Thanks to comment on Brock from *Johnson*. Good find by Johnson, but merely a mention of individual expat submissions from the Senate International Tax Reform Committee.
The Senate International Tax Reform report is out.
It’s 82 pages all about corporate taxes until the final paragraph where they acknowledge receiving a large number of submissions from US expatriates regarding individual international tax issues. But they aren’t going to do anything about it.
In skimming through this, I see that there is reference to individual taxation issues (what is presently in place, I think).
This is what the final section, the one we’re most interested in, says (and doesn’t say):
F. Overseas Americans
According to working group submissions, there are currently 7.6 million American citizens living outside of the United States. Of the 347 submissions made to the international working group, nearly three-quarters dealt with the international taxation of individuals, mainly focusing on citizenship-based taxation, the Foreign Account Tax Compliance Act (FATCA), and the Report of Foreign Bank and Financial Accounts (FBAR).
While the co-chairs were not able to produce a comprehensive plan to overhaul the taxation of individual Americans living overseas within the time-constraints placed on the working group, the co-chairs urge the Chairman and Ranking Member to carefully consider the concerns articulated in the submissions moving forward.
Canoe re: “Until they find the time to implement the very simple and obvious ABC solution, they should offer a temporary solution, for some at least: A sale on renunciations — say $200 and a mail-in form.”
Exactly. Let the non-compliant, non-wannabee Americans go free, for gods sake. Those who want to be American can stay American and fight for RBT.
Interesting
FATCA Repeal: Looks Like Good News for 7.6 Million Expats
http://www.lizlarroquette.com/facta-repeal-looks-like-good-news-for-7-6-million-expats/
Please note Senator Hatch’s key words:
“…broaden the base”
Thus the reason why they don’t want to switch to RBT, which would be shrinking their tax base.
They want tax dollars from US Persons all over the world to help pay off that $18 trillion national debt (which is a hopeless task).
@Mr A
The US has done a comprehensive analysis of whether one would bring in more revenue than the other (CBT or RBT). Perhaps this is what’s needed for anyone to make any kind of recommendation. They could have at least suggested that, though!
@Bb
I don’t see how such an analysis of predicted revenue could be reasonably accurate without knowing what will happen with FBAR penalties. And that (to my eyes at least) is unknown.
Is the IRS truly going to pursue FBAR penalties from citizens of other countries who live in those countries? Based on the absurd definition of local accounts being offshore?
If anyone is looking for logic in the U.S. tax code then that person is looking in vain. The U.S. will never understand that C.B.T. is wrong until all the other nations of the world start to specifically to employ C.B.T. on all of their non-resident citizens who reside in the U.S.
Such a move would impact the U.S. Treasury heavily because the U.S. has a disproportionate percentage of its residents who aren’t citizens as compared to other industrialized countries. Once the U.S. started to experience the capital drain that it is imposing on other nations then and only then will it change its ways. This would be true F.A.T.C.A./C.B.T. reciprocity.
“The U.S. will never understand that C.B.T. is wrong until all the other nations of the world start to specifically to employ C.B.T. on all of their non-resident citizens who reside in the U.S.”
No, the US will not even understand it then. The only way the US would start to understand it is if Kenya would do it to Obama as suggested. But they still wouldn’t really understand it.
When China’s payment system for international transactions replaces the US’s system, the US will wonder what happened because the US still won’t understand.
“Such a move would impact the U.S. Treasury heavily”
No it wouldn’t. It would only impact the targeted persons.
@Norman Diamond- I don’t think that the exercise would be as pointless as you obviously do. If the other nations of the world were to impose C.B.T. on its U.S. resident citizens then the U.S. would become a less desirable place for their citizens to immigrate too. Remember the C.B.T. is an anti emigration policy and the U.S. is heavily dependent on immigration for its economic survival and to keep its demographic profile from aging as has happened to many other O.E.C.D. countries.
The U.S. is also very sensitive when it comes to having capital leave its shores. Can you imagine the uproar in the halls of Congress once the tax benefits of the U.S. tax code were to be cancelled out by the C.B.T. of other countries? You can be sure that Congress would quickly enact laws forbidding U.S. residents from paying taxes to their country of citizenship. Such a move would quickly put the lie to the I.G.A.’s and their so called reciprocity.
This is probably the only way to get F.A.T.C.A. and C.B.T. on the radar of U.S. news outlets. I have yet to see a report on F.A.T.C.A./C.B.T. by the major U.S. media outlets. Never have their been so many treaty signed without any mass media coverage as has happened with these I.G.A.’s
The reason why I think the exercise is pointless is that the IRS has already reported to Congress several times on the problems of CBT (both the laws and the IRS’s implementations), so Congress knows and they don’t care.
