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.”
@ Japan T
Right . I believe they lost in court and I don’t know if they appealed. Anyway they don’t report, at least not in the detail that overseas FFIs are required to report under FATCA, so maybe they don’t even care about FATCA at this point.
@Japan
Because RBT is the way the majority of the world works. the argument is for people to pay tax where they get services. The treaties take care of double tax in most cases. There is a reason why the majority of the world operates like this.
Under the current RBT Let’s say for example i recieve US rental income. Article 6 of the UK US Double Tax Treaty confirms that the US may tax income from US real property of a UK resident. Therefore the US will tax the rental income
The UK will give credit for the US tax against the UK tax, as required by the Double Tax Treaty.
this is just a simplified explanation.
This $60K exemption. Is the tax like on U.S. Death/U.S. Exit, where only the asset value is considered and not any loan balance against the assets?
“Estate valuation is the process of calculating the value of a gross estate for federal estate tax purposes.
The gross estate is the value of its assets and property before taxes and debts are deducted.”
So say an asset is purchased in the U.S. for $100,000 with an interest only loan of $80,000. So then the tax is $100,000-$60,000 exemption = $40,000*the tax. So the estate is then up for this tax and for paying down the $80,000 loan. It all gets confiscatory and with excess compliance.
Watcher. Not quite as far as I know. There is still a 5.45 million exemption for estate taxes. So if NRA dies with 100,000 of US assets but a total estate of 5.45 million, there would be no tax owing. If his total estate were 10.9mill, about half of his estate would be taxable and therefore he would pay US estate taxes on 50,000. Even when no taxes are owing, the filing is onerous and expensive and best avoided.
I’m not an accountant so may be incorrect in the details.
U.S. tax system = Lernaean Hydra
Reuters-Ipsos poll on support for tax reform plan
http://polling.reuters.com/#poll/TM1342Y17/dates/20171020-20171109/type/smallest
Supported by 26% of the overall Homeland population (including 55% of Republicans)
@UK Rose
“I don’t ever remember Trump himself mentioning citizen tax or Fatca.”
He didn’t, though things would have been far worse under Hillary.
“Supported by 26% of the overall Homeland population (including 55% of Republicans)“
Curious coincidence – the same number support Roy Moore for senator because, hey, the bible says that Joseph was much older than Mary…
@Duality
Hillary should not have been the candidate in the first place. Probably neither should Trump.
@Embee
I didn’t mean double taxed on estate tax. I meant just normal investments. Here is where I see the problems with double tax and the treaties and the TTFI unless all treaties are amended. Assuming the US under the new system is going to adopt a withholding of 30% for all now regardless of treaty rates
For example a UK resident NRA that pays a higher rate tax receives US source dividends of the equivalent of £20000 in 2016/17 with US tax of £3000 withheld. (at the current 15% treaty rate) He has no other dividends so his liability will be £15000 @ 32.5% = £4875. He is a higher tax payer and there is a £5000 tax free UK threshold and the relief is restricted to 15% of the gross or the tax payable on the dividends, whichever is less. So £3,000. He deducts the £3000 foreign tax credit and pays the difference.
Under the new rules, the UK NRA will have 30% withheld £6000 but the relief restriction has not changed unless the treaty is rewritten. So will the UK agree to lose tax revenue so that the US can claim extra tax or will the UK NRA resident now be liable for the 30% + the difference calculated above £1875 to the UK.. What will the UK NRA do in the end if this isn’t fixed? I suspect move their investments. If this were me, that is what I would do. Also why would I want more tax going to the US. I would rather pay the country I am resident in to provide better services.
@EmBee
“@ Japan T
Right . I believe they lost in court and I don’t know if they appealed. Anyway they don’t report, at least not in the detail that overseas FFIs are required to report under FATCA, so maybe they don’t even care about FATCA at this point.”
They were suing so as to not have to report. If they lost, they have to report. Though they may not (yet) be required to report as much detailed information.
@UK Rose
“@Japan
Because RBT is the way the majority of the world works. the argument is for people to pay tax where they get services. The treaties take care of double tax in most cases. There is a reason why the majority of the world operates like this.
Under the current RBT Let’s say for example i recieve US rental income. Article 6 of the UK US Double Tax Treaty confirms that the US may tax income from US real property of a UK resident. Therefore the US will tax the rental income
The UK will give credit for the US tax against the UK tax, as required by the Double Tax Treaty.
this is just a simplified explanation.”
That is uderstsndable. My question is, as the rental property is in the US, it is US services that protect it. UK fireman are not going to cross the pond to extinguish a fire nor will UK police investigate and crime against the property. Therefore, why can it not be that the US and the Us alone tax income derived from the property. The UK is not providing any sevices in regards to the property. Why is it right for them to tax it?
@DoD the 5.45 mill goes to 10.0 mill.
An inflation adjustment for FBAR would be good as well, if it were part of the plan.
@ UK Rose
Your calculation is no doubt correct but it’s beyond me. Honestly I’d love to see people investing in the country they live in and thereby having their tax money support that country’s economy. However, if their investments are in another country, thus using that country’s economy to create their gains, then maybe it isn’t too unfair to give that other country first dibs on the taxes. I do see where this territorial taxation change could result in a flow of assets from the USA back to the country of residence though.
