Good news on passport revocation: the House rejected the Senate version of H.R. 644 (Trade Facilitation & Trade Enforcement Act, a.k.a. the “customs bill”) and substituted it with their own version, which passed in a largely party-lines vote. The House version of the bill does not include Senator Orrin Hatch’s provision to deny new U.S. passports and revoke existing passports of people who have outstanding unpaid taxes or form crime fines, or who do not provide SSNs (it is not clear whether this would deny passports to passport applicants who never had SSNs in the first place).
Also, as Tim alerts us in a comment, Section 603 of the Senate version of the Trade Preferences Extension Act (H.R. 1295) — which would have required U.S. banks to report accounts with zero or de minimis interest to the Treasury, in what could have been another step towards the alleged reciprocity that Treasury mendaciously promised it would offer FATCA “partner jurisdictions” — was removed from the House version of the bill before its overwhelming passage.
This does not mean that these provisions are dead yet. Both bills will now go to conference, where the Senate conferees will have the opportunity to pressure the House to reinsert the sections that they dropped. Separately, H.R. 1314 (the Trade Act, or colloquially the “trade promotion authority & trade adjustment assistance bill”), which contained a provision to deny the refundable portion of the child tax credit to filers who take the Foreign Earned Income Exclusion, failed to pass; it may be scheduled for another vote in a few weeks.
The gory details
As always, trying to keep tabs on Congresscritters involves a giant paperchase (or its electronic equivalent). I ended up at the correct destination only by a rather roundabout method: I went to the website of the House’s Office of the Clerk, where you can find a summary of Friday’s legislative activities. (You can also see video here), and stumbled around until I found entries relevant to H.R. 644:
|11:45:47 A.M.||H.R. 644||DEBATE – Pursuant to the provisions of H. Res. 305, the House proceeded with one hour of debate on the Tiberi motion that the House concur in the Senate amendment to the title of H.R. 644 and concur in the Senate amendment to the text of H.R. 644 with the amendment printed in part A of the House Report 114-146 modified by the amendment printed in part B of the report.|
|2:15:34 P.M.||H.R. 644||On motion that the House agree with an amendment to the Senate amendments Agreed to by recorded vote: 240 – 190 (Roll no. 363).|
Both the amendments to H.R. 644 and H.R. 1295 were in fact substitutes which rejected the Senate versions of the bills and replaced them with House versions which did not include the provisions of interest to us. (For the amendment to H.R. 644; see page 6 of H. Rept. 114-146; as you can see, it does not include Title X of the Senate bill, which held the “revenue offsets”, among them, passport revocation. The second-degree amendment — “modified by the amendment printed in part B of the report”, at p. 103 — solely concerns Title VII, the controversial currency-manipulation provisions of the bill. The amendment to H.R. 1295 can be found at page H4139 of the Congressional Record.)
What happened in the Committee on Rules
House Report 114-146 was the Committee on Rules’ report on House Resolution 305. That resolution provided for consideration of both H.R. 1314 (which ended child tax credit refundability for FEIE users) and H.R. 644 (the “customs bill”, which had passport revocation), with amendments by the Chairman of the Committee on Ways and Means, Paul Ryan (R-WI), or his designee (who turned out to be Pat Tiberi, R-OH). The report also discusses the motion for consideration of H.R. 1295 (the bill that had the “DATCA” interest-reporting expansion)
In committee, Jim McGovern (D-MA) tried to move:
Motion by Mr. McGovern to amend the rule so that the Ryan amendments to H.R. 644 and H.R. 1295, as well as the Senate amendment to H.R. 1314, are all subject to amendment on the floor, and considered under an open process. Defeated: 4-9
It’s not clear if House Democrats would have used that opportunity to reinsert the passport-revocation provisions. (I think it’s quite unlikely they would have used it to reinsert the interest-reporting provisions: Homeland politicians on either side of the aisle do not want to see their own banks subject to the same garbage which they’ve imposed on the rest of the world with FATCA, they want to put competing tax havens out of business so that #1 Tax Haven USA is the last one standing.)
