UPDATE: JUNE 14, 2015
from JakDak:
The Senate Finance Committee chairman, Senator Orrin Hatch (R-UT), has established working groups to study different aspects of the tax system. These working groups are scheduled to report back to the committee by June 26.
Tax Policy Update
June 09, 2015[Interesting: NUMBER OF THE WEEK: 61. The number of countries that have signed on to implement the OECD’s multilateral agreement for the automatic exchange of tax information, in conjunction with the ongoing Base Erosion and Profit Shifting (BEPS) project. Although the U.S. has committed to implement the standard, it has not yet signed onto the formal agreement (the “multilateral competent authority agreement”), which lays out in detail what information will be exchanged, the timing and method of exchange, and how signatories will work together to ensure compliance. Signatories to the agreement will begin exchanging information as early as 2017. Additionally, the OECD released on June 8 its “Country-by-Country Reporting Implementation Package” developed under the BEPS Action Plan. Under the plan, which the Treasury Department has said it will implement for the 2016 fiscal year, multinational companies are required to aggregate and report information annually regarding where they do business, the global allocation of income, and amount of taxes paid, along with other information that will allow taxing authorities to more closely examine multinationals’ tax practices. The release of the package coincides with the 2015 OECD International Tax Conference in Washington, D.C., this week where OECD representatives are expected to review and discuss key initiatives under BEPS.]
SPOILER ALERT: Comprehensive Tax Reform Unlikely in 2015. In an interview last week, Senate Majority Leader Mitch McConnell (R-KY) outlined a busy legislative agenda between June and August recess: passing a highway bill, cybersecurity legislation, No Child Left Behind, and the Toxic Substances Control Act. Tax reform, however, is conspicuously missing from the list. “We’re certainly not going to be able to be doing big, comprehensive tax reform with this president,” McConnell said. Tax reform optimists have been eyeing the highway reauthorization bill as a potential vehicle to move a limited set of tax reform measures, but according to McConnell, the bill might instead be better suited to pick up a different legislative passenger—the reauthorization of the Export-Import Bank. McConnell believes the highway bill would provide the best opportunity to reauthorize the bank, which is set to expire June 30.
The inability of the Senate Finance Committee Tax Reform Working Groups to meet their original May 31 deadline to report recommendations to Chairman Orrin Hatch (R-UT) and ranking member Ron Wyden (D-OR) only adds to the general pessimism. The international tax working group may offer the only glimmer of hope, with reports that it has made the most progress in hammering out detailed recommendations. The working groups are now aiming to deliver their reports before Congress departs for the July 4th recess.
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UPDATE: MAY 25, 2015
Em’s comment to JakDak:
I’m not sure of the where for the SFC recommendations but the when has been delayed:
http://thehill.com/policy/finance/242916-senate-tax-reform-groups-get-more-time
The Senate Finance Committee’s leaders are giving tax reform working groups some more time to formulate their recommendations.
Finance Chairman Orrin Hatch (R-Utah) and the panel’s top Democrat, Sen. Ron Wyden (Ore.), had hoped for recommendations by the end of May.
But in a statement Thursday, the two senators said that the working groups made it clear that they needed extra time to do the job right. The panel will set a new deadline after lawmakers return from next week’s recess.
“It is our hope these bipartisan working groups will use this extended time to finalize their recommendations for tax reform and produce in-depth analyses of options and potential legislative solutions,” Wyden and Hatch said in a statement.
etc.
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Shadow Raider says
April 29, 2015 at 6:39 pm
The Senate Finance Committee just released the comments sent by the public on tax reform. As expected, there are lots of comments about CBT and FATCA.
http://www.finance.senate.gov/newsroom/chairman/release/?id=3b14e94b-69f9-41e2-9fd3-7d191971b7ee
Hatch, Wyden Release Public Input on Bipartisan Tax Reform
Over 1,400 Submissions Made to Working Groups
WASHINGTON – Finance Committee Chairman Orrin Hatch (R-Utah) and Ranking Member Ron Wyden (D-Ore.) today released over 1,400 submissions from stakeholders on how to best to overhaul the nation’s broken tax code. In March, the Committee sought input from the public in an effort to provide additional data and information to the Committee’s bipartisan tax working groups, which are currently analyzing existing tax law and examining policy trade-offs and available reform options within each group’s designated area.
“We thank the stakeholders and public who provided us with this valuable data and input,” Hatch and Wyden said. “These submissions have equipped us with the ability to better evaluate how reforming the tax code will affect both American families and business of all kinds. As our bipartisan groups work towards producing substantive recommendations on how to reform the tax code, they will now be able to consider these valuable ideas.”
All comments received by the Committee that met submission requirements were made public.
