News

EU Parliament FATCA hearing shows the body is listening

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.

Coverage of the hearing has been published by Tax Notes and International Advisor.

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 taxationtf@democratsabroad.org.

DEMOCRATS ABROAD TAXATION TASK FORCE


Treasury has eased FATCA reporting pressure on Foreign Banks. What now?

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:  taxationtf@democratsabroad.org.

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.


November 2019 Capitol Hill Tax Reform Meetings (4-6 Nov)

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 taxationtf@democratsabroad.org. 

Democratically yours,

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)


DemsAbroad back in DC talking tax reform 4-6 November. Time to call Congress.

Democrats Abroad is back on Capitol Hill again next week to talk to Congress about Residency Based Taxation, FATCA reform, Tax Cuts and Jobs Act fixes and other recommendations aimed at reducing the burden U.S. taxation places uniquely on Americans living abroad. 

Please help us demonstrate the enormous support that exists across the Americans abroad community for these critical reforms by reaching out to your elected representatives some time between 4 and 8 November.  This campaign guide has all you need to call or write your members of Congress.

Democrats Abroad UK held a webinar for those who want support reaching out to Congress.  Click here to view a recording of the webinar.

As usual, in the follow-up to next week's meetings we will publish a report on what we learned. Please send comments or questions to taxationtf@democratsabroad.org.

DEMOCRATS ABROAD TAXATION TASK FORCE


How To Contact Your Members Of Congress Webinar Available To Watch On-Demand

You can now watch the How To Contact Your Members Of Congress Webinar we hosted on September 17, 2019 on-demand here:

Please feel free to watch this webinar anytime you like for any call storms we have in the future, or anytime you'd like to contact your Members of Congress about the myriad of tax problems Americans abroad face or any issue you want Congress to change.


September 2019 Congressional Door Knock Report

The DemsAbroad Tax Team had another productive week of meetings with Congressional tax writers in Washington DC the week commencing 16 September 2019.  We are continuously reminded about the importance of turning up in person to present the serious personal and financial problems that U.S. tax, banking, securities and other laws cause Americans abroad.  Not only have we - the many dedicated individuals and organizations advocating on behalf of Americans abroad - built important relationships with the members who are championing our cause (Maloney (D-NY), Holding (R-NC), Titus (D-NV), Raskin (D-MD) and Beyer (D-VA)), but we’ve firmed up our relationship with the House Ways and Means Committee (W&MC) which is so critical to progressing a bill to enact Residency Based Taxation (RBT).

RBT Bill 

We had a very interesting discussion with the W&MC team working on expat taxation legislation.  While we expected their work to be farther advanced than it is, we now have a clearer understanding of their approach to shaping the bill which has as its foundation the administration of the law once it is in place.  Their emphasis is on ensuring the law can work for the many categories of Americans abroad:  short to medium to decades-long expats; short term corporate placements; love exiles; aid workers; retirees; students of all kinds; healthcare exiles; adventurers; pensioners; and more.  We were pleased to offer our on-going advice and feedback on the design elements of the RBT bill and we are determined to keep pushing the work along.

Outreach to Congress

Aside from the in-the-weeds work on the bill, there is of course more work to be done educating members on the problems we need addressed.  As you know, our focus is on persuading members in the all-important W&MC that our problems are serious and urgent.  Aside from the five members noted earlier, we also met in the office of these W&MC members: Rep Larson (D-CT), Rep Murphy (D-FL); Rep Walorski (R-IN), Rep Pascrell (D-NJ) and Rep Westrup (R-OH).  We door-knocked 25 other W&MC members and passed our Leave Behind Pack to the legislative staff.  Our meetings on the Senate side included Sen Brown (D-OH) and Sen Portman (R-OH), both serving on the Senate Finance Committee, as well as Sen Paul (R-KY), known for his determination to block reforms to U.S. tax treaties critical to our experience navigating the intersection of U.S. and residence country taxation.

We find that the most compelling cases we present are those that profile the constituents of the offices we visit navigating these challenges: the enormous complexity and cost of U.S. tax compliance; bank lockouts; double-taxation of pensions; the obstacles to ordinary investing; and the existential threat the Tax Cuts and Jobs Act “transition taxes” pose for small to medium sized business owners. 

