Below is a copy of the statement for the record by the Democrats Abroad Global Taxation Task Force submitted to the Senate Finance Committee for the hearing with Internal Revenue Service Chief Executive Officer Frank J. Bisignano held on April 15, 2026.
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Chairman Mike Crapo, Ranking Member Ron Wyden, and Members of the Committee: Thank you for the opportunity to submit this statement for the record. Democrats Abroad shares the concerns raised by Senator Wyden in his opening remarks with regards to the IRS data sharing agreement with ICE. The U.S. tax system relies on voluntary compliance, which depends upon trust in the system. That system functions effectively only when taxpayers believe it operates within clear legal limits and that the information they provide will be used appropriately and protected from misuse. A federal court recently found that the IRS unlawfully disclosed taxpayer information to ICE in tens of thousands of instances. Regardless of the ultimate resolution of ongoing litigation, such findings affect confidence in the consistency with which statutory safeguards are respected. From a tax administration perspective, diminished confidence can have practical consequences. Taxpayers may disengage from the system, making administration more difficult and less effective. For Americans living abroad, these concerns have an additional dimension. The United States is the only industrialized country that taxes based on citizenship rather than residence, and therefore must administer a worldwide tax system. That system depends not only on compliance on the part of taxpayers abroad, but also on cooperation with other jurisdictions. This cooperation rests on an expectation that information will be handled in a lawful, fair, and transparent manner. When that expectation is called into question, it can create uncertainty about whether existing safeguards and remedies are adequate, and whether they are consistently upheld in practice. In other words, the United States maintaining credibility as a country that follows its own laws, especially when handling taxpayer information, is in the national interest. At the same time, while other major jurisdictions have developed comprehensive legal frameworks recognizing the protection of personal data as a fundamental right, the United States continues to rely on a fragmented approach that falls short of modern expectations. In that context, we encourage Congress and the Treasury to work with international partners and their competent authorities to ensure that existing agreements and practices reflect the expectations of a modern data protection framework. These concerns arise in the context of an already complex compliance environment. The National Taxpayer Advocate in her latest annual report to Congress has identified taxpayers living abroad as facing “severe compliance burdens” and has warned that: “Unless the IRS takes meaningful steps to improve its services, guidance, and systems for these taxpayers, the frustration and fear experienced by Americans abroad will continue to grow, harming not only them but also the integrity of the tax system as a whole.” Part of this difficulty relates to the disproportionate exposure that Americans abroad face with regard to international reporting requirements. The associated penalties can be severe in some cases, such that the fear of coming into compliance is greater than the fear of remaining non-compliant. Democrats Abroad supports efforts to strengthen taxpayer rights and improve IRS administration, including the Taxpayer Assistance and Service Act. However, for Americans abroad, the challenges are ultimately structural. That is why Democrats Abroad continues to support the Residence-Based Taxation for Americans Abroad Act as a means of aligning the tax system with how taxpayers abroad actually live and work. A system that is clearer, more proportionate, and easier to comply with will also be one that taxpayers are more willing to engage with—and that is essential to maintaining trust. Sincerely,
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