Submissions can be found below. Total submissions to each bipartisan tax working groups are as follows:
Individual Income Tax – 448
Business Income Tax – 332
Savings & Investment -128
International Tax – 347
Community Development & Infrastructure – 207
Each of the five bipartisan working groups is currently working to produce findings on current tax policy and legislative recommendations within its area, with the goal of having recommendations from each of the five working groups completed by the end of May.
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Thanks, Shadow Raider, for alerting all here. There will be many Brockers reading, starting with the submissions (not all by individuals) to International Tax.
I’m still reading “Individual” submissions but here’s a PS from David Nicol in Hong Kong I’d like to share …
I considered trying to produce a spreadsheet of the submissions that identified the overall characteristics (ex. home country and current location, occupation, likely gross income, marital status, age, citizenship status/acquisition (ex. dual by birth),) and main complaints/issues raised (FBAR, FATCA, account closures at home and US, double taxation, marital status filing discrimination, filing costs, fear/stress factor, foreign spouse, etc.), but it would be very timeconsuming to do for both the individual tax submissions and the international ones. I hope the ACA or AARO does this – it could be very useful as a future reference to throw up into the faces of US lawmakers and politicians as well as those in our own home country (ex. Canada).
I’d love a comparison of Congressional tax returns and that of those deemed ‘UStaxablepersoncitizens’ outside the US. Of course the first step would be access to see what the Congresscritters actually file.
http://www.nationaljournal.com/magazine/congress-tax-returns-20150327
‘One Good Idea
Congressional Tax Returns Could Tell Us a Lot’
By Molly Mirhashem
“Dorothy Brown, a professor at Emory University who specializes in tax law, has proposed an idea to finally spur tax reform: examining the tax returns of all 535 members of Congress. I recently spoke with her about the proposal, which she calls “The 535 Report.”……..
@ badger
Good suggestions — the spreadsheet for the SFC submissions and the peek sheet for Congress members’ tax returns. Both would be VERY interesting. Tax reform MUST happen — the tax beast has gone absolutely bezerk!
@Embee, I’m only part way through the submissions, but the consistent themes struck me early on. And none of it is new – it has all been identified before. The endless permutations add to the insanity of what has been done to people in the name of US extraterritorial taxation, FBAR and FATCA. It is criminal what the US has continued to do to those living outside the US. I have no faith that ethics will inform the actions of the Senate Finance committee and their colleagues, but I (ruefully) enjoy the fact that this treasure trove proves their willfulness in the past and if they don’t act in any meaningful way to provide remedy, this solidifies their conscious and deliberate willfulness from now into the future. There are no US resident millionaires and billionaires asking for relief in the submissions. Just ordinary folks living law abiding lives in their homes outside the US.
Of course, that is because the billionaires and millionaires have the direct ear of the politicians, as do the US corporations. They don’t need this exercise, they can get their issues heard via other more direct means.
@ badger
“Treasure Trove” — exactly the word I used this morning when I was telling my husband about some of the submissions I had read last night. I was thinking that when the next committee asks for submissions (and I’m sure there will be more — it’s a typical stalling technique) it would be great to have a consolidated report of these SFC submissions. Such a report would be useful too when the media or academic paper writers get curious about the plight of “overseas” Americans. What’s it all about? Well take a look at this oh curious one.
I would be willing to do a packet of summaries if there were some others interested in splitting up the rest. (Provided the template is kept relatively simple.) Maybe there could be a “key quote” included when someone has phrased something particularly well. I keep seeing things which have me saying to myself, “Well that was a good way to put it!”
Badger,EmBee and others
I see MANY people are going through the submissions there seems to be a lot of wasted information that could be deciminated. Why not make a spreadsheet / fact sheet that covers certain points and have them uploaded on a new forum here. A example could be uploaded and within a week everyone could throw in their ideas. This would assist the Senate staff probably monitoring this site and show the seriousness of our plight.
Noting recurrence of something along following lines. Who got them on to this? Makes lots of sense.
Nichola & Jacinda Shelly:
As one suggestion I would consider modifying the definition of a U.S. person
for tax purposes in 26 U.S. Code § 7701(a)(30) — to meet a bona fide residenc
test or physical presence of 2 of the 3 consecutive tax years.
Hello JakDac-
Great thinking. Sounds like a university professor?
I have started on a mission to identify all Australian submissions which I shall highlight on Australia FATCA page.
Another thought was to identify organizations that might provide substantial support to ADCS (as we hear its all little people contributing), in the way of funding, endorsement, or on their US Person/FATCA pages with link to ADCS.
This is an interesting one:
The Investment Funds Institute of Canada [Anti PFIC] #14 from end.
@Jak Dac @Badger has similar ideas of compiling the submissions.
@Badger; @Jak Dac re: compiling submissions. Share Excel workbook in cloud: have collaborative compilation of results. I wish to remain too anonymous to initiate this. I believe e-mails would then need to be sent to invite joint authorship.
