IMPORTANT: Democrats Abroad does not provide personal tax advice or recommendations. We recommend that you engage a qualified, professional tax adviser to address questions related to your personal financial situation. If you do not have a tax adviser we recommend the U.S. Tax Return Preparer Directory published by American Citizens Abroad. Many will offer payment plans. There are also FreeFile tax return systems for low income taxpayers that accommodate taxpayers with foreign addresses.
Congress has passed the Coronavirus Aid Relief and Economic Security (CARES) Act and the president has signed it into law. Americans abroad will be interested in understanding the law's aid provisions and how they can access them. This is a summary of key aid provisions that are or may be relevant to Americans abroad –
Democrats Abroad is ending 2019 repeating and reinforcing a request we made, in unison with our colleague organizations advocating on behalf of Americans abroad, this time last year; that Congress hold hearings focused on the taxation, banking and other issues causing serious personal and financial harm to Americans abroad. The request takes on added importance this year.
As followers of our work know, for the last 2 years Americans abroad have enjoyed the support in our tax advocacy efforts of Rep. Don Beyer (D-VA-8), Rep. Dina Titus (D-NV01), Rep. Jamie Raskin (D-MD08), Rep. Carolyn Maloney (D-NY12) and Rep. George Holding (R-NC02). This week Rep. Holding announced his retirement from Congress. Americans abroad will, at the end of the 116th Congress, lose a Congressional champion for Residency Based Taxation (RBT).
Fortunately, Rep. Holding suggests he will continue in his last year in office working in collaboration with his House Ways and Means Committee colleague Rep. Beyer and others in support of RBT. Democrats Abroad wishes to thank Rep. Holding for his support of a reform critically important to Americans abroad and we wish him well.
In the meanwhile, Americans abroad need to continue broadening support for RBT on Capitol Hill. Hearings that feature presentations demonstrating the range and severity of our U.S. taxation problems will surely build our profile and amplify the urgent need for our recommended reforms. If you have not as yet reached out to your elected representatives to ask for their support for RBT please do so now. This campaign guide is all you need.
In other news, we draw your attention to recent reporting by Bloomberg on the serious tax problems faced by Americans abroad. It's a wonderful, concise but complete profile of the challenges we face. A great resource for campaigners!
Further support for FATCA campaigners came on 11 December in a letter from the EU Council President to Treasury Secretary Mnuchin which outlined the serious problems FATCA continues to create for Americans abroad and the foreign financial institutions they bank with despite recent Treasury guidance providing relief. Further, the letter draws attention to the need for the U.S. to address its own commitments under the intergovernmental agreements.
And that brings us to our wrap up of the work Democrats Abroad did in 2019 advocating for tax reform for Americans abroad. We thank all the great activists who supported our work this year. RBT will get done when Congress has heard from enough of us who are desperate for change. If your concern about this issue drives you to do more, the Democrats Abroad Taxation Task Force is always looking for committed volunteers prepared to roll up sleeves and join us in this important work. If you have initiative, time and energy to give we would love to hear from you.
2019 TAX REFORM ADVOCACY YEAR IN REVIEW
Democrats Abroad jumps into the year publishing a survey for non-resident Americans on taxation. The survey was closed on February 2 after two weeks in the field having generated 9,885 submissions from Americans from all U.S. states living in 123 countries across six continents.
Democrats Abroad pays tribute to Lucy Laedrich, a leader with the Association of Americans Resident Overseas (AARO) and our colleague over many years in advocating on behalf of Americans abroad. Lucy passed away in February following a lengthy illness. We miss her leadership and are grateful for her service to our community.
Democrats Abroad publishes the findings of our 2019 research in a report entitled Tax Filing From Abroad: 2019 Research on Non-Resident Americans and U.S. Taxation. The Dems Abroad Taxation Task Force took our research to Capitol Hill and shared the findings with our elected representatives to underscore the urgent need for tax reform for Americans abroad. Click here for a report on our March meetings with Congress.
Democrats Abroad publishes a letter addressed to Congressional leaders in support of “Accidental Americans” who seek a remedy that enables them to shed their unwanted U.S. citizenship without lengthy procedures or undo penalties.
Democrats Abroad publishes the 2019 expat tax research Datapack, making available all the data collected from our January 2019 survey for use by our colleagues advocating for reforms to U.S. tax and other laws that discriminate against Americans abroad.