“Remember the C.B.T. is an anti emigration policy”
It’s a pro-renunciation policy. The world used to have more than two countries that practiced CBT, but some countries discovered that they weren’t profiting by forcing their diaspora to renounce. The US mostly doesn’t profit from it either (despite the absurd fee), but the US DOESN’T UNDERSTAND that the US doesn’t profit from it, the US doesn’t care, the US isn’t going to care.
“Can you imagine the uproar in the halls of Congress once the tax benefits of the U.S. tax code were to be cancelled out by the C.B.T. of other countries?”
I can imagine the silence. Tax benefits are put there to get votes, not to guarantee that the benefit will go where it should. If foreigners in the US lose US tax benefits, Congress will care just as much as they do about Canadians who lose Canadian tax benefits, i.e. not even a half-whit.
@Norman Diamond- other countries that had C.B.T. gave up on it because they came to realize that it was unenforceable and trying to enforce it wasn’t worth the money. The U.S. also didn’t enforce its C.B.T. until recently because of the same reasons. The difference now though is that the U.S. decided that in order to enforce C.B.T. it would take the immoral route of threatening the financial institutions of all other countries by withholding 30% of all U.S. based money transfers if other countries refused to sign on.
In one fell swoop the U.S. used both extortion and abolished the principal of equality between nations, The U.S. has also shown its own ignorance of the only basis of taxation which is being an account holder with the treasury of the taxing authority. This principal means that taxation is strictly resident based and is not based upon citizenship. After all the U.S. taxes all of its residents whether or not they are citizens and can do so only because all residents are account holders with the U.S. Treasury. Whereas non-residents are not account holders of the U.S. Treasury but are account holders with another treasury.
So much for the collective intellectual abilities of the members of Congress and the occupier of the White House.
Obviously US politicians have more pressing concerns – like how are they going to pass and fund new national highway bills. They’ll pretend to homeland constituents that “there’s gold in them thar expat hills” abroad, overseas, to be mined from the legal local post-tax savings and homes of those individuals born/living outside the US who are already taxpayers in the non-US country where they live – while the US politicians are busy turning a blind eye but eager ears; letting the US based corporations continue to buy access and influence and lobby for whatever profits them the most while enjoying their US homeland benefits to the max.
“other countries that had C.B.T. gave up on it because they came to realize that it was unenforceable and trying to enforce it wasn’t worth the money.”
I think it was enforceable and it was an incentive for their diaspora to renounce. Though I agree that trying to enforce it on anyone other than a wealthy tax evader would have been more expensive than any benefit they could hope to gain.
“The U.S. also didn’t enforce its C.B.T. until recently because of the same reasons.”
I wonder. The US did enforce its CBT sometimes, and had ways to enforce it nearly always. The same methods that they used in screwing me for being a victim of Monica Hernandez (though I didn’t know it at the time) and for being illegally honest (when I didn’t know that honesty was illegal), also could be used against anyone else in the US diaspora, honest or not, victim of Monica Hernandez or not. The same method that they used in screwing Bobby Fischer, they could also use against anyone else who depended on a US passport. I think they could have found a way to get Marc Rich if they’d wanted to. But yeah, it’s not worth while to them to pursue someone who owes $0 in taxes, so maybe they didn’t try very hard until they figured out how to abuse the penalty system.
@ Jak Dac — Regarding that article,
FATCA Repeal: Looks Like Good News for 7.6 Million Expats
http://www.lizlarroquette.com/facta-repeal-looks-like-good-news-for-7-6-million-expats/
It seems rather weak (e.g., “being considered”), with some wishful thinking:
“Mr Yue said that the law’s repeal is being considered ‘To defend 7.6 million overseas Americans’ privacy rights and constitutional protections…’
Republicans Overseas has a three-pronged strategy in order to accomplish the goal of protecting expats. The strategy includes filing a FATCA lawsuit; working to elect a Republican president; and introducing and passing repeal legislation.
Rob Wood, a tax lawyer at Wood LLP, based in San Francisco, believes that a repeal of FATCA is being considered due to FATCA’s ‘overreaching and hurting America’s image.'”
As with anything written which has emotional impact – if you bury it under piles of paper and let it stew for months if not years, then the emotional impact gets drained and diluted and in the end, the pain and injustice becomes muted and contained. So all the heart-wrenching testimony that expats took the time to write will just wilt away in the archives.
