on the 2019 bill and are making it a “high priority August recess project”.  In our view this is really great and important. 

    Because the bill that results - developed on the basis of advice from all the Americans abroad tax reform activists - will end up being a W&MC work product.  Reform proposals often run into serious roadblocks when they reach the Ways and Means Committee staffers.  Having the bill originate with W&M gives it a much better chance of getting through to the Committee review process which is a critical step along the path.

    We will keep calling and emailing and pushing for updates on the legislation as it develops.  As always, RBT activists keen to see a great bill emerge should focus their outreach efforts on their members of Congress.  This campaign tool will help.

    Tax Treaties

    This week (commencing Monday 15 July) the Senate is expected to hold votes to ratify updates to existing tax treaties with Japan, Spain, Switzerland and Luxembourg.  As you may know, the Senate has not voted on any tax treaties since Senator Rand Paul took office in 2006.  Sen. Rand is expected to withhold his vote on these treaties, but they are expected to generate enough support for ratification.

    Democrats Abroad has not reported on the changes to those treaties, but it may interest our members and other Americans living in these four countries to understand the changes that may affect them.  Those interested should contact the country committee chair to discuss.

    National Taxpayer Advocate

    After 18 years in the position Nina Olson is retiring as the IRS National Taxpayer Advocate.   Ms. Olson has published an annual report to Congress known as The Purple Book which includes recommendations for improving service to taxpayers.  She has included non-resident taxpayers in her assessment of IRS services, including calling repeatedly for reforms to FATCA and FBAR reporting.  The 2019 Purple Book, published in February of this year, was no exception. 

    Our analysis of the recommendations suggests the following items are noteworthy for American taxpayers abroad:

    #14 - Provide additional time for non-resident taxpayers to make adjusted claims due to math errors

    #12 - Reconcile FBAR and FATCA reporting and eliminate duplication - this has been included amongst Olson's recommendations since at least 2014.

    #40 - Allow for a period of notice and comment prior to the signing of new FATCA IGAs (in recent weeks the U.S. signed its most recent FATCA IGA with the Seychelles)

    #46 - Require the IRS to address comments made by the National Taxpayer Advocate on proposed rules before enacting them

    Ms. Olson’s last day as National Taxpayer Advocate is Wednesday July 31, 2019.  Her successor has not as yet been appointed.  We thank her for her service and wish her well.

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

    DEMOCRATS ABROAD TAXATION TASK FORCE

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    Democrats Abroad Residency Based Taxation FAQs - Update through June 2019

    Happy Fourth of July!

    Best wishes for glorious celebrations of our nation's 243rd birthday, filled with delicious BBQs, refreshing beverages and fabulous fireworks.

    And when the celebrations are over if you are interested in turning your mind to work by Democrats Abroad and the rest of the expat tax reform coalition to persuade Congress to enact a switch from our current system of Citizenship-based Taxation to Residency-based Taxation (RBT), then you might want to see our RBT Frequently Asked Questions doc.  We have updated it for progress achieved through June of 2019 and are hereby publishing it for your reference.  

    Please send comments or questions - or FURTHER questions for us to add to this document! - to taxationtf@democratsabroad.org.

    DEMOCRATS ABROAD TAXATION TASK FORCE

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    US Double Tax Treaties, Expat tax reform coalition at work on the Hill, and More GILTI regs

    Thanks to all who participated in the Congressional CallStorm organized by Democrats Abroad to mark the 2019 International Tax Filing Day. With the help of all you expat tax activists we continue to build the profile of Americans abroad struggling to comply with double taxation and to bring our problems to the attention of members of Congress in both parties and across both chambers. We need the support of all those interested in expat tax reform in order to make it happen. Thanks again for your support.

    Tax Treaties at last on the Congressional agenda

    You may be aware that since Senator Rand Paul took office in 2006 he has blocked all tax treaties from coming to the floor of the U.S. Senate for a vote.  During this time tax treaties between the U.S and Hungary, Luxembourg, Switzerland, Chile, Spain, Poland, Japan and Portugal (at least) have been stuck in limbo, not to mention reforms made to the Model U.S. tax treaty. We recommend that all Americans abroad who vote in Kentucky to contact Sen. Paul and urge him to lift his holds on these treaties.

    This week the Senate Foreign Relations Committee is expected to begin consideration of the treaties with Hungary, Chile, Spain, Japan and Portugal. Double taxation treaties address a range of matters that impact U.S. citizens living abroad, most especially the treatment of savings and retirement plans that receive beneficial tax treatment in our countries of residence but no favorable treatment under the U.S. tax system. When U.S. tax treaties are silent on this matter they leave payments made from foreign pensions, including those to which we may be legally mandated to contribute, subjected to double taxation.

