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.
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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:
CC:PA:LPD:PR (REG-104226-18)
Room 5203
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.