On 1 August 2018 the US Treasury published a further set of proposed regulations implementing the transition taxes in the 2017 Tax Cuts and Jobs Act* (TCJA). On 9 August the regulations were published in the Federal Register, thus opening a 60 day comment period. We urge you to make a submission detailing how the taxes will impact the viability of your business and your family. Here’s how.
If you are an American abroad who owns a company registered abroad you will no doubt be aware of the misery Congress created for you when they passed the 2017 Tax Cuts and Jobs Act; they wacked you with 2 BRAND NEW TAXES! For those not in the know see the endnote to this notice [i] and know that our research shows these odious taxes will force many Americans abroad to close their businesses.
On 1 August 2018 the IRS issued further guidance for how to calculate the Repatriation Tax and the GILTI Tax. This reporting by The Tax Adviser blog describes the guidance at a high level. This reporting by Deloittes is more detailed. Neither account of the proposed regulations will be easily understood by those outside the tax accounting profession! Most important: there’s nothing in them that provides relief from Repat and GILTI for American business owners abroad.
Since the 2017 tax law was passed Democrats Abroad and other organisations representing American expats have been running campaigns demanding relief for American business owners abroad from the crushing burden brought by the Repat and GILTI taxes. (This Congressional outreach campaign demanding transition tax relief is still running so do take part if you have not done so already!) Many thousands of messages have been sent to Treasury, the IRS and members of Congressional tax writing committees. We know that we are making headway. We are told further changes to the laws are coming. And we need to keep pushing – by taking advantage of this open comment period to make our problems understood.
IF YOU ARE AN AMERICAN ABROAD IMPACTED BY REPATRIATION TAX AND GILTI TAX PLEASE MAKE A SUBMISSION TO THE IRS BEFORE THE 9 OCTOBER 2018 CLOSING DATE. Members of Congress who are close to the process recommend submissions include detailed descriptions of the business and how it and the American business owner will be impacted. Directions for submitting written or electronic statements or a request for a public hearing are detailed here in the Federal Register.
Address and post written submissions to:
Internal Revenue Service
P.O. Box 7604
Ben Franklin Station
Washington, DC 20044
Submissions can be hand-delivered Monday to Friday between 8am and 4pm at the Courier’s Desk in the IRS office at 1111 Constitution Avenue NW, Washington, DC 20224.
[i] In ushering in a new system whereby the profits of foreign corporations controlled by US companies would no longer be taxed by the U.S., Congress put into the 2017 Tax Cuts and Jobs Act a new system of taxation to tax 1) company profits generated from 1986 through 2017 that are being held offshore and 2) profits earned going forward and taxed by the jurisdiction where the business is incorporated at a lower rate than what they’d be taxed on by the US. Corporate lobbyists made sure there were lots of offsets and deductions available to corporate owners of foreign companies so that the tax liability from these 2 new “transition taxes” were almost entirely zeroed out - for corporations. Individual Americans who own companies in their countries of residence have no such deductions or offsets available to them.
Unlike corporate owners of foreign corporations, Americans abroad that own foreign corporations aren’t keeping profits in their country of residence to avoid paying U.S. tax on them; they use the profits of their businesses to provide for their families and save for the future. Many have no cash available to pay profits generated over the last 3 decades. Many cannot afford to pay tax on future profits to both the country of incorporations AND the U.S.
Congress, the IRS and Treasury will only address themselves to the serious crisis the Tax Cuts and Jobs Act has created for American business owners abroad if we continue to explain the impact and demand a fix. Please share this message and encourage the American expats you know who own companies in their country of residence to respond to Treasury’s invitation to provide comment.
The Taxation Task Force encourages Democrats Abroad Country Committees and Local Chapters to print some of these tri-fold, double-sided pamphlets about our Residency Based Taxation advocacy campaign to distribute at your events. It explains our campaign and provides languagesupporters can use to call or write to their elected representatives.
Please send questions or comments to TaxationTF@democratsabroad.org.
Thanks for your on-going support!
Democrats Abroad Taxation Task Force
Democrats Abroad was invited to be a part of a roundtable convened by Dutch politician and member of the European Parliament, Sophie In’t Veld, to discuss issues raised in a paper examining the Foreign Account Tax Compliance Act (FATCA) and its application to the international community and European affairs. Democrats Abroad does NOT involve itself in host country politics or policies and so has declined the invitation.
Democrats Abroad acts as the Democratic voice of all Americans abroad. The community of Americans abroad is as diverse in age, economic status, race, marital status, sexual identity and political persuasion as any other American community.
Uniquely, however, the community of Americans abroad also includes a cohort of U.S. citizens who have little or no connection to the United States other than by accident of birth - "Accidental Americans." Having no association or affiliation with U.S. culture or identity, nor a desire to maintain such artificial and bureaucratic ties, Accidental Americans bear the consequences of a citizenship condition that was not of their making.
Democrats Abroad acknowledges that the only remedy on offer to Accidentals currently requires them to incur significant effort and considerable, material cost to renounce their American citizenship. This is an effort no other nation on Earth imposes.
Democrats Abroad takes an interest in all Americans living abroad – those who are living abroad temporarily; those who are living abroad indefinitely; and those whose lives have always been firmly rooted in countries other than the U.S. We support policies that free and empower Americans to make responsible migration and citizenship decisions in the interest of themselves and their families. Democrats Abroad supports a citizenship renunciation remedy for Accidental Americans consistent with this view and we stand with Accidental Americans in their work to secure one.
12 mos to get Congress to exempt Americans abroad from the TCJA* “transition taxes”. Write them NOW!
Committed activism by Americans abroad has succeeded in persuading Treasury to give us a 12 month reprieve from "transition tax" payments due under the 2017 Tax Cuts and Jobs Act* (TCJA). All your letters to Treasury and Congressional leaders helped us achieve this important campaign milestone. We now focus our outreach on Congress. Please help by writing to your elected representatives and others in Congress now. Here's how.
The 2017 TCJA was drafted in such haste that a great many errors were made. The transition taxes in the law introduces will cause great harm to Americans business owners abroad. Congress is being lobbied heavily by groups like us seeking to have the errors that impact them addressed in a "corrections bill". We need an exemption from the Repatriation Tax and GILTI Tax regime in that "corrections bill"!
The "corrections bill" may be introduced some time over the summer as an attachment to a bill renewing funding for a government department or agency, or it may be introduced in the "lame duck" session after Election Day (or other). In any case, we have to use the time we have to keep our demands front of mind for Congress.
Whether you are an American business owner abroad or not, we ask that you participate in our Phase 2 campaign of outreach to members and officials in Congress demanding an exemption from the "transition taxes" in the TCJA. Please use this information and email message template to write to YOUR HOUSE AND SENATE MEMBERS as well as the key Congressional leaders.
Please let us know if you receive a communication back. Send it, or any questions or comments, to us at firstname.lastname@example.org.
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 email@example.com.
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.
Please send questions or comments to firstname.lastname@example.org.
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 email@example.com.
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).
Please send questions or comments to firstname.lastname@example.org.
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 email@example.com
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.
Please send questions or comments to firstname.lastname@example.org.