In the lead-up to the Democrats Abroad 2019 global meeting the Democrats Abroad Tax Task Force returns to Capitol Hill for 3 days of meetings about tax reform for Americans abroad. As with all our Congressional Door Knocks we publish a campaign guide for Americans abroad who support tax reform to use to reach out to their elected representatives before or during the dates of our Capitol Hill meetings. In the days following the Democrats Abroad 2019 global meeting conference about 70 of the attendees held a more expansive Congressional Door Knock. 9 teams of delegates held 45 meetings across 3 days about a range of issues, including taxation.
Democrats Abroad published a report on the two Door Knocks, referencing outcomes from both the Tax Task Force’s meetings and global leaders’ meetings, including that Rep. Don Beyer (D-VA08) would be partnering with Rep. George Holdings (R-NC02) on draft legislation to enact a switch to Residency Based Taxation.
Democrats Abroad asks Rep. Carolyn Maloney (D-NY12), Rep. Jamie Raskin (D-MD08)and Rep. Dinah Titus (D-NV01) to raise the proposal to enact Residency Based Taxation with the House Ways and Means Committee at the annual Ways and Means Committee Members Day Hearing.
Democrats Abroad marks the June 15 International Tax Filing Day by hosting a Congressional CallStorm for Americans abroad to reach out to their elected representatives and demand relief from U.S. taxation for Americans abroad.
Democrats Abroad publishes a tax advocacy update outlining developments related to Double Tax Treaties, expat tax reform advocacy work on Capitol Hill and further GILTI Tax regulations.
Democrats Abroad publishes updates to our Residency Based Taxation FAQs.
Democrats Abroad publishes a mid-summer bulletin on developments in U.S. taxation and our advocacy work related to tax reform for Americans abroad.
Democrats Abroad celebrates the introduction by Rep. Maloney and Rep. Beyer of bills to provide relief and support to Americans Abroad: The Overseas Americans Financial Access Act and The Commission on Americans Abroad Act.
Democrats Abroad hosts a webinar for Americans abroad on how to contact members of Congress and publishes a recording of the webinar.
Democrats Abroad prepares questions for Democratic Party presidential candidates about issues important to Democrats abroad, including their positions on foreign financial account reporting and U.S. taxation relief for Americans abroad. Responses are posted here as they are received from candidates.
Democrats Abroad announces another group of meetings on Capitol Hill to take place in early November and invites expat tax reform activists to call Congress in the lead-up to and during the meetings.
Democrats Abroad UK hosted a Tax Seminar to discuss the many problems Americans abroad have complying with U.S. tax and other requirements. With 200 attendees from the UK and Europe and 17 presenters it was the largest seminar of its kind.
Democrats Abroad returns to Capitol Hill for more meetings with House tax writers and publishes a report on the November meetings.
Democrats Abroad reports out on new Treasury FATCA regulations published in anticipation of the end of the 3 year grace period for foreign banks to file IRS-compliant FATCA reports.
Democrats Abroad reports out about hearings in the EU Parliament on FATCA.
Democrats Abroad celebrates perhaps the most perfect (both complete and succinct) encapsulation of the U.S. taxation issues faced by Americans abroad published by Bloomberg.
Politico interviews Democrats Abroad (and our expat tax advocacy colleagues American Citizens Abroad) about the serious problems Americans abroad face remaining compliant with U.S. tax and other obligations. Download a PDF of the article here or download the article from Politico (behind their firewall) here.
On Tuesday 12 November the European Parliament held a public hearing (video here) exploring the impact of FATCA on citizens of Europe who also have U.S. citizenship, including data privacy violations, banking discrimination and more. The hearing was organized in response to a petition filed on behalf of a collective of European citizens who are adversely affected by FATCA, including Accidental Americans. (See below.)
Our friends in the Accidental Americans Association who testified at the hearing tell us that EU Parliamentarians and others are genuinely starting to grasp the issues and the injustice. Some national politicians are speaking out, notably in France, The Netherlands and the UK. And the EU Parliament has demonstrated its belief that relief from the harm FATCA is doing to Accidentals is urgently needed. The European Commission, the executive branch of the European Union, however, has not and, to the frustration of Accidentals, shows no signs of wanting to get involved.
European Parliament TV has published this video of the hearing. Deliberations not in English are translated; it is essential viewing for those who are following or interested in the progress of challenges to FATCA through European legislative bodies.
