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Democrats Abroad publishes 2019 Expat Tax Research Datapack

Democrats Abroad is pleased to make public the data obtained in our 2019 research into the experience of Americans abroad complying with U.S. tax filing and financial account reporting requirements.

Click here to download the DATAPACK of the Tax Filing From Abroad Report.

Click here for the full Tax Filing From Abroad report. 

Click here for a summary of the findings.

We hope this information will be useful to the many organisations and individuals working hard to persuade Congress to make urgently needed reforms to the way the U.S. tax code impacts Americans living outside the U.S.

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March 2019 meetings with Congress about expat tax reform

The DemsAbroad Taxation Task Force is pleased to report back about our expat tax reform meetings last week (the week commencing 4 March 2019) on Capitol Hill.  Thanks to Carol Moore of DAUK for joining us for the meetings.

Work continues on a bill implementing a switch to Residency Based Taxation

As followers of this issue know, the residency-based taxation (RBT) bill introduced by Rep George Holding on the last sitting day of Congress in 2018 was lacking in the detail needed to generate the support it needs to be enacted.  However it was a great milestone for RBT activists and an important signal to us all that a powerful member of Congress is committed to an expat tax reform that would provide genuine relief to ordinary Americans living and working abroad.

We understand from Holding’s team that they are back at work with the Ways and Means Committee lawyers drafting the bill, and with the analysts on the Joint Committee on Taxation who are scoring the proposal (to establish the impact on the federal budget).  Holding's team expects to introduce another version of the Tax Fairness for Americans Abroad Act in the 116th Congress in the coming months and we support their work to see more of the detail we spent so much time developing through 2018 in the next version of the bill.

But you don’t have to take our word for it.  Rep Holding’s tax counsel, Matt Stross, will feature in a Webcast about the Tax Fairness for Americans Abroad Act hosted by our colleagues at American Citizens Abroad taking place on Wed 13 March and Thurs 14 March.  Click here for information and to register to attend.  Bring your questions and don’t forget to thank Matt.  He has worked very hard on this proposal and deserves our gratitude for his endeavors and his commitment to getting it done!

Building support for RBT across the House

We also met with the other members of the House who we know are our allies in expat tax reform:  Rep Carolyn Maloney (Americans Abroad Caucus co-chair); Rep Jamie Raskin (former member of DA France); Rep Dina Titus (former American abroad, very good friend to Democrats Abroad and featured speaker at our 2016 Global meeting in Berlin); and Rep Don Beyer (former U.S. Ambassador to Switzerland).  They are fully across work on the bill and, now that Democrats have control of the House, we expect them to become more hands-on with it.

Meetings with other members of the tax writing subcommittee of the House Ways and Means Committee suggests our band of mission-critical allies is about to grow.  We will give those members some time to develop an understanding of the reform and will be happy to share their names in due course.

What else

We understand that Rep Carolyn Maloney will be reintroducing the Overseas Americans Financial Access Act which would exempt from FATCA reporting all accounts of Americans abroad in their countries of residence and also reintroducing her bill proposing the establishment of an Americans Abroad Commission to examine the range of U.S. laws and regulations that have an unfair, adverse impact on Americans abroad.   If such a commission were in place then Congress might avoid inadvertently enacting laws that harm Americans who live outside the U.S., such as the Tax Cuts and Jobs Act (TCJA) which gave rise to the Transition Taxes which are seriously hurting Americans who own foreign registered companies.[i] 

The TCJA introduces two Transition Taxes: the Repatriation Tax and Global Intangible Low Tax Income (GILTI) tax.  Despite a year of activism, we are still waiting for some Repatriation Tax relief, other than the one-year deferral to start making payment.  The GILTI Tax, however, was the subject of new Treasury regulations introduced when we were on the Hill last week.   The rules change gives individual owners of foreign registered companies access to the same offsets and discounts afforded to US-based corporate owners of foreign registered companies.  Electing to be taxed as a corporation, however, could for some result in greater levels of taxation in the long run.  American owners of foreign-registered companies should consult their tax professional.

What’s next

Our expat tax advocacy team is back on Capitol Hill the week of Monday 8 April and again the week of Monday 13 May, having more meetings with law makers key to the development of the bill and the development of support for it.  Whilst normally we see members in both houses, the March 2019 meetings focused on the House where the in-the-weeds work on RBT is going on.  Our outreach will accordion out again to include the Senate next month. 

We can’t underestimate the importance of outreach by Americans abroad to your elected officials about expat tax reform.  If you’re looking for advice on how to contact your member please refer to this Guide.  It gives you everything to know about how to contact your member and what to say/write to them once you do.

Democrats Abroad Taxation Task Force

Taxationtf@democratsabroad.org

 

 

 

[i] The TCJA introduced territorial taxation for corporations giving them a deeply discounted tax rate on the repatriation of unrepatriated of profits.  It also imposed deemed repatriation of profits on Americans abroad who own foreign registered companies, many of whom never intended to repatriate the profits (and who are already paying taxes in the jurisdiction where the company is registered.)   These business owners living and working abroad are having to put their hand on many thousands of dollars to pay the retroactive Repatriation Tax on profits going back to 1986.  Catastrophic for many.

The TCJA also places a new tax on the future profits of foreign registered companies, with offsets and discounts for US-based corporate owners of foreign registered companies but none for Americans abroad who own foreign registered companies. 


Democrats Abroad is back on Capitol Hill to discuss tax reform for Americans abroad this week.