    It’s perhaps too early to anticipate those eight treaties moving closer to a floor vote in the Senate, but reporting suggests Sen. Paul is meeting with Treasury Sec. Steven Mnuchin to discuss his privacy concerns. We are following this issue and look forward to reporting back.

    Americans abroad on Capitol Hill

    Democrats Abroad gives an enormous shout out to our colleagues at Association of Americans Resident Overseas (AARO) and Federation of American Women’s Clubs Overseas (FAWCO) for their amazing week of meetings on Capitol Hill about expat tax reform. DA’s Tax Task Force was pleased to brief some members of their delegation and share with them an extensive list of members of Congress for them to meet (including names of key aides to speak to). We have since de-briefed with them and, to put it very briefly, they learned that: a) our concerns and recommendations are getting through to Congressional tax writers, and b) there remain a few outliers who either CONTINUE to harbor major misunderstandings about the demographics of Americans abroad or have concerns that RBT will open the flood gates to mass exploitation by wealthy Americans using real or faux off-shore residency to move assessable income to low-tax or no-tax countries.

    Yes, we’ve heard it all before but at least these prejudices are well outside the mainstream.

    Big, big THANK YOU to AARO and FAWCO for hitting it hard and fighting the good fight for a switch from citizenship-based taxation to residency-based taxation, financial account reporting reform and more. Heroic work by excellent colleagues (who, like us, are volunteers and) who share our goal of persuading Congress to fix the Internal Revenue Code and other laws and regulations that cause serious personal and financial harm to Americans living abroad.

    Treasury announces more changes to GILTI regs

    It’s been almost 18 months since Americans who own companies registered abroad were shocked to learn of two new taxes in the 2017 Tax Cuts and Jobs Act (TCJA) that could destroy not only their businesses but also their life savings. Regulations implementing the Repatriation Tax and GILTI Tax announced last year failed to provide material relief to Americans abroad. Last Friday June 14th Treasury issued “final regulations” on GILTI, Subpart F income and tax credits. You can read about them here (IRS and Treasury advice) or here (The Tax Adviser tax blog).

    Disclaimer:

    Democrats Abroad does not provide personal advice on tax matters.

    Tax advice should be obtained from a qualified tax professional (accountant, lawyer, adviser or return preparer) who understands both the U.S. tax system and the tax system of the country where the taxpayer lives (including any applicable tax treaty). 

    If you need tax advice Democrats Abroad recommends the Tax Return Preparer Directory published by our colleagues in expat tax advocacy, American Citizens Abroad. Click here to reference their directory.

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

    DEMOCRATS ABROAD TAXATION TASK FORCE

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    Intl Tax Filing Day CallStorm - Thur June 13 2019 - time to call Congress!!

    The 2019 deadline for U.S. citizens living abroad to file their taxes is Monday June 17 (as the usual international tax filing deadline of June 15 falls on a Saturday this year).  

    In order to draw attention to International Tax Filing Day Democrats Abroad is hosting a Congressional CallStorm.  We invite  U.S. citizens who support expat tax reform to participate in this campaign on Thursday June 13 (neither Friday June 14th nor Monday June 17th are House and Senate sitting days) and call their members of Congress asking for relief.

    Everything you need to participate in the CallStorm is in this guide for campaign participants.

    Date for calls:  Thursday June 13, 2019

    Date for written and electronic messages:  Through the month of June

    Who to contact:  your two Senators and your member of the House of Representatives.  If you don't know who they are advice for finding them and their contact details are in the guide.

    What to say:  scripts for calls and sample language for emails, letters and postcards are in the guide. If you can add your personal story about why expat tax reform is important to you that would be even better.   Specifically, we are asking for -

    • A switch from our current system of citizenship based taxation to residency based taxation, in which we’d still be required to report US-based income to the IRS, but not the income we make in and pay tax on abroad 
    • the Overseas Americans Financial Access Act, which would exempt us  from disclosures of the  financial accounts we hold in our countries of residence which we use to pay bills and save for the future  

    Further details on our tax advocacy ideals, strategy and asks are in the guide.

    Thanks in advance for your support.  As noted in the guide, our work with the House tax writing subcommittee is making serious progress, but we need to build support for expat tax reform right across Congress.  To do that we need all who are seeking relief from the burden of complying with two tax jurisdictions to call your elected representatives and ask for it.

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

    Democrats Abroad Taxation Task Force 

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