[OCTOBER 1 UPDATE: THANKS EVERYONE WHO SENT LETTERS!]
Today is the very last day to support — by your letter and petition — a Republicans Overseas (RO)/RNC proposal that would replace citizenship-based taxation with a form of “territorial taxation”.
Info is at this website: https://republicansoverseas.com/territorial-taxation-individuals/#petition
RO’s Solomon and Michael will personally bring the letters and petition to the White House on October 2, but they need to receive everything by September 30 — WHICH IS TODAY.
USCA suggests that you consider:
“…The comments in this thread have reflected a diverse collection of views. The RO proposal has been severely criticized for various reasons (mostly revolving around the taxation of nonresident aliens). It’s true that the RO proposal has many flaws.
That said, I think it’s important to recognize in broad terms, that the RO proposal that will change the impact of CBT as it currently stands. In that respect the proposal is at least a start and that start is described as “Territorial Taxation For Individuals”. It is possible (and I think advisable) to support the broad principle of changing CBT without necessarily agreeing with every aspect (or any aspect) of the specific RO proposal. Some of you may have read the most recent ACA proposal which does a good and interesting job of explaining what “territorial taxation” (borrowing from the language of the RO proposal) could mean for individuals. (Interestingly what “territorial taxation” COULD mean for individuals is what most of us think of as “residence-based taxation…)
I am simply trying to argue that change will require education. Education will require engagement. Engagement requires personal interaction.
Your sending a letter and/or signing the petition will help RO achieve the personal interaction that they need to engage and educate. If you care about this issue at all, then you must participate.
I don’t believe that the mere fact of sending letters or signing petitions will make a difference. But, I do believe that WITHOUT YOUR EFFORTS and support that NO CHANGE IS POSSIBLE. Therefore, you are really deciding whether you want to act in a way that makes change possible or if you choose to act in a way that makes change not possible. It’s your choice. This is NOT about supporting a specific proposal. This is about behaving in a way that opens the door to discussion in change.If it matters, I am not a Republican. I am not a Democrat. To the extent that I am political, I would be an independent. I am not primarily a U.S. citizen. So, these comments are not partisan. But, I am deeply committed to the struggle to getting these unjust laws changed. Furthermore, I believe that change can happen ONLY if all those affected create a united front in opposition to CBT. It is the opposition to CBT that unites ALL Americans abroad.
It’s very simple really. Where laws are made through a democratic process: If you don’t make your view known you can’t expect change.
Your participation may or may not make a difference. But, your NONPARTICIPATION will make a difference because it will ensure that no change will happen….”
Trump is in the White House and over half of the Swamp creatures hate him so badly they would rather see the country fail than him succeed. They indeed never thought he’d be elected and are secretly working against him. He once was a creature of the swamp himself. He owned several politicians himself and because he turned on his kind and wants them done away with.
We will see if he can save the country first..
Patricia Moon –
Wouldn’t this be the case with any plan to modify or replace CBT? Not everyone would want to shift from US citizen benefits (FEIE, tax credits, child credits) to NRA treaty benefits.
Until/unless CBT were to be ruled unconstitutional, anyone who wanted RBT would have to file a form – annually? – to make the choice. And in so doing, identify him/herself as a person subject to US tax law. And perhaps pay an exit fee, and perhaps be required by banks to produce proof of status.
On the other hand, I suppose it would be a way of solving the bank access problems while keeping the passport. A sort of reversible halfway house on all those roads leading to renunciation.
@plaxy
Interesting thoughts……..
Those points came from the staffers who wrote the document and were (presumably) responding to complaints about CBT. It is my impression that none of it was devised/meant to be a total solution.
I can envision tax reform without the idea of an “election” – probably because I am a long-term, never-going-back-expat and forget there are some who are abroad only temporarily.
I was just talking off the top of my head. When I think of tax reform, I think of all the little nitty-gritty items that have to be struck/added etc. IOW, the actual “doing” of it is quite complicated. Guess I was just fantasizing for one instant, imagining perhaps it could be simple…..LOL
Do you all realise how many condors would loose their bread and butter ? There are many living overseas and I personally know some who live off of us living overseas along with us. Please write and support for RO as these condors will keep on feeding off of us.