Accidental Americans – Advocacy Update
Followers of Democrats Abroad’s tax advocacy will know that we support a renunciation remedy for Accidental Americans to shed their unwanted U.S. citizenship without lengthy procedures or undo penalties. So far the U.S. government has provided no indication that such a remedy is forthcoming. Renouncing U.S. citizenship involves application fees, administrative hurdles and tax compliance that puts the cost beyond the reach of many.
On September 6 of this year, purportedly in recognition of the FATCA problems outlined by Accidentals, the IRS published new procedures providing tax relief to former American citizens who relinquished their U.S. citizenship without becoming tax compliant. The relief – no tax payable if the liability is less than $25,000 – is going to be relevant and of use to only a very small band of former citizens. The details are here.
Please send comments or questions to firstname.lastname@example.org.
DEMOCRATS ABROAD TAXATION TASK FORCE
We have reported previously about media accounts foretelling the closing of many thousands of foreign financial accounts held by American citizens living in France, the UK, in Europe generally and elsewhere by the end of this year. In 2017 U.S. Treasury granted a FATCA filing extension to FFIs whose reports on the accounts of U.S. citizens had missing Tax Identification Numbers (TIN) or Social Security Numbers (SSNs); the “grace period” for obtaining the SSNs ends on 31 December 2019. Without further guidance from Treasury providing relief, FFIs noted, they may have been forced to close the accounts of U.S. citizens with no TINs or SSNs.
In late October Treasury amended its FATCA reporting guidance to provide FFIs with as much as 18 months beyond 1 January 2020 to obtain TINs or SSNs for the financial accounts in their FATCA reports. See below for more detail.
What that means for Americans abroad is a harder question.
We expect that many foreign banks will carry on with their outreach to account holders whose accounts are reportable under FATCA to obtain missing SSNs. But it is equally possible that some will elect to cease such efforts, close reportable accounts without TINs or SSNs and eliminate the risk of suffering FATCA non-compliance penalties.
We will continue to follow this issue carefully. We encourage Americans abroad whose foreign accounts are closed to contact their member of Congress. We also encourage you to let us know, as we will be aggregating information on account closures for presentation to Congress and Treasury.
Please contact us at any time with comments or questions: email@example.com.
DEMOCRATS ABROAD TAXATION TASK FORCE
Treasury relief for FFIs reporting accounts without Tax Identification or Social Security Numbers.
The guidance is published in the form of Treasury’s FATCA Frequently Asked Questions for FFIs. The relief is as follows, in brief –
- A reporting Model 1[i] FFI is not required to immediately close or withhold on accounts that do not contain a TIN/SSN beginning January 1, 2020.
- FFIs have a further 120 days to obtain the TINs.
- If the TINs are not provided within that 120 day period, the IRS will not automatically conclude that the FFI is out of FATCA compliance.
- The IRS will take account of the facts and circumstances leading to the absence of the TINs, such as the reasons why the TINs could not be obtained, whether the FFI has adequate procedures in place to obtain TINs and the efforts made by the FI to obtain them.
- If Treasury determines that the FFI is in significant non-compliance, it will provide notice and will work with the FFI over the next 18 months to address the non-compliance.The FI would have at least 18 months from the date of the notification of noncompliance to correct the TIN/SSN error before the IRS took any other further action, such as removing FFI from the list of FATCA compliant FFIs.
- An FFI that is no longer FATCA compliant risks being subject to 30pc withholding on certain U.S. source payments made to the FFI.
[i] In countries with Model 1 FATCA agreements financial account reports are made to the IRS by the Foreign Financial Institutions. In countries with Model 2 FATCA agreements financial account reports are made to the IRS by the country’s tax authority, which receives the reports from the FFIs.
Thanks to all who supported the work of Democrats Abroad advocating for tax reforms for Americans abroad by calling and writing to your elected representatives ahead of and during our week in Washington DC. Sorry to be repetitive, but the messages members of Congress get from their constituents are the most persuasive ones and push them hardest to address our problems and reform recommendations. It’s never too late to reach out, so if you’re waiting to contact your member of Congress then please consult our latest campaign guide and make your voice heard. If you’ve never before contacted your member of Congress and want more background on how to do so then this webinar may be of interest.
More meetings with Ways and Means members and RBT friends
Our team arrived on Capitol Hill with 11 meetings in the calendar but ended up giving 18 briefings across the three days and leaving briefing materials in another 10-12 offices. As usual, our outreach focused on the all-important members of the House Ways and Means Committee where legislation to enact our keynote reform, Residency Based Taxation (RBT), is being developed.
