Below is a copy of the submission the Democrats Abroad Global Taxation Task Force submitted to the Internal Revenue Service for the public comment period on Form 1040 U.S. Individual Income Tax Return.
Click here to download a pdf of DA's submission to the IRS in full.
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Dear Mr. Garcia, Democrats Abroad appreciates the opportunity to comment on the Information Collection Request (“ICR”) submitted by the Internal Revenue Service (the “Agency”) for renewal of Form 1040 and attached forms. As the largest Americans abroad organization in the world, with 200,000 U.S. citizen members living outside the United States, we can provide firsthand insight into the burden of preparing the U.S. Income Tax Return for Individual Taxpayers (“Information Collection”). International taxpayers are recognized as an underserved community by the Internal Revenue Service and its watchdog, the Taxpayer Advocate Service. Our own research confirms this, finding that our community is both underserved and also subject to a higher tax compliance burden than placed on resident U.S. citizens. We, and others, have repeatedly highlighted to the Agency that U.S. citizens living outside the country — compared to citizens resident in the U.S. — spend much longer, and pay much more on tax preparation services, to file their individual tax return. Reducing burden analysis to only a simple estimated average masks from OMB a deeply problematic paperwork burden complicated in many cases because the tax-filer lives abroad. Further, the IRS provides no support to international taxpayers, not even programs for the most vulnerable, such as for low-income Americans or the elderly that are available to residents of the United States. Despite this excessive burden, 54% of tax returns filed from abroad have no tax liability, predominantly due to higher taxes paid in our country of residence. The unusually high burden pushes many low-income and middle class Americans abroad to one of two extremes: either paying excessively high fees to specialized international tax professionals due to complexity, or being pushed out of tax compliance if the complexity of their return exceeds what they can reasonably pay a professional for. Public comments to the State Department recently highlighted a causal relationship between the burden of this particular Information Collection and loss of U.S. citizenship. We can identify no other Information Collection from the federal government whose compliance burden leads to citizens facing such extreme choices. Our submission, in the following attached appendices, examines this:
The scope of changes needed to remedy this situation extends beyond what is reasonable to expect from a routine Paperwork Reduction Act renewal. The first step, however, is for the Agency to acknowledge that taxpayers living abroad live with the consequences of an excessive paperwork burden. We believe that, within the context of the Paperwork Reduction Act, the following steps are appropriate:
Further detail on these steps is provided in Appendix D below. Reasonable paperwork burdens are the cornerstone of a Fair and Just Tax System, a right under the Taxpayer Bill of Rights. We hope that this will be kept in mind when the Agency reviews and acts on the input that it receives from the public. Sincerely,
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