@plaxy
“I suppose it would be a way of solving the bank access problems”
I can’t imagine the banks wanting to take on the costs of even more administration, sorting out those temporarily abroad from those permanently there. It would be much easier to continue to reject all Americans.
@ Heidi – I agree. Where bank access problems exist now, they will continue to exist until FATCA is repealed. Under CRS each country polices their own financial institutions and there’s no draconian 30% penalty imposed by a foreign government for failure to comply. As long as the 30% stick is there, FFIs will prefer to report on any and all possible US Persons.
It would be interesting to see whether bank access problems are worse in countries with IGAs that do less to protect their FIs from the 30% penalty. There’s very few institutions that will not take US persons in Australia (the only one I know about is an investment fund, not a depository institution) – and our IGA virtually eliminates the risk that an Australian FI will be subject to the 30% withholding.
Heidi, Karen: Yes, I agree, it would be easier for banks to opt not to apply any of the “curing” procedures, just treat all customers with US indicia as reportable and demand the SSN. I wasn’t thinking clearly.
I don’t know of any retail banks in my country (Model 1 IGA) that reject US citizens completely, as long as the person co-operates and hands over their SSN. The ones I’ve looked at all have some accounts that US citizens can apply for, and some they can’t. Depository/investment, I suppose, as you say, but I don’t think it’s due to fear of the 30% withholding being invoked. I think it’s just because they don’t want to risk the “significantly non-compliant” label.
I think the Model 1 IGA does eliminate the 30% threat. I’m not sure about the Model 2 IGA.
Republicans Overseas says it’s NOT TOO LATE!
Posted today, October 1st:
http://www.arabianbusiness.com/politics-economics/380087-us-expat-tax-reform-petition-to-be-delivered-to-white-house
US expat tax reform petition to be delivered to White House
Petition predicts that territorial taxation would lead to an increase in American exports
…
The petition – being circulated by Republicans Overseas – calls for an end to citizen based taxation (CBT), which mandates that American citizens living abroad pay taxes both to their country of residency and to the US government.
According to the document, territorial taxation would be “tax-revenue positive” for individuals, as it “eliminates current loopholes that allow wealthy foreigners not resident in the United States to generate substantial income…without paying their fair share of tax.”
Additionally, the petition predicts that territorial taxation would lead to an increase in American exports.
“Due to CBT, Americans overseas are at least 35 percent more expensive to hire than their foreign counterparts,” the petition reads. “Territorial taxation would make employing Americans overseas more affordable, and more Americans overseas will lead to more exports of American goods and services.”
Other benefits of territorial taxation cited by the petition include attracting skilled immigration by individuals who would avoid tax implications caused by foreign businesses and income, and an end to the “discriminatory costs of tax compliance” on overseas Americans.
In the UAE, Americans from both sides of the political spectrum have voiced their support for territorial taxation.
“The general concept of citizen based taxation is wrong,” Dr. Steven Anderson, the Chairman of Republicans Overseas – UAE said. “We want territorial taxation, or, in other words, taxation at where you are a resident.”
“With FATCA (Foreign Account Tax Compliance Act) the United States government coerced foreign banks to implement measures and comply with their request that all American-owned bank accounts over a low threshold need to have their account balance forwarded to the Internal Revenue Service,” he added. “And this is monthly.”
etc.
@Tom.Harrison
Condors who make a living preying on the carcasses of Americans abroad will need to find a new career. One result of the U.S. tax reform will be that there will be fewer Americans abroad left to comply. This is because Americans abroad are in one of two categories.
Category 1: Those Americans abroad who have been filing U.S. taxes (and now must continue filing because they are in the system) – They have no choice but to renounce. They will have to get on with their lives.
Category 2: Those who have never complied and never will comply. They will of course retain their U.S. citizenship (having never complied in the first place)
Put it another way: The only U.S. expats who can remain U.S. citizens will be those who do not enter the U.S. tax system. Think of it! The only way to remain an American is to remain non-compliant with U.S. laws.
It’s the American way!