To that end, we continue to encourage all Americans abroad suffering from the burdens of U.S. taxation to call and/or write to your elected representatives about your experience.  Use our language or use your own.  If there’s any chance you can get to Capitol Hill yourself, then deliver your message in person!  The Senate and House offices are open to all – take advantage of it!  Find your members’ office address, walk right in (after passing through ground-floor metal detectors), introduce yourself, ask for an aide who has time to speak to a constituent for 10 minutes and then tell your story.

Transition Taxes
In all of our meetings we discussed the impact the Repat and GILTI taxes have had on small and medium sized American business owners abroad. We had a particularly successful meeting in the House Committee on Small Business.  Officials there confirm that the impact of GILTI is much more widespread than they had initially thought. We will continue to engage with the Committee to keep pressure on Congress and Treasury to establish a solution.

What's Next

You can be sure that we will be back on Capitol Hill at least one more time before the end of the calendar year, working in concert with all the other Americans abroad organizations to make the case for a switch to RBT and for other legislative remedies that address the serious discrimination we suffer as non-resident citizens.

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

Democratically yours,

Democrats Abroad Taxation Task Force


Rep. Maloney and Rep. Beyer re-introduce bills to provide relief and support to Americans Abroad.

On Tuesday 17 September Rep. Carolyn Maloney (D-NY12) and Rep. Don Beyer (D-VA08) introduced two bills to provide support and relief to Americans Abroad.  They are the Commission on Americans Living Overseas Act and the Overseas Americans Financial Access ActDemocrats Abroad endorses these bills and thanks Rep. Maloney and Rep. Beyer for their on-going interest in and support for the Americans abroad community.

Commission on Americans Abroad Act

The Commission on Americans Abroad Act, first introduced by Rep. Maloney and former New York Rep. Charlie Rangel in the 113th Congress, would create a commission to establish the impact of U.S. laws and regulations on Americans living abroad and make reform recommendations.  You can read about it here.

Overseas Americans Financial Access Act

The Overseas Americans Financial Access Act, first introduced by Rep. Maloney in the last Congress, provides an exemption for Americans abroad from all Foreign Account Tax Compliance Act (FATCA) reporting for the accounts we hold in the countries where we live.  FATCA was created to discourage and apprehend Americans using foreign financial accounts to hide money from the IRS; it was never intended to track the accounts we use in the places where we live to pay our bills and save for the future.  You can read about it here.

Democrats Abroad is in Washington DC this week (18-20 September) for more talks about expat tax reform and will be discussing these bills in our meetings.  Expat tax reform activists are encouraged to participate in our Congressional CallStorm this week to tell our elected representatives that we need relief from the unjust burden that the U.S. tax code and other laws and regulations place on Americans abroad.

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


DA is in DC next week. Expat Tax Reform Activists, it's time to call Congress.

Democrats Abroad is back on Capitol Hill again next week to talk to Congress about Residency Based Taxation, FATCA reform, Tax Cuts and Jobs Act fixes and other recommendations aimed at reducing the burden U.S. taxation places uniquely on Americans living abroad.   We especially look forward to meetings we have scheduled with the Ways and Means Committee for updates on their work on legislation to enact a switch from Citizenship Based Taxation to Residency Based Taxation.

Please help us demonstrate the enormous support that exists across the Americans abroad community for these critical reforms by reaching out to your elected representatives some time between 16 and 20 September.  This campaign guide has all you need to call or write your members of Congress.

Democrats Abroad UK is hosting a Webinar on 17 September for those who would like a tutorial about how to contact their members of Congress.  Click here for more information and to register.

As usual,  in the follow-up to next week's expat tax reform meetings we will publish a report on what we learned.  Please send comments or questions to taxationtf@democratsabroad.org.

DEMOCRATS ABROAD TAXATION TASK FORCE


TAXATION TASK FORCE WEBINAR ON HOW TO CONTACT YOUR MEMBERS OF CONGRESS

Democrats Abroad will be going to Washington DC to speak to Members of Congress (MoCs) on Wednesday, September 18th to Thursday, September 19th in our continued effort to advocate for a switch from Citizenship Based Taxation (CBT) to Residency Based Taxation (RBT).

We need your help and support to contact your Members of Congress during our visit to show Congress how important our issues and that they need to take action.

You are invited to attend this webinar on Tuesday, September 17 at 3pm EST to learn how to contact your Members of Congress in support of our tax advocacy efforts and to ensure your voice is heard!


Click here to RSVP to attend the webinar
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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