One way to do a summary compilation would be to just pull out themes from the various submissions, and maybe group these by categories. Perhaps categories something like, for U.S. Persons abroad:
— actual issues with U.S. income tax (e.g., PFICs; non-recognition of non-U.S. pensions, registered savings/education/disability plans; currency conversion issues)
— process-related issues (e.g., different filing years for different countries; lack of information; extra complexity in filing; excessive costs)
— financial impacts on individuals (e.g., excessive penalties)
— health-related impacts on individuals (various fears, pressures, stress)
— impacts on countries of a person’s residence (e.g., transfer of money originating in other countries from those economies to the U.S.)
— impacts on the U.S. as a result (e.g., Roger Conklin’s issues)
— citizenship-based taxation (why is it still there?; costs vs. benefits; changing definitions of citizen; impacts on accidental citizens; etc.)
— FATCA (exacerbates CBT; closure of bank accounts; cannot have company signing authority; costs to financial institutions and clients)
— FBARs (privacy and security issues; need to send to Financial Crimes Enforcement Network)
— concrete suggestions and recommendations for improvement
This is just a quick sketch, having read several submissions, and with some general examples just for thinking, as a start. Category splits aren’t tidy; they overlap. Maybe nothing new for people who read here often, but perhaps a handy bulleted list of themes with just enough description to keep the points relatively short. And as someone suggested, perhaps with quotes from some well-worded points made in submissions.
JC wonders about this …
“As one suggestion I would consider modifying the definition of a U.S. person for tax purposes in 26 U.S. Code § 7701(a)(30) — to meet a bona fide residence test or physical presence of 2 of the 3 consecutive tax years.”
And here’s the rest of the story …
“For example, the citizen is responsible for filing IRS forms (while still getting the 2555 and foreign earned income exemptions) and paying taxes (if owed) for the first 3 years residence abroad. Thereafter, he registers with the IRS as a Tax Exempt US Citizen Abroad, proves that he/she has been compliant in all taxes paid and forms filed, and thereafter is free of US filing requirements.”
I’m not sure what the source of this idea is but it was mentioned in several submissions.
@EmBee @JC: Regarding the 3-year overseas residence suggestion for exemption from filing, I’m not sure if it was the ACA that originated the suggestion, but it’s in their report:
RBT would be an option available to Americans abroad who have resided three years as bona
fide overseas residents under Section 911 of the Internal Revenue Code, who have been U.S. tax
compliant and who have an established tax home abroad.
So that makes at least two individuals and the ACA making the identical suggestion. It may not help everybody, but it does seem to me to be a solution that would be more palatable to US lawmakers than a complete abandonment of CBT.
I don’t see that arrangement helping anyone if Fbars still need to be filed during the 3yr probation.
It would just add another layer of complexity for the banks and yet another question….
” Are you a US person residing here for less than 3yrs?”
Americans would still be shunned and considered a toxic commodity.
Heidi, that’s an excellent point. There is also the terrifying possibility of US persons being relieved of tax filing, but still subject to FBAR and FATCA “just to make sure” no one back in the homeland is “using them” to hide their trillions.
@ Barbara
It would also make US citizens prisoners of their resident country.
There are many in Europe who live in one country and work just across the border in another. That’s the way the EU works, no borders.
consider Kaggle to analyze the data
http://www.kaggle.com
Has this ever been posted on IBS? How I wish I’d submitted it to the Senate Finance Committee, laminated and mounted on wood!
http://www.azquotes.com/picture-quotes/quote-our-properties-within-our-own-territories-should-not-be-taxed-or-regulated-by-any-power-thomas-jefferson-39-68-24.jpg
@Barbara
They wouldn’t see it as applying to other nations, unfortunately!
The inclination to sort the submissions by country, etc. perhaps shows that the submissions by Stephen Kish should have perhaps been individually instead of grouped. Instead of: International Tax – 347 it could have been instead: International Tax – 1,347 with weighting even more than it is from US persons overseas asking for RBT. Note for next time.
@Barbara @Bubblebustin
That image was prominent on Twitter until recently. Someone should photoshop addition:
The US Government should apply this principle in 2015 and not tax US Persons resident in Canada, UK, Australia, etc.
Since the US likes to make things difficult, why not make 2 different passports:
1- Blue passport for resident Americans. Seal Team 6 will come to their rescue (maybe). They can vote. They mostly use their passport for short trips and then they go back to the US. They can apply for welfare and other social assistance programs, and government jobs. They must file tax returns every year and FBARs
2- Black passport (can’t use green = minor or brown = official US government business passport). No one will come to their rescue. They can’t vote. They cannot use welfare and social assistance programs, or apply or government jobs. If they return to the US for stays greater than 1 year, they have to convert to a blue passport or face “massive penalties”. These people get left alone to live their lives. The only benefit they receive with the black passport is the right to return to their place of birth.
@geez, India has done something like that with India Citizenship copmared to Overseas Citizenship India
@Geez
Like that idea! 🙂