Republicans Overseas posted today, October 2nd:
RT IMAGE included in link and Facebook posting.
https://twitter.com/JCDoubleTaxed/status/915003697859407872
EmBee: Thanks for posting the results of our letter-writing/petition-signing efforts. It sounds very positive and its good to know that further letters and petitions will be delivered later this month. It gives everyone, who did NOT participate in the campaign just concluded, to reconsider their positions on letter-writing and to join the international effort to put an end to the injustice we are all suffering at the hands of the US government.
It’s well-known that every letter written and every signature on a petition represents many times more who did not write or sign. 1,744 actually translates into a number far higher. The recipients of the letters/petition will know this. Our voices are now shouting loudly in the heart of Washington!
@ MuzzledNoMore
I’m just transferring little updates from FB to here, in case some Brockers aren’t checking there. Keith Redmond wrote that it broke down to 519 letters and 1223 petitions. I think each petition was printed out so the pile on Ms. Zager’s desk was quite high but they would have preferred it to be much higher. BTW Keith is lobbying again on Capitol Hill today and Wednesday. The push is still on.
@USCitizenAbroad,
You are correct. I fit that category 1 you mentioned. I had no choice. Wish I had now joined category 2. But I was advised against it. Some more rattling from attorney Virginia Jeker on her blog.
https://www.angloinfo.com/blogs/global/us-tax/fatca-information-chaos-at-the-irs/
It seems like a lot of chaos on data collected from foreign govts.
Thank you @Tom.Harrison for posting the Jeker blog post ‘FATCA? Who Cares? Information CHAOS at the IRS’ https://www.angloinfo.com/blogs/global/us-tax/fatca-information-chaos-at-the-irs/, which led me to the TIGTA report she discusses; ‘Exchange of Information Capabilities Are Underutilized by the Internal Revenue Service ‘
September 11, 2017
Reference Number: 2017-30-077.
https://www.treasury.gov/tigta/auditreports/2017reports/201730077fr.pdf
As Virginia noted, the TIGTA report on their audit excluded and examination of the IRS status of FATCA data – which may be very significant. Also, she says; “…A September 11, 2017 Report (Report) by the Treasury Inspector General for Tax Administration (TIGTA) revealed that the Internal Revenue Service (IRS) is not up to speed in processing or using information sent to it from foreign countries, including bulk data from the automatic exchange of information….”
The report is very interesting, and may provide ammunition for court cases against the FATCA IGAs in terms of bolstering the utter lack of US reciprocity, and in terms of whether the US is even honouring its commitments under existing treaties re automatic exchange of information. I am really wondering what if any information it has even managed to send to those with tax treaties such as Canada. The Canadian government has refused to disclose whether/what information it has received from the US. Seems that there may be some grounds to be doubtful that the US is even keeping its promises re sending info outside of the FATCA IGAs;
Ex.
“…..The United States paused sending information on United States source payments to treaty
partners in 2012 to update the processes the IRS employs to assess whether United States
exchange partners have the appropriate legal framework and infrastructure to safeguard the
information exchanged, and implement these new processes. As of May 2017, the program
continues to be paused, and there is no definitive timeline to restart the program. In the
meantime, the IRS is still creating files for each country but is not sending them out. Because of
the reciprocal nature of exchange-of-information relationships
, it appears seven treaty partners have paused further automatic exchanges with the IRS pending resumption of IRS automatic exchange activity.
10
Of the 21 treaty partners who were inconsistent in sending data, four
partners stopped sending automatic exchange information after Fiscal Year
2012, and another three partners stopped sending information after Fiscal Year 2013……”
Those writing letters may perhaps point to the TIGTA report in demonstrating that the burden on US resources in terms of trying to enforce the unenforceable – US extraterritorial CBT – is growing, and that perhaps these very real costs do not justify the presumed imaginary revenue gains which have never been quantified. No cost benefit analysis of FATCA has ever been done (and probably will never be done). Even if in the case of implementing the FATCA IGAs incredible costs are being borne by the revenue agencies and financial institutions and accountholders and taxpayers of all the non-US countries of the globe, that does not alleviate the US costs necessary to attempt to make actual use of the data.
