SEAT (Stop Extraterritorial American Taxation) has announced that they and AARO (Association of Americans Resident Overseas) have filed a joint amicus brief in Moore v. United States, a US Supreme Court case which deals with the Transition Tax. (Amicus curiae refers to an organisation or person that isn’t involved in the litigation, but has expertise in the subject matter and receives the Court’s permission to submit information and arguments in support of one of the parties.) Although the lawsuit involves US residents, this amicus brief explains why Moore is important for overseas Americans.
Reposted with permission from SEAT:
Today SEAT and the Association of Americans Resident Overseas (AARO) joined to file an amicus curiae brief with the U.S. Supreme Court in relation to Charles G. Moore, et al. v. United States (Docket No. 22-800).
SEAT co-founder John Richardson has explained:
SEAT co-founder Karen Alpert blogged about the problems of the “Mandatory Repatriation Tax” being challenged by Moore back when the Tax Cuts & Jobs Act (TCJA) was legislated:
In all of the hearings on [the TCJA], not one Representative or Senator mentioned anything about the applicability of this provision to corporations owned by tax-residents of other countries, for whom the idea of “repatriating” profits to the U.S. is not only absurd, but also a drain on the economy of the country they call home.
The case concerns Charles and Kathleen Moore, who live in Washington State. In 2006 they invested in 13% of an Indian corporation, KisanKraft, created to import, manufacture, and distribute affordable farming equipment in India. The Moores never realized earnings from the investment.
In 2017, the Moores discovered they owed nearly $15,000 in U.S. income tax based on the unrealized earnings of KisanKraft going back to 2006. Believing the “transition tax” (or “repatriation tax”) to be unconstitutional, the Moores took their case to court arguing that because the tax was imposed on accumulated foreign earnings, it was not a tax on income and is therefore unconstitutional under the 16th Amendment. In June 2022, the Ninth Circuit Court of Appeals affirmed the district court’s decision rejecting the challenge. In its decision, the court held that whether income is realized is not a determinative factor regarding the validity of the transition tax.
In June, 2023 the Supreme Court granted the Moores’ petition for a writ of certiorari – that is, the Court agreed to hear the Moores’ appeal. The Court is expected to hold arguments in the case in December, 2023.
The question posed in granting certiorari is “Whether the Sixteenth Amendment authorizes Congress to tax unrealized sums without apportionment among the states.”
SEAT’s and AARO’s joint amicus brief explains both why Moore is important for overseas Americans and additional grounds upon which the Court may rule in favor of the Moores.
For more information about Moore and its importance – in particular for overseas Americans – see Richardson’s in-depth discussion on his website Citizenship Solutions.
SEAT’s and AARO’s joint brief is available here: