Today (11/16/2017) the floor of the House passed the House tax reform bill. The earlier version is here .
Today also the Senate Finance committee passed the Senate tax reform bill. See link
Do not yet have the final versions of either bill but suspect that we are not helped in the bills. Will post here final versions when they become available.
Listen to the C-span clip found by BB in which Residence-based taxation is mentioned by Golding and Brady in the House tax bill debate — none of this however, appears to have been incorporated into the House or Senate bills passed on 11/16/2017
Republicans Overseas (RO) continues to press on, to make changes in the final tax package that will help us. The fight is not yet over, but it continues, right from the beginning, to be an uphill battle — and the odds don’t seem very good right now. RO says: “Again we need to focus on the Senate side since this fight is far from over.”
Personally, it makes no sense to me to blame Solomon and the handful of people at Republicans Overseas for trying to make a change and, so far, failing. Yesterday a friend reminded me that there was this Ismene, who kept telling her sister Antigone that it was pointless to even “try”: “…but you’re bound to fail…No sense in starting a hopeless task…Go then, if you are determined, to your folly, etc. etc.” Antigone responded: “When I have tried and failed, [then] I shall have failed.”
“…it’s not only the USA that is guilty of persecuting those with foreign finances. ”
The US claims the right to penalize those with no cross-border income. The US claims the right to see the domestic bank accounts of non-US-residents born in the US – regardless of whether they do or do not have cross-border income. The US claims the right to see the domestic bank accounts of those whose parents were born in the US – regardless of whether they or their parents do or do not have cross-border income.The US threatens foreign banks with 30% withholding if they fail to detect a customer or would-be customer who was born in the US – regardless of whether they do or do not have cross-border income.
CBT is not fair.
“I’m not sure who you’re not agreeing with.”
I’m objecting to your assertion that the UK treating non-reporting by a UK resident of cross-border income as a criminal offence is “Exactly the same unfairness imposed on US citizens with foreign (to the US) financial lives.”
Stephen: RE: “The Joint Committee Summary for the Tax Reform Bill has now been released (see link below). There is new text suggesting that the 12% one time tax applies to ALL shareholders of foreign (local to us) corporations — not just the big foreign subsidiaries of domestic corporations. US persons are given eight years to pay up.”
By “The Joint Committee Summary for the Tax Reform Bill” do you mean that THIS document IS Brady’s anticipated “mark-up” or are we still waiting for the mark-up results? Can you please reply ASAP. I’m going to be away for a week starting tomorrow. If indeed, this 12% disaster is what we have received for all our trouble I need to get further UN action underway right now. I hope I’ve misidentified the document! Clarification urgently needed!
As I read the above discussion about the crackdown on anything “offshore”, even a holiday home in Spain, and the growing oppression that is CRS in the EU, I come to realize, as has been written here multiple times, that the only true remaining tax haven will be the US. As I understand it, I can have accounts in the US, and assets there, and they will never be reported anywhere. In effect, CBT means I truly am only accountable to Uncle Sam, and he will help me screw the country where I reside.
I hope the ICIJ cracks Delaware soon.
The US isn’t picky. They’ll help anybody screw their residence country – not just US citizens. They’ll sell you a little shell company with a US address and you’re good to go.
@Muzzled
The JCT documents are NOT the product of the markup. The markup session is to run until/through Thursday. Then the bill goes to the Senate.
I believe it is Friday that the Senate’s own version of Tax Reform Bill will be presented.
Muzzled,
No, we don’t have the mark-up yet. Personally, I would not move on anything having to do with the UN until we know what is actually in the tax reform bill.
My recommendation for this week still is that readers of this post focus more on alerting the House W&M what they want mentioned or changed in the bill by registering their recommendations on the Republicans Overseas FB site and request that these be passed on to House W&M,
I don’t think that internal-only complaints on this post will help. Republicans Overseas, which wants tax reform and interacts with House W&M, actually posted (on its own) a long (sad) letter from an owner of a US person-owned incorporated small business that would be harmed by the draft legislation.
Tell RO today what you want changed in the bill.
https://www.facebook.com/republicansoverseas/
According to https://www.lexology.com/library/detail.aspx?g=624d27a0-83cc-4a9c-993a-2f594cd90624, you wouldn’t get to wait eight years before paying; you’d be allowed to opt to pay in eight annual instalments.
Stephen: thank you so much for the clarification. And thank you for letting me know that the Senate comes out with its own version immediately after the release of the mark-up. I thought we might have had to wait weeks for that.
There will definitely be no action on my part on the UN Complaint unless the completed tax reform bill does not sufficiently answer our pleas for relief of our current tax situation. Hope is still alive!
Key quote from plaxy’s lexology link:
Key quote from me:
Question:
Could someone put together a rough estimate on how much in dollars this “repatriation” tax would cost a hypothetical but as typical as possible incorporated small business owner in Canada? Would it be so much as to force a shut down and sale of the business in order to pay the thief across the border? This, again, is money which should remain in Canada to help our economy survive.
If I were still a US citizen and had an interest in a corporation that the US considers a CFC, I would be busy right now making a renunciation appointment with some (any) consulate for as late in December as possible. Having the appointment would be an option which could be exercised or not depending on whether this provision is in a bill passed before the end of the year. With a 2017 renunciation date, you wouldn’t have to file 2018 US returns, so this “repatriation” provision would never apply. I foresee a rush for the exit if this becomes law.