Page 47 is very interesting too;
under Recommendation 6, and ‘Corrective Actions’;
“….the Treasury Department will only agree to collection assistance provisions if, after consultation with the IRS, the determination has been made that such provisions would result in a net benefit tot he United States. As a longstanding policy matter, the Treasury Department has not sought to include provisions in double taxation treaties providing for assistance in the collection of taxes, primarily due to concerns that such provisions could result in a disproportionate level of burden on the IRS. Collection assistance provisions are not included in the U.S. model income tax convention, which is the baseline text the Treasury Department uses when it negotiates double taxation treaties. Moreover, collection assistance provisions are only one narrow component of a comprehensive double taxation treaty. The Treasury Department only consider it appropriate to enter into a double taxation treaty with a country when U.S companies are experiencing unrelieved double taxation with respect to that country. The Treasury Department will not consider a double taxation treaty with the sole objective of establishing a collection assistance relationship.”…..
Note that the emphasis is on relief for US companies experiencing “unrelieved double taxation”. No mention of individuals.
I see that in the intro to this report;
BACKGROUND AND SELECTED POLICY ISSUES ON INTERNATIONAL TAX REFORM
Scheduled for a Public Hearing Before the
SENATE COMMITTEE ON FINANCE on October 3, 2017
Prepared by the Staff
of the
JOINT COMMITTEE ON TAXATION
September 28, 2017 JCX-45-17
See;
“I. PRESENT LAW AND BACKGROUND
A. General Overview of International Principles of Taxation
International law generally recognizes the right of each sovereign nation to prescribe rules to regulate conduct with a sufficient nexus to the sovereign nation. The nexus may be based on nationality of the actor, i.e., a nexus between said conduct and a person (whether natural or juridical) with a connection to the sovereign nation, or it may be territorial, i.e., a nexus between the conduct to be regulated and the territory where the conduct occurs.3 For example, most legal systems respect limits on the extent to which their measures may be given extraterritorial effect. The broad acceptance of such norms extends to authority to regulate cross- border trade and economic dealings, including taxation.
The exercise of sovereign jurisdiction is usually based on either nationality of the person whose conduct is regulated and or the territory in which the conduct or activity occurs. These concepts have been refined and, in varying combinations, adapted to form the principles for determining whether sufficient nexus with a jurisdiction exists to conclude that the jurisdiction may enforce its right to impose a tax. …..”
The authors of the report refer to ; “…conduct with a sufficient nexus to the sovereign nation. The nexus may be based on nationality of the actor, i.e., a nexus between said conduct and a person (whether natural or juridical) with a connection to the sovereign nation, or it may be territorial, i.e., a nexus between the conduct to be regulated and the territory where the conduct occurs….”
but then erroneously cite residency and nationality as equivalent – which is NOT the international norm;
“….When determining how to allocate the right to tax a particular item of income, most jurisdictions consider principles based on either source (territory or situs of the income) or residence (nationality of the taxpayer).6
Footnote 6 cites;
Reuven Avi-Yonah, “International Tax as International Law,” 57 Tax Law Review 483 (2003-2004).
https://www.jct.gov/publications.html?func=startdown&id=5025
How can we ever get the US to consider changes which do away with US extraterritorial CBT if the official reports before those who could implement changes continue to cite nationality/citizenship as equivalent to residency as an international norm? That false claim of nationality = residency has appeared before in materials produced for the consumption of US law and policy makers.
How can they ever understand how exceptional (in a negative and distortionate sense) the US definition of RBT is if they continue to repeat to themselves that residency = nationality?
If the US insists on understanding residence = nationality = citizenship, then we’ll never be able to make it understand the paradox and injustice of treating citizens with NO actual US residency – classed as ‘USresidents’ for tax purposes, and taxed as US residents, while treating everything in the person’s actual true country of residence as ‘foreign’ and ignoring all the layers of punitive distortions that twisted logic has created.
I myself don’t follow how nationality could ever be considered the same as residency in the source cited by the report’s footnote http://repository.law.umich.edu/cgi/viewcontent.cgi?article=1552&context=articles .
I think this would have been a far more useful and clearer characterization of the international norm vs. the US norm for the basis of imposing taxation;
“……….Although international law recognizes
three independent predicates for worldwide taxation—nationality,
domicile, and residence—no state other than United States assesses
worldwide income taxation solely on the basis of nationality.”…..
