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 -
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 firstname.lastname@example.org.
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.
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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 firstname.lastname@example.org.
At the DA annual meeting the leaders of the Democratic Party Committee Abroad (DPCA or Democrats Abroad) ratified this resolution to call upon the Democratic Party to provide formal support for a switch from the current U.S. system of Citizenship Based Taxation to Residency Based Taxation. Next a resolution signalling that support will be submitted to the Democratic National Committee for presentation at their next meeting of party leaders (August).
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Democrats Abroad continues its work pushing the House Ways & Means Committee to exempt American business owners abroad from the “transition taxes” built into the 2017 Tax Cuts and Jobs Act.
The Ways & Means Committee is holding a series of hearings on tax reform, the latest (May 23 2018) of which is focussing on small business. Click here for more information.
Democrats Abroad made this submission to the hearing. It draws attention to the material harm done by the transition taxes built into the Tax Cuts & Jobs Act that mistakenly hit Americans abroad who have small to medium sized businesses in their countries of residence. It also outlines our proposed remedy: an exemption from the tax for bona fide non-resident Americans.
All Americans abroad who own businesses impacted by the transition taxes are encouraged to 1) use this grassroots campaign tool to write to relevant lawmakers and regulators to demand a remedy, and 2) make your own submission to the Ways & Means Committee hearing on tax reform and small business.
Please send questions or comments to firstname.lastname@example.org
This is a link to our FATCA and FATCA reform campaign FAQs, updated for developments in our campaign in support of Residency Backed Taxation and other.
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The Ways & Means Committee of the U.S. House of Representatives is holding a hearing on Wednesday May 16, 2018 entitled "Hearing Series on Tax Reform: Growing our Economy and Creating Jobs". You can find more information about it here.
Democrats Abroad has prepared this submission to the hearing, outlining our concerns about the "transition taxes" introduced in the 2017 Tax Cuts and Jobs Act, profiling comments from American business owners abroad who are being hurt by the new taxes and demanding this urgent remedy:
"We believe Americans overseas with interests in foreign corporations should be exempt from the Repatriation Tax and from the GILTI Tax regime for any given year so long as:
(1) they meet the conditions required for exemption under IRC Section 911, and
(2) they are individual U.S. Shareholders.
This solution both achieves the U.S. Congress's goal of capturing corporate tax it has been long-denied, and recognizes that the profits of businesses owned by Americans living abroad were never meant to be repatriated to the U.S. because they are needed to sustain the underlying business entities and the American expatriate families who rely upon them.
We strongly urge Congress to correct this unintended tax burden which harms Americans and their opportunities for personal savings and economic growth. American business owners abroad should be exempted from these transition taxes so they can remain positioned to manage and grow their businesses and take care of their families."
We urge you to read the whole of our submission and follow these instructions to make your own submission to the hearing, especially if you are the owner of a Controlled Foreign Corporation and will be impacted by the Act.
Please send questions or comments to the Democrats Abroad Taxation Task Force at firstname.lastname@example.org
Thanks to everyone who has contributed to our campaign in support of a switch from our current system of Citizenship Based Taxation to Residency Based Taxation by calling, message or writing to Congress. If you have yet to do so, or feel compelled to reach out to your elected representatives again, this guide has all the information you need.
If you're not sure what Residency Based Taxation is and so are not sure whether you should act in support of this campaign then we encourage you to examine our Residency Based Taxation Frequently Asked Questions. And if you still have questions please contact us at TaxationTF@democratsabroad.org.
Our campaign in support of an urgent remedy for American business owners abroad who face TWO NEW TAXES because of the 2017 Tax Cuts and Jobs Act carries on. This was a horrific drafting error made because of the extreme haste with which Congressional Republicans drafted and passed the 2017 tax law. Our discussions with Congress the first week of May suggests the law contains HUNDREDS of such errors! We need as many voices as possible drawing attention to this one so that, should the Republicans get their act together and introduce a "corrections bill" to make these many fixes, that an exemption for Americans abroad from these crushing new taxes is included. Whether you are the owner of a controlled foreign corporation or not, please click here to send a message to lawmakers and regulators who can implement a fix.
You can sign up for regular updates from the DA Taxation Task Force here.
