Below is a copy of the submission the Democrats Abroad Global Taxation Task Force submitted to the House Financial Services Subcommittee on Oversight and Investigations for hearing titled "Holding the Biden Administration Accountable for Wasteful Spending and Regulatory Overreach" that took place yesterday.

Click here to download a pdf of DA's submission to the House Financial Services Subcommittee on Oversight and Investigations in full.

American citizens and Green Card holders living abroad are obliged to file their U.S. taxes annually if they meet one of the minimum thresholds imposed by the IRS. 

This citizenship-based taxation system applies regardless of where in the world the U.S. citizen or Green Card holder is located and is a frequent source of headaches and frustration come tax season.

Before we get into the U.S. tax implications during retirement as an American citizen or Green Card holder abroad, let’s review crucial information for expats to understand prior to filing. 

American Abroad Tax Basics:

Filing U.S. taxes from abroad doesn’t have to be as complicated as it sounds. Every day, I see clients who go from overwhelmed by the idea of filing their U.S. taxes to excited because they realize they could be in for a big refund.

As an American abroad myself, I’ve lived through the same frustrations. It’s why I started MyExpatTaxes, which provides do-it-yourself tax software along with the opportunity to work alongside top expat tax professionals for more complex cases.

Due to last month's overwhelmingly successful tax webinar, Democrats Abroad is proud to announce our Tax Webinar Series every Wednesday starting on February 15!

• February 15 How To File The FBAR (Americas/Europe Friendly Time)
• February 22 How To Get Caught Up On Filing US Taxes from Abroad (Asia/Europe Friendly Time)
• March 1 Investing For Americans Abroad and Dual Citizens (Asia/Europe Friendly Time)
• March 8 Taxes And Retirement For Americans Abroad (Americas/Europe Friendly Time)

Tickets for all events are a donation of $10 General Admission / $5 Retired/Student/Unemployed / $5 Recording Only

Tickets for each webinar in the series must be purchased separately.

All proceeds go to Democrats Abroad.

All webinars will take place on an online Zoom webinar. Read on for more info on each webinar.

How To File The FBAR

Tired of paying someone else to file the FBAR for you every year but not sure how to do it yourself? In this webinar, an expert will walk you through the process of filing the FBAR, which is free when you do it yourself. They'll show you the form, what information you need to provide, how to submit the FBAR online, and the filing deadline.

When: Wednesday, February 15 at 1:30pm EST view your time zone

Get your tickets now

How To Get Caught Up On Filing US Taxes from Abroad

Did you forget to file a US tax return since you moved abroad, or have you been living outside the US for a long time (decades even!) but you've not been filing a US tax return? Join us to go over the IRS Streamlined Filing Procedure - the process to get caught up on your US tax filings. The good news is that you don't have to file for all the years that you missed, you potentially won't owe any US tax, and you might even be eligible for some money from the IRS depending on your circumstances.

When: Wednesday, February 22 at 3:30am EST view your time zone

Get your tickets now

Disclaimer: Democrats Abroad cannot provide individual tax advice. We are not tax lawyers, accountants or advisers. Please consult a professional tax adviser/accountant/return preparer when addressing your personal tax matters.

We recommend the IRS Tax Return Preparer Directory to find a service provider who meets your needs and budget, though buyers need always beware. Democrats Abroad suggests Americans abroad in need of tax advice consult the IRS Tax Return Preparer Directory to find an advisor or tax return preparer near you or providing online services: https://irs.treasury.gov/rpo/rpo.jsf

A guest post originally published here.

The IRS tax season just opened on Monday and with that, people are scrambling to get their US tax return in before the deadline. For Americans abroad, this can be a very anxiety provoking and stressful process because it is well documented that filing taxes for Americans abroad is more difficult for Americans outside the US than inside the US. According to American Citizens Abroad, it is estimated that return preparation fees for Americans abroad is between $2,000 and $3,000 and significantly higher for small business owners, while the average fee in 2021 was $323 for a return with itemized deductions and $220 for a return without itemized deductions.

The fact that Americans abroad are liable for filing and paying tax both in the country they live in as well as in the US, it is difficult for Americans abroad why they are subject to tax in two countries since their immigrant counterparts don’t face the same tax filing or liability from their home countries. The United States is unique in that its citizens are liable for US tax on non-US sourced income. The US tax code is completely unique and out of step with the tax system experienced in the rest of the world, which makes it difficult for Americans abroad to remain in compliance with their US tax filing obligations, but not impossible.