“Citizenship Taxation”
NEW YORK UNIVERSITY SCHOOL OF LAW
SPRING 2015
COLLOQUIUM ON TAX POLICY
AND PUBLIC FINANCE
Ruth Mason
http://www.law.nyu.edu/sites/default/files/upload_documents/Ruth%20Mason.pdf
The continuing lack of clarity and definition of ‘residency’, and ‘nationality’ etc. in most discussions of US taxation by policy makers does not lay bare their underlying assumptions, and distorts attempts to get reform and perpetuates the current nonsense and injustice.
As long as they can point to a source that says the US uses a norm of ‘residency’ but then apply the word to include NON-residents, and defines ‘nationality’ broadly enough to include illogical anomalies like expired (but not officially surrendered) greencard holders who aren’t citizens and who don’t live in the US and have no right to reside there, and defines citizens as ‘residents’ and includes those who don’t or have never resided in the US, it is just like the character in ‘Through the Looking-Glass’ who said;
“…“When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean—neither more nor less.”…”
http://www.bartleby.com/73/2019.html
I don’t see how there can be meaningful conversation and consideration of this with law makers if the terms of reference continue to be so ill defined, confusing and so distortionate.
Interesting, thanks for mentioning that footnote. I hadn’t seen Avi-Yonah’s paper before.
The writers of the report seem not to have read the article very carefully. Avi-Yonah is drawing a distinction between the way terms such as nationality and territorial have traditionally been used by international lawyers, and the way they are used by international tax lawyers, who, says Avi-Yonah,
“talk about residence and source jurisdiction, not nationality and territoriality.”
Maybe the report-writers just lit on those few words and assumed Avi-Yonah was saying that international tax lawyers just use different names for the same concepts. Not the case at all. They should be made to do their homework and rewrite their paper.
@plaxy, I found the discussion of nationality and residence confusing in Avi-Yonah’s paper, but I would have expected more thoroughness from researchers producing a paper on which lawmakers would be considering matters of such significance.
From RO Facebook:
Thank you to all participants of RO letter/petition writing campaign to President Trump in support of the tax reform and Territorial Taxation for Individuals inclusion. We are so proud of you. You out-performed the RNC petition campaign. The RNC received 6,366 petitions from over 62 million Trump voters.
Today RO Worldwide President Michael DeSombre, RO Vice Chairman and CEO Solomon Yue (Right), and American Expatriates Group leader Keith Redmond (Left) met with Legislative Counsel Matt Stross (Middle) to Congressman George Holding (NC) and delivered 1,744 letters & petitions to President Trump to Congressman Holding’s office.
Mr. Stross was very impressed with your efforts because he knew only 562,853 overseas Americans voted in 2016 and not all of them were Trump voters. You turned in 1,744 letters & petitions. Mr. Stross also agreed that it’s time to petition Congress for TTFI inclusion. RO is calling for 6,400 overseas petitions to Congress. We will deliver them in person to both tax writing committees late October.
https://www.facebook.com/republicansoverseas/posts/743011065882691
Tweet from Solomon Yue
@MichaelDeSombre & @SolomonYue delivered 1744 letters/petitions in support of #TaxReform & #TTFI 2 WH Assoc. Pol. Dir Samantha Zager. #FATCA
https://twitter.com/SolomonYue/status/915186392459878402
I find it deeply depressing that something so simple could be made so complex that I need to read it twice to understand what they are trying to say. Then I see that they have STILL not grasped this very very simple concept.
If people do not live in your country or have a source of income from your country, you can not tax them and you do not attempt to tax them. That money is not your money and what you are doing is THEFT with extortion and threats.
The USA is cutting itself off from the world with this nonsense.
Just yesterday I was talking to a chap working for an entirely French company in France. Through a Spanish company they deal with, they were persuaded to do some work for a US company. After agreeing, he and the US company discovered FATCA.
He has spent a huge amount of time dealing with paperwork for the IRS otherwise the US company has to withhold 30 percent of all payments made to a French company and hand that money to the US IRS.
Now, at least this French company had a native English speaker to deal with that.
His verdict?
Avoid doing business with US companies.
Yea, and don’t have an American as a client, don’t lend to one, don’t business partner with one and for heavens sake, don’t marry one.
Seriously, just build the wall and pull up the drawbridge and have done with it.