And when you think about it – how many years did it take for America to realise the impact of inversions as a result of their own tax policies? Almost 2 decades?
Nothing is going to happen here. America needs every last dime and then it will still be buried in debt – and I agree with those who say renounce. America is not about to really “overhaul” anything. The truly deep change needed will not be forthcoming.
“What happens to a dream deferred?”
@MR A. “Is the IRS truly going to pursue FBAR penalties from citizens of other countries who live in those countries? Based on the absurd definition of local accounts being offshore?”
Exactly…..let them try.
The US Senate has just said to people with CLINGING US Citizenship, Let them eat cake.
The US refuses to sign the Mutual Collection Treaty so most of the world will not aid in collection.
Scotia Bank is NOT foreign and NOT offshore.
Citibank is FOREIGN!!!
I read it this morning and started swearing. Same old stuff, folks. I’ve been to Washington – hell, I met Tom Bertholdt and listened in on a meeting between Americans abroad and folks from the Joint Committee on Taxation.
They know what’s going on. It’s been told and retold and every time the same result – thanks for coming (or writing) and we’ll see. That dance between Americans abroad and their orgs and the US gov has been going on now for YEARS. And we are not getting anywhere. I’m about ready to smack the next person who wants to continue to “work within the system to effect change”. This is insanity – doing the same thing over and over and expecting a different result. I don’t thing anything is going to help here – not more letters, more submissions, or more lobbying or more nifty well-crafted reports.
I call it as I see it – only the renunciations and the lawsuits are having any impact whatsoever. So that’s where I put my support.
The case for ending CBT is obvious to most people here. But we are not a significant political force. The issue is, apparently, truly off the radar in Washington. We pounce on the crumbs of hope that fall from the table of Senate committees; we devour sympathetic blog posts and are ecstatitc at occasional mainstream media articles. And sometimes rational things happen seeminglyt out of the blue. But to be honest with oneself, there is no sign of movement on this front. Which is why we must all continue to contribute to the the protest, in our own ways, from renunciation to relinquishment to letter writing to lawsuits … loud persistent protests of all kinds will, some day, improve our lot. Or not.
Thanks, Victoria, for your comment, your conclusions and your own post: http://thefranco-americanflophouse.blogspot.jp/2015/07/the-international-tax-bipartisan-tax.html
Victoria: Loved your blog post! Spot on!
I do have one question. You say, “According to Republicans Overseas FATCA Legal Action, the anti-FATCA/FBAR lawsuit led by James Bopp, Jr. was filed in US district court on June 29 with 7 plaintiffs one of whom is Senator Rand Paul.” I was unable to find information at the link you supplied that says anything about the lawsuit having been filed on June 29. It was *supposed* to have been but I have heard nothing further.
Do you, or does anyone, know about the current status of the Bopp lawsuit?
AccountingToday addresses the international tax reform homeland talk for US multinational corporations. Not a mention of the individuals abroad. http://www.accountingtoday.com/news/tax-practice/senate-finance-committee-releases-bipartisan-tax-reform-proposals-75132-1.html?utm_campaign=daily-jul%209%202015&utm_medium=email&utm_source=newsletter&ET=webcpa%3Ae4718509%3A2531408a%3A&st=email
Is anyone really surprised? Didn’t we go through this same exercise last year when the senate finance committee called for submissions? How many will submit the same letters, same comments, etc. next year when the committee asks for submissions on tax reform?
The only change will come from litigation. I was done wasting my time with letters a long time ago.
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@To All, I’m at the end of the day that I made the right decision to renounce, as heart-wrenching as that was. I’m so disappointed by their lack of concern for us abroad though not surprised.
There is this, MuzzledNoMore, but I don’t see an announcement of the actual lawsuit filing yet: https://www.facebook.com/republicansoverseas/posts/399526503564484
June 28 at 7:06am ·
Republicans Overseas Action FATCA lawsuit will claim seven-count constitutional violations against the U.S. Treasury, IRS, and U.S. Financial Crimes Enforcement Network on behalf of seven plaintiffs. As a result, we will delay the lawsuit filing for one week so Mr. James Bopp Jr. will be able to amend and finalize our complaint. When Mr. Bopp succeeded in repealing significant portions of the McCain-Feingold Campaign Finance Reform Act through Citizens United vs FEC in the U.S. Supreme Court, he only claimed one constitutional violation under the 1st Amendment.
@Muzzled It is my understanding that the RO-FATCA-Bopp lawsuit has NOT been filed yet. They have made many promises but nothing so far. The latest rescheduling was for this past Monday but….NOPE.