On top of this, the IRS makes it difficult for Americans abroad to remain compliant with their tax filing obligation for many reasons, but one of them is that online tax preparation software options aren’t American abroad friendly, hence why remaining in compliance with the IRS is so challenging for many. This article attempts to review the online US tax preparation software options for Americans abroad in 2023. I will try to clarify the options available in the market including free, low cost, and paid options.

A guest post originally published here.

One of the things I hear from Americans abroad all the time is that they feel very alone and lost when they discover that they’re supposed to be filing a US tax return. The part of the IRS website for international taxpayers is difficult to find and understand, especially for someone that’s new to filing US taxes from outside the US, has lived abroad for a long time, or never lived in the US at all. The US State Department pulled Tax Attaches from Embassies around the world in 2013 due to lack of funding. I’ve heard anecdotally that some embassies will tell you about your tax filing obligation when you renew your passport, but other embassies don’t say anything. It’s clear there’s no consistent message going out from the embassies, if there’s any messaging at all.

Depending on what country and where you live in the world, there might be a local American club in bigger cities to converse with fellow Americans (and most people aren’t there to talk about taxes!) but for people living in remote villages or in the countryside, it’s rare to encounter other Americans or have anyone to talk to or seek help from for fulfilling their complicated US tax filing obligation. So, more often than not, Americans abroad turn to online communities to connect and seek answers to the labyrinth that is US taxes for Americans abroad. This article attempts to summarize the online communities on Reddit and Facebook available for local accountant recommendations, help with filing, and other issues relevant to an American abroad and dual citizens’ US tax obligations.

A guest post originally published here.

As the international member of the Taxpayer Advocacy Panel (TAP) I am frequently contacted by international taxpayers requesting information on how to contact the IRS to ask questions or to resolve an issue. Most issues with the IRS can and should easily be resolved with a phone call. This article attempts to explain how taxpayers with a U.S. tax obligation can best go about contacting the IRS by phone from outside the U.S.

How the IRS Communicates with Taxpayers

It’s first useful to review how the IRS will not communicate with you.

The IRS will never contact you by:

• e-mail
• social media
• text message

The IRS can contact you by:

• mail
• phone
• fax

For people living internationally, the most common form of contact from the IRS is by regular mail. Generally, the IRS will send you several letters in the mail about the same issue. However, mail is not always a reliable source of communication for people living outside the U.S. and so one of the most frequent complaints I hear is that people don’t receive a letter that the IRS said was sent to the taxpayer. It is frequent for letters to get lost or are delivered after a deadline the IRS is asking the international taxpayer to meet in the letter itself.

It is unfortunate that the IRS has not improved its technology infrastructure to support e-mail or video calling customer support for international taxpayers, because these are much more reliable and more frequently used methods of communication for people living internationally these days. The good news is that the IRS is looking at options and trialing e-mail and online customer service options, but there isn’t a set date for when these communication options will be made available. In the meantime, we have to rely on current methods of communication with the IRS.

Taxpayers can contact the IRS by 3 different means:

• phone
• mail
• fax

It was highlighted in the 2022 National Taxpayer Advocate’s Most Serious Problems report that “Unlike domestic taxpayers who have access to a variety of toll-free lines, the IRS provides one telephone line for taxpayers outside of the United States, and it is not toll-free.”

I have received reports from international taxpayers who have tried to call the International Taxpayer Service Call Center who were unable to get through only to be hung up on or cut off after waiting on hold for hours. Keep in mind though that this feedback is consistent with feedback about calling the IRS in general, not just with people calling internationally, so it’s not an issue specific to international callers but it does exacerbate the problems people internationally experience with communicating with the IRS. Making calls to the IRS from outside the United States can be costly for people and so the following tips will hopefully reduce your costs and wait time if you need to call the IRS.

We need your help this week. You can really make a difference!

Step 1: Find your two Senators’ and one Representative’s phone numbers

• Click here and search for your last US address or your US voting address, or your parents last US address if you have never lived in the US.
• Grab the Washington D.C. phone numbers (area code 202) for all three members.

Step 2: Call their offices!