@ Japan T
I believe at the time they sued they thought FATCA was going to be reciprocal but since it isn’t they have what they wanted … so far.
@JapanT both will tax with U.S. first right of taxation. So if the U.K. tax is higher than the difference is paid to the U.K.
JC. Unlikely to pass along with everything else.
@DoD I think that there is lots of pressure to pass something especially after failure to pass repeal and replace Obamacare, else consequences at midterm elections.
@EmBee
My reading has it that the Banker’s Association challenged the regulation/s requiring them to report and that it was thrown out due to being premature because they have not yet paid any penalties.
‘Florida Bankers Association and Texas Bankers Association v. U.S. Dept. of Treasury’ – Nonresident Alien Bank Deposit Reporting” Bloomberg Jan. 07, 2016
“However, a number of banks eventually brought suit challenging the enforceability of the §6049 regulations, which mandated their reporting of deposit interest paid to nonresident aliens residing in those countries listed in the various revenue procedures (and a failure to so report was subject to a penalty under §6721). In August of this year, the United States Court of Appeals for the District of Columbia Circuit ruled that the Anti-Injunction Act (AIA)5 barred the lawsuit as premature.6
Briefly stated, the AIA bars (as premature) suits that seek to restrain the assessment or collection of any tax, i.e., the AIA bars pre-enforcement challenges to certain tax statutes and regulations. Thus, as the court said, because of the AIA taxpayers are relegated to paying the tax and raising any challenges in refund suits after the tax is paid or in deficiency proceedings, thereby protecting the government’s ability to collect a consistent stream of revenue. Thus, in this case, the court noted that the banks could decline to file the report, pay the penalty, and then sue for a refund.”
“The court observed that because this penalty is considered a tax under the taxing statutes, the pre-enforcement challenge to the reporting requirements of the regulations under §6049 (which is enforced by a penalty) is covered by the AIA and prevents the challenge from proceeding. The court explicitly rejected the banks’ argument that their challenge is not to a tax but, rather, to a regulatory reporting requirement which happens to be enforced by a penalty.”
“The banks then filed a petition seeking a rehearing en banc before the U.S. Court of Appeals for the District of Columbia, but were turned down in December 2015.
While there are always two sides to a story, it’s difficult (at least for this author) to understand how the banks must first subject themselves to penalties (which could include criminal penalties) in order to challenge what is really not a tax statute or regulation but, rather, a reporting regulation enforced by a penalty (which admittedly the Code technically treats as a tax). The dissenting opinion makes this argument quite forcefully.”
@ND
While this does not specifically state that penalties = taxes, It clearly states that this regulation can not be challenged until after the Penalty is paid, citing that taxpayers must first pay the Tax then challenge it. However, they do cite specific legislation that may not be specific to your case.
@JC
“@JapanT both will tax with U.S. first right of taxation. So if the U.K. tax is higher than the difference is paid to the U.K”
Yeah, I know. Just can’t see what the justification for it is. And, as stated requires, requires treaties which have gaps, as we all know. Plus the risk of data leak.
@ Japan T
Thanks for finding that. It sort of looks like the banker associations got ruled against by a “lack of standing”. It’s like someone facing a tsunami and the rescue team saying, “Sorry mate but it has to hit you before we can move you to high ground.” We’re quite familiar with that trick.
“While this does not specifically state that penalties = taxes, It clearly states that this regulation can not be challenged until after the Penalty is paid, citing that taxpayers must first pay the Tax then challenge it.”
The appeals court overturned the Supreme Court ruling on Obamacare in order to do that.
I’ve cited the Obamacare ruling but haven’t got anywhere yet. It seems unconstitutional to me that the IRS could impose one million penalties and that courts could use the AIA to prevent refund suit until after the victim pays all one million penalties. But the constitution was written by dead male slaveowners so no court is going to uphold it.
@EmBee
“Thanks for finding that. It sort of looks like the banker associations got ruled against by a “lack of standing”. It’s like someone facing a tsunami and the rescue team saying, “Sorry mate but it has to hit you before we can move you to high ground.” We’re quite familiar with that trick.”
Yeah, aren’t we though.
@ND
“It seems unconstitutional to me that the IRS could impose one million penalties and that courts could use the AIA to prevent refund suit until after the victim pays all one million penalties. But the constitution was written by dead male slaveowners so no court is going to uphold it.”
Seems like the Constitution is operatively dead and has been for quite some time.
@Dod: “Not quite as far as I know. There is still a 5.45 million exemption for estate taxes. So if NRA dies with 100,000 of US assets but a total estate of 5.45 million, there would be no tax owing.”
That’s perhaps a Canadian-centric view. It would be the case only if you live in one of the few countries with a US estate tax treaty, which includes Canada. If you don’t, the exemption drops from $5.49mm to just $60k
On these numbers then, without a treaty there would be a US estate tax bill. And this NRA’s heirs will curse them at their funeral for having left assets liable to this tax when it can be readily avoiding with simple steps such as interposing a holding company between the owner and the US asset.
Grover Norquist tweets that the fight is not over https://twitter.com/GroverNorquist/status/929979786038071297