Thank you for your interest in the work of the DemsAbroad Taxation Task Force working to persuade lawmakers and regulators to reform areas of the U.S. Internal Revenue Code that harm Americans living outside the U.S. We are grateful to those who took the time to participate in our Congressional CallStorm this week, calling elected representatives at the same time we were meeting in their offices. Your voices are of paramount importance to the success of our work convincing Congress to reform the tax code and eliminate the areas that discriminate against non-resident taxpayers.
May 2018 Congressional Door Knock
Our meetings were with members on both sides of politics and in both houses of Congress. Here are our takeaways:
Residency Based Taxation –
The Residency Based Taxation proposal being championed by Rep George Holding (R-NC) is now with the staff serving the House Ways & Means Committee who deal with technical tax matters. Ideas proffered to the committee to prevent abuse of the law for tax avoidance purposes are being converted by the tech staff into legislative provisions. We expect to see another draft of the proposal in the coming weeks and then it will be ready to go to the Joint Committee on Taxation for costing (known as “scoring”). At the same time the draft legislation will be distributed to House members for the purpose of attracting co-sponsors. Dems Abroad expects to assist by recommending members we know from our Door Knocking to be interested in supporting this important reform for Americans abroad.
Tax Cuts and Jobs Act -
Another matter we spent a good deal of time discussing on the Hill was the Tax Cuts and Jobs Act, specifically the new “transition taxes” built into the law to take the U.S. from our current system of corporate taxation to a system of Territorial Taxation for Corporations. Unfortunately, these taxes will have an existential impact on Americans abroad who own companies. See here for an explanation. Our discussions with lawmakers confirm what we already knew to be true – GOP tax writers’ only goal was to push through a tax cut for large corporations as quickly as possible. That so many drafting errors and oversights were the result is no surprise; but what is surprising – and appalling - is that Congressional Republicans have no plans to introduce a “corrections bill” any time soon. Our only option is to badger them into doing it. So whether or not you are a small to medium-sized business owner, please join in this important campaign demanding a transition tax remedy.
Democrats Abroad will continue our push in two ways. Firstly, by taking to the airwaves. We are planning a mass media campaign to draw attention to the harm that these taxes will do to Americans abroad who own businesses. We’ve heard from hundreds of them (many of whom are quoted in this submission we made to the 24 April Senate Finance Committee hearing on the new tax law) and they are terrified that the taxes may force them to close their businesses. We think this is a story worth telling. Secondly, we are working with the House Americans Abroad Caucus on a Congressional “sign on letter” in which the signatories note their concern about the issue and call upon Treasury and the IRS to establish a regulatory remedy. The letter should be ready in the next week. It will be “open” for signatures for 2-3 weeks – during which time we will encourage you to message your members of Congress and ask for their support. Please stay posted.
Our other messages for members of Congress included a request for their support for:
- A “same country exception” from FATCA reporting for the accounts of Americans abroad in their countries of residence;
- A Commission on Americans abroad, which would examine existing and proposed laws that discriminate against Americans abroad and propose a remedy;
- The Social Security Fairness Act, which would repeal the Windfall Elimination Provisions, a law responsible for cutting the social security payments of Americans abroad who also generate retirement benefits from the statutory retirement programs in their countries of residence;
- A mechanism for Accidental Americans to shed their unwanted U.S. citizenship without the enduring financial penalties or lengthy procedures;
- Reforms to the Foreign Bank Account Report (FBAR) reporting requirement for Americans abroad in their bona fide country of residence, especially redressing the enormous and out-of-proportion civil and criminal penalties for non-compliance.
Please contact us at any time with questions and comments: email@example.com
DA is door knocking Congress this week to demand urgent reforms to the ways the U.S. tax system harms Americans abroad. It is critical for Congressional offices to be hearing from Americans living abroad right now to back up our message.
Download this Guide which has all the information you need to call, message or write to your elected representatives about the urgent need for tax reform for Americans abroad.
We need a "storm" of calls to rain down on Capitol Hill to make a difference. Please make your calls to your Senators and member of the House of Representatives and share this other Americans abroad. And then request your ballot for the 2018 midterm elections.
Please send questions or comments to TaxationTF@democratsabroad.org.