We gave briefings in some offices we had yet to brief: Reps Mike Kelly, Ron Kind, Jason Smith, Devin Nunes, Brad Westrup, Brendan Boyle, Jimmy Gomez, Jodey Arrington, Steven Horsford, Judy Chu and Terri Sewell. We updated others we’ve met with before: Reps Thompson, Suozzi, Posey and Blunt-Rochester. And, of course, we caught up briefly with each of the members who are our RBT Champions: Reps Beyer, Holding, Maloney, Raskin and Titus.
There’s really no substitute for face-to-face meetings in the offices of these important members. We have built valuable and trusted relationships with legislative aides important to the progress of our work. With rare exceptions, they listen carefully, ask good questions and offer insights and thoughtful advice. We download a lot of information to them, but we learn a lot as well. (In non-sitting weeks like this one, we find the staff are more available to us, more relaxed and less rushed and more apt to provide particularly insightful information about what’s really going on in Congress.)
We came away with some valuable intel and useful ideas that we will fold into our existing advocacy strategy.
Democrats Abroad maintains an abiding commitment to representing the concerns of Americans abroad, particularly in the area of taxation which causes such enormous personal and financial harm. Our advocacy incorporates reform recommendations aimed at addressing the serious problems we face due to discriminatory provisions not only in the tax code but also in bank secrecy, securities and investment, national security and Social Security laws. As outlined in our recent advocacy reports and grassroots campaign materials, we are asking for Ways and Means Committee hearings to profile the range of problems, concerns and burdens we bear.
Tax Advocacy in Action
As followers of the work of Democrats Abroad advocating for tax reform for Americans abroad know, we are by no means the only group working to persuade Congress to enact a switch to RBT. We are part of a coalition of partisan and non-partisan organisations working in parallel to educate members of Congress about the genuine harm U.S. taxation causes for non-resident citizens and about how RBT can be implemented to address our problems without creating tax avoidance loopholes.
Building a Bill
Over the last 3 years our coalition has engaged extensively with the office of Rep. George Holding on the development of a proposal to enact a switch from our current system of Citizenship Based Taxation to RBT. Our proposal included a complement of design elements for introducing RBT and also for protecting the filing exemption from abuse by those few who would use either real or pretend offshore residency for the purpose of pushing assessable income out of the reach of the IRS.
Our RBT proposal was scored by the Joint Committee on Taxation and sent to drafters to be converted into the language of a bill. Unfortunately, by the end of the 115th Congress the drafters had not completed work on the bill. They did, however, send us the Tax Fairness For Americans Abroad Act which, although bereft of the important legislative design details we worked so hard to establish, was an important advocacy milestone for our coalition.
We picked up the work on RBT in January 2019, at the start of the 116th Congress, with a bi-partisan partnership of Ways and Means Committee members championing our reform - Rep George Holding (R-NC) and Rep Don Beyer (D-VA) - and a new team of drafters in the Ways and Means Committee office. We have met with the drafters several times this year to discuss the design elements of the RBT proposal.
Knowing the tax administration aspects of the bill were the main obstacle to completion in the last Congress, we understand the drafters are taking a new approach to structuring the legislation. We have not as yet, however, seen their work. Meeting with them provides useful insights into why RBT is still a work in progress. Importantly, they always assure us that Beyer and Holding are committed sponsors. But it doesn’t make the waiting any easier. We continue to make ourselves available to the drafters to workshop the bill; but the most important work is that of the Americans abroad community, reaching out to our elected representatives to maintain pressure on Congress to get this done.
Taxation Task Force
The Democrats Abroad Taxation Task Force is an all-volunteer team giving time on a daily basis to keep abreast of legislative and regulatory developments, plan and execute campaign initiatives and drive a multi-pronged strategy that leverages the strengths and assets of the Americans abroad community to the best of our ability.
We are looking for additional support for our team and encourage those interested in volunteering time and talent to our work to contact us at firstname.lastname@example.org.
DEMOCRATS ABROAD TAXATION TASK FORCE
Julia Bryan – ex officio (Czech Republic
Jennifer Cederwalls (Sweden)
DeeDee Gierow (Sweden)
Rebecca Lammers (UK)
Carmelan Polce – Chair (New York and Australia)
Michael Ramos (Australia)
Joe Smallhoover (France)
Chip Seward (Washington DC and France)