A delegation of Democrats Abroad is in Washington DC this week meeting with members of Congress to share the results of our 2019 research on Americans abroad facing US taxation and continue discussions about legislation enacting a switch from our current system of citizenship based taxation to residency based taxation.

In our Leave Behind Pack is a summary of the findings of the research and a document making the case for RBT.  

Residency Based Taxation activists are asked to reach out this week to their members of Congress in support of expat tax reform.  Please refer to this grassroots campaign guide for reaching out to Congress about expat tax reform, which has scripts for calls and language for writing messages.

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


Democrats Abroad supports a remedy for "Accidental Americans"

Democrats Abroad has written to Congressional leaders in support of a citizenship renunciation mechanism for "Accidental Americans".   Download the letter here.

Please send questions or comments to taxationtf@democratsabroad.org


Tax Filing From Abroad: 2019 Research on Non-Resident Americans and U.S. Taxation

Democrats Abroad is pleased to present its fourth major research project on the experience of Americans living and working abroad facing the challenges of a range of U.S. tax, financial account reporting, banking, securities and other laws that discriminate against them as non-resident citizens:  Tax Filing From Abroad:  Research on Non-Resident Americans and U.S. Taxation.

The key findings of the research are summarized below. The report includes not only the survey data but also comments from research participants that expand on the numbers. Download the full report here.

We will use the findings to profile the Americans abroad community to lawmakers and regulators in discussions aimed at persuading them to enact reforms to laws and regulations that place an unfair and undo burden on Americans abroad.  We hope the data is useful to all those advocating on behalf of the Americans abroad community.  To that end we will be publishing a Datapack of the raw data collected in the survey undertaken in January 2019.

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

 

Key findings of the Democrats Abroad 2019 research on Non-Resident Americans and U.S. taxation:

 

55%

 moved outside the U.S. for marriage/a relationship or work/employment

64% 

are living abroad indefinitely

97%

 have serious problems addressing their US tax filing obligations

55%

 hire tax return professionals to prepare their filings

61%

 pay more than $500 for tax filing services, 34% pay more than $1,000

 

One in three incur personal and financial harm by discriminatory tax code treatment

30%

 receive foreign government social welfare payments, which are fully US taxable even if they are not taxed locally

31% 

have been refused foreign financial products

28% 

have been denied U.S. investment/brokerage products

2%

 employed by a company in which they own a majority interest; these are entities are affected by the 2017 Tax Cuts and Jobs Act (TCJA) Repatriation Tax and GILTI tax

4%

 Indicate they are personally impacted by the TCJA Transition Taxes, suggesting the impact is felt by the spouses/family of the business owners.

20%

 Receive U.S. social security benefits

One in six SS beneficiaries have their benefits reduced by the Windfall Elimination Provision

56%

 Have payments reduced by more than 25%

57%

 Say WEP reductions make a modest to very big impact on their household budget

2.5% 

Identify as Accidental Americans

50%+

 of them would like to renounce their U.S. citizenship, but most would only do so if they could renounce at a reasonable cost, effort


In memory of Lucy Stensland Laederich, champion for Americans Abroad

Democrats Abroad wishes to express heartfelt condolences to the family and friends of Lucy Stensland Laederich, of the Association of Americans Resident Overseas, Paris (AARO) and the Federation of American Women's Clubs Overseas (FAWCO) and to acknowledge Lucy's profound contribution to the Americans abroad community. Lucy was a greatly respected and valued colleague of all those working to advance the interests of Americans living and working outside the U.S., especially in the area of tax reform for Americans abroad. We celebrate her life and achievements and recognize the contribution she made to our community.


2019 Non-Resident Taxation Research - SURVEY NOW CLOSED

Many thanks to all those who have made submissions to our 2019 Non-Resident Taxation Research Project over the two week study period.  The survey was closed at midnight on Sunday February 3, 2019.  We look forward to publishing a full report on the findings of the research by the end of February.  

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Democrats Abroad is launching our 2019 Non-Resident Taxation Research Project to generate information we will use to advocate for reforms to relieve the burden of tax, banking, financial account reporting, securities and other laws that discriminate against Americans living abroad. Please contribute to our research by filling out this questionnaire. It will be open for submissions for 2 weeks, closing at midnight US EDT on Sunday February 3, 2019.

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Democrats Abroad Expat Tax Reform Advocacy - 2018 Year in Review

As each year passes our list of expat tax issues grows.  As followers of expat tax matters know, there was nothing good for Americans living abroad in the Tax Cuts and Jobs Act of 2017.  Not only did the law fail to address any of the tax problems Americans abroad endure, it also placed a further serious - and for many existential - tax burden on Americans who own small to medium sized businesses overseas.  For these reasons you could say 2018 was the most challenging year yet for expat tax reform activists, many of whom invested enormous energy advocating on behalf of the Americans abroad community during the 2017 tax writing process.

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Tax Fairness for Americans Abroad Act

Democrats Abroad welcomes the introduction of H.R. 7358, the Tax Fairness for Americans Abroad Act. H.R. 7358 is not a perfect bill and, coming on the eve of adjournment, it cannot be given serious consideration or debate. That said, it is a milestone for advocates of a switch from the current U.S. system of Citizenship Based Taxation to the globally-accepted norm of Residency Based Taxation (RBT), and raises to attention important issues that Congress must address with hearings in the 116th Congress. 

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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.