Karen,
I am posting your comment on the RO FB site.
“Hope is still alive!”
But on life support. “Put not your trust in princes.”
Am I reading this right. 12% on deferred, 5% other. Goes back to 1986. I imagine most small businesses in the cross hairs have not declared and filed U.S. tax returns all those years. So in addition to the 12% / 5% then there must be the U.S. filings under U.S. GAAP going back to 1986 to figure out how much 12% / 5% is “owed” each year if any. IMO, this would be a nightmare for any U.S. only small business only operating in the U.S. to try and figure out – “deferral” if it were required. For nonUS businesses there would be multitudes of complexity.
I don’t know the exact rules. I am not an accountant. I am trying to figure out what the U.S. may consider “deferred.”
Loan Many businesses get a loan to start out, keep going, expand. In the process of paying down a loan a business must pay a bank and not take disbursement. The U.S may figure that as a deferral, yet the money goes to the bank and will never be disbursed. I am talking about paying down the principal. Loan interest is a business expense.
Retained earnings to grow the business While businesses may not be paying down loans they may be saving up just paying the corporate rate of tax saving money within the business for expansion. Will the U.S. consider this deferral, and apply a kind of savings tax on businesses?
Depreciation Politicians can not understand it. They think that if something is purchased depreciation is a tax break. If something depreciable is purchased then it could mean the entire amount for the item leaves the account of the business and into the account of the seller. But then the government says no no business we don’t recognise that all that money went out the door. You can only deduct part of it on your tax each year. You might have to earn more profit and pay more tax upfront on the item basically increasing the cost of the item to be able to pay for: the item, plus upfront tax on the undepreciatble portion in year 1.
There will no doubt be conflicts between U.S. depreciation rules and with the rules of various countries . Some countries may allow instant write off while the U.S. may not. Going forward I believe the tax reform will correct this all and allow instant write offs.
Timing differences causing “deferral” Not all countries mimic the U.S. calendar tax year and companies may not have been planning their distributions to line up with the U.S. tax year. Companies may make a distribution at the end of their tax year (in country of residence). They may wait to see what is left in the kitty at the end of the tax year and then make end of year distribution then. Oops they could be doing the evil deferring in all this. Your distribution is out 3,4, or six months, 12% for that especially if there is a bumper year of profit.
I believe I am correct. I don’t know the exact rules. What am I missing? What is our best one, two, or three specific examples that we may use in the same sentence as OUTRAGEOUS?
I’d really like to see someone explain how this would be computed. Would it be based on prior filings of form 5471, or would it need to be re-calculated looking at annual income statements / tax returns? I presume the computation is done in USD on a year by year basis – or could a functional currency be used for all computations with translation of only the final amount to USD? It only applies to deferred foreign income; so if your small business has some US source income, I presume you would have to go back year by year and remove that from “deferred income”.
The articles written so far seem to assume that retained earnings will be approximately equal to the deferred foreign earnings to be “repatriated” – this will not be the case if local currency cannot be used as a functional currency, if there are any US source earnings, or if the company was formed before 1986.
Another question I have is how they will determine whether those deferred earnings are invested in cash (and taxed at 12%) or something else (business assets?). Is it based on the relative value of assets currently on the balance sheet? GAAP book value? IFRS book value? Tax book value? Market value?
@Harrison
“@Japan T, you don’t have to convert or do treason to loose your US citizenship. There are other ways to get a second citizenship. I suggest you try those. Get out before they go more crazy.”
Can’t. Do not meet the requirements for Japanese citizenship.
The suggestions to convert or commit treason given in jest and I responded in jest.
“Tell RO today what you want changed in the bill.”
Solomon Yue works in a glove manufacturing factory in Tigard Oregon. Sorry he is, in my opinion useless. What has he done for us so far? Look folks we are Americans, hated around the world. We are hopelessly F***ed from birth. Ask me if I even care if Kim Ding Dong does his worst. Nobody cares.
We are to comment at Tax Connections, a journal that tax industry professionals read.
And by doing so-
We will guilt them. I like it, yet they will say the law is the law.
Get them to change their view – see above answer.
Influence the government – maybe best to send article to the government.
I copied my comment above to the Tax Connections site. It is still in moderation.
As some who’d be effected by this tax, I want to express my gratitude to those who take the time to comment.
Best guess of journalists:
1. Thursday’s “manager’s amendment” (another amendment by Brady) will try to get the cost of the bill back under $1.5 trillion.
2. Republicans haven’t yet decided what will be in that amendment
Haven’t seen any good articles on this, just random tweets:
https://twitter.com/claireallbright/status/928405081917218816
https://twitter.com/jamiedupree/status/928405975605960704
https://twitter.com/ChadPergram/status/928398418904600581
Definition of “manager’s amendment” (the “agreed to in advance by both sides” part doesn’t really seem to apply here)
http://www.districtpolicygroup.com/dewonkify-detail/dewonkify-manager-s-amendment
My comments at tax connections were deleted. I guess they were subversive.
Marie –
I suspect that there are several posts in the moderation queue. Check back again in the morning (US Eastern Time).