Below is a copy of the submission the Democrats Abroad Global Taxation Task Force submitted to Treasury for the public comment period on the Executive Order, ‘‘Modernizing Payments To and From America’s Bank Account’’.
Click here to download a pdf of DA's submission to Treasury in full.
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Dear Tyler Curtis and Nora Esposito, Democrats Abroad, the official arm of the Democratic Party representing U.S. citizens living outside the United States, appreciates the opportunity to submit this regulatory comment. Our main recommendation is to modernize payment systems so that Americans abroad can both easily make payments to and receive from the Internal Revenue Service (IRS) via non-U.S. bank accounts, which will increase access and eliminate a barrier that Americans abroad currently face in paying taxes or receiving refunds - basic functions that the IRS should be facilitating for all its citizens. Additionally, please ensure that paper checks remain an option for receiving payments from Americans abroad who do not have a U.S. bank account. It is common for Americans living abroad to have a bank account in their country of residence in order to receive a salary and pay local bills. But many Americans are unable to make payments to the IRS via electronic transfer because few U.S. banks will accept non-residents as customers, even U.S. citizens living abroad. Some of our members have reported they haven’t been able to pay their tax due because the instructions on the IRS website for making a transfer from a non-U.S. bank account are too complicated. These individuals were unable to get assistance from the IRS, and therefore were subject to unfair late-payment penalties. Americans living abroad also struggle or are unable to deposit U.S. checks, even those issued by the U.S. Treasury, in their country of residence. This is because, in the rest of the world, checks are for the most part deemed unsafe as a money transfer method. Banks in countries such as Sweden, Australia, and the Netherlands have stopped accepting checks altogether. When Americans abroad do not have a U.S. bank account and are unable to provide bank details on their tax return, the IRS defaults to issuing a check when a refund or credit is due. We regularly receive emails from our members asking how to cash a check from the IRS, because it is difficult or impossible to find a bank that will accept a check at all, let alone one from outside the country. Banks that accept foreign checks often charge a heavy processing fee for this uncommon service. It follows that the IRS, Treasury, and the taxpayer would greatly benefit from an updated system able to both make bank transfers to and receive money from non-U.S. bank accounts. Not only would this make tax collection easier for the agency, but it would also remove barriers that Americans abroad face in being able to complete the most basic of functions that the IRS is tasked with, collecting tax. The Taxpayer Advocacy Panel in 2022 requested the IRS make it easy for taxpayers abroad to receive payments to a non-U.S. bank account, and the IRS said the issue was under consideration until September 30, 2022, but never followed up. Additionally, the IRS Strategic Operating Plan in 2023 said a key project was to “Allow those with foreign bank accounts and foreign currency to make and receive payments.” Yet the option to easily make or receive payments from non-U.S. bank accounts still doesn’t exist. While the IRS has remained stagnant on this issue, the Social Security Administration is able to make payments to non-U.S. bank accounts for beneficiaries residing outside the United States. Given that another federal agency already makes payments to non-U.S. bank accounts, it is inexplicable that the IRS is unable to implement the same capability. Our suggestions are discussed in more detail in the attached annexes. We thank you again for the opportunity to comment. Sincerely,
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