• Call first, in order to identify the correct person to send your email to.
• When receptionist answers, read the following script:

Hi, my name is [name], I am a constituent and I would like to send a copy of a recently released report on tax problems for Americans abroad to the person in charge of tax on the Congress[wo/man]'s legislative team. This is an issue that matters to me since I live abroad in [country]. Could you tell me his or her email address so I can send a copy of the report?

• Call during Washington D.C. office hours (9am to 5pm ET, weekdays) to increase your chances of success.
• Do not leave voicemail. After three unsuccessful attempts, email us at [email protected] and we'll see if we can help.
• Call your House representative first if you don’t have time for all three.
• Minimum credit (usually about $5) can get you connected through any internet device to reduce costs if you cannot make an international call.

Step 3: Send a separate email to each Member’s tax staff

If you do not receive a reply within 24 hours, send a follow-up email.

• Ask for confirmation that they received your email for their records (1-2 minutes of your time).
• Message them on their social media platforms to help bump your email up to the top of their inbox.
• If the Congressional staff requests additional information or wants to speak to you about the report but you're not confident in doing this, reply that writers of the report will be happy to speak with them (forward us the email and then we'll advise you on next steps)
• If you receive any reply, please forward it to [email protected] so we know how the member's office responds.

Thank you so much for helping us with this very important work.

• If you have any questions on this action, please email us at [email protected].
• Feel free to share this webpage with anyone you think is interested in helping fix the tax problems for Americans abroad!

On Friday, December 30, 2022, the IRS issued Notice 2023-11, which provides temporary relief from the FATCA reporting rules for non-U.S. banks (known as FFIs, “foreign financial institutions”) in about 90 countries (known as Model 1 Jurisdictions). The notice specifically provides relief for reporting of U.S. TINs (Social Security or ITIN numbers) for 2022, 2023, and 2024.

Democrats Abroad is encouraged by the recognition by Treasury and the IRS that modifications to the FATCA-reporting regime are necessary. Although temporary relief for non-U.S. banks is a positive step, the temporary relief is provided to FFIs rather than directly to Americans abroad. We would prefer permanent relief that resolves the core problem caused by FATCA: loss of access to non-U.S. bank accounts for Americans abroad.

In 2022 the Democrats Abroad Taxation Task Force met with IRS and Treasury officials to raise awareness of the ongoing tax and financial-access issues experienced by our constituency. We are pleased to see some of our views are recognized in this IRS notice. We look forward to an ongoing productive dialogue with these government agencies and Congress in order to resolve the tax and financial-access issues that severely impact the daily lives of Americans abroad.

Highlights from the notice that are relevant to Americans abroad include:

• Treasury and the IRS acknowledge that foreign countries, non-U.S. banks, and U.S. citizens (including for Americans living abroad) are concerned about account closures when a U.S. TIN has not been provided.
• Treasury and the IRS acknowledge notification that some non-U.S. banks are refusing to open or maintain accounts for Americans abroad, or are “otherwise providing access to accounts on less favorable terms than apply to other account holders, even if the U.S. citizen provides a U.S. TIN.”
• One of the requirements for FFIs to receive relief is for the relevant country to encourage its banks not to discriminate against Americans abroad who do provide a U.S. TIN.
• Even though Americans abroad and FFIs had up to 6 years to provide U.S. TINs for FATCA reporting, TINs were still not provided.
• Relief to FFIs is limited to reporting on accounts opened before a certain date and is conditional upon the bank providing U.S.-citizen customers with information on how to come into tax compliance and/or renounce citizenship.
• Relief also obliges banks to take steps to encourage tax compliance by U.S. citizens like providing links to the IRS and U.S. State Department’s websites.

Announcing the release of the 2022 report on tax and financial access issues for Americans abroad!

Click here to read the report

Share the report with your Members of Congress

Thank you to all that participated in the tax survey earlier this year! This report is a summary of what you shared about your tax and financial access issues. Overall, your feedback confirmed the compounding effect of tax discrimination, unintended consequences, and banking rules and regulations impose a substantial burden on Americans abroad.

We encourage you to read the report and share it with your Members of Congress, who are the ones with the power to change the tax laws.

A BIG thank you to the 40+ volunteers who contributed both big and small to this report. This report is nearly 2 years in the making, and we're very excited that it's now publicly available for all to read. Our hope is that this report will be an effective advocacy tool for the upcoming 118th Congress, and we look forward to engaging in productive conversations with Congress in 2023 to further our advocacy efforts for tax reform.

Please send any questions or feedback on the report to [email protected]