In any case, McGovern’s motion was defeated 4–9 in a strict party-lines vote. Other Democratic attempts to provide for amending the bills in question (mostly H.R. 1314) were also voted down, and instead the resolution was reported in its original form.
H.R. 1314: FEIE & child tax credit
In an an article that Publius pointed out six weeks ago, we learned that both chambers supported denying the refundable portion of the child tax credit to the diaspora in order to pay for Homelanders’ health care:
Tax Committees Approve Health Care Tax Credit. Members of Senate Finance and House Ways & Means committees voted to extend the Health Coverage Tax Credit (HCTC) for American workers who may be negatively impacted by foreign trade. The tax credit covers 72.5 percent of an eligible individual’s health care premium cost. Under the House Trade Assistance Adjustment (TAA) bill (H.R. 1892), the credit would be extended retroactively from 2014 to the end of 2019. The HCTC provision would cost approximately $173 million over ten years according to the Joint Committee on Taxation. Both of the tax-writing committees aim to pay for the extension by eliminating the refundable portion of the child tax credit for American taxpayers living abroad who claim the foreign earned income exclusion under Section 911 of the tax code.
The Senate ended up sticking these provisions into Section 209 of H.R. 1314:
SEC. 209. Child tax credit not refundable for taxpayers electing to exclude foreign earned income from tax.
(a) In general.—Section 24(d) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:
(5) EXCEPTION FOR TAXPAYERS EXCLUDING FOREIGN EARNED INCOME.—Paragraph (1) shall not apply to any taxpayer for any taxable year if such taxpayer elects to exclude any amount from gross income under section 911 for such taxable year.
(b) Effective date.—The amendment made by this section shall apply to taxable years beginning after December 31, 2014.
The House did not try to substitute H.R. 1314 with their own version. However, they scheduled separate votes on concurring with various portions of the Senate amendments. The first vote, regarding Title II (the extension of trade adjustment assistance, which includes the above child tax credit provision), went down in flames: nearly two-thirds of Republicans and almost four-fifths of Democrats voted against it. The House was much less opposed to Title I, the portion of the bill which had trade promotion authority: 54 Republicans voted against it, but conversely 28 Democrats joined the Republicans, just enough to create a majority on that question. Nevertheless, H. Res. 305 provided that if any of those votes failed, the House would be considered as having rejected the whole thing.
Ironically, The Atlantic credits this development to pressure from labour unions, in particular the AFL-CIO (yes, the same AFL-CIO which has spent years screaming that anyone who opposes FATCA must be an evil fat-cat tax evader, and which has praised the Congressional Progressive Caucus’ “Budget For All” which attempted to repeal the FEIE entirely).
We’ve seen in the past week or so:
– FBAR penalties limited to “only” 100% confiscation
– Tax- and SSN-related passport denial nixed
– Attempt to remove child tax credit for FEIE claimers nipped in the bud (for now)
– Reporting zero-interest accounts nixed
Is it possible we’re starting to see the outer limits of how far the US government is able to abuse its overseas citizens? Could we begin to see some sort of reining in, toward the direction of sanity? Or are they simply feeling around the peripheries of what’s possible until they find something so sinister that they all can agree on it?
@Eric, the bank balance defeat should be used vigorously as a wedge and to create dissent that the USA has just rejected FATCA reciprocity.
We need to hammer this yesterday, today and tommorrow.
The Administration promised reciprocity and “Congress has now spoken, NO FATCA reciprocity.”
When posting announcements like this, it is a good idea to say which house and which senate. In this case, it appears you mean the U.S. House of Representatives and the U.S. Senate, as opposed to the Canadian Senate, where they pass whatever the House of Commons passes.
Eric: Thank you, once again, not only for informing us of this positive news but for detailing the difficult process so clearly. Personally, I do not have what it takes to do the type of research that you do on our behalf.
The information that the no-interest accounts will be left alone is great news on two counts: a) personal financial privacy continues to be assured with regard to such accounts; and b) as George says, it is another nail in the coffin of US intentions regarding FATCA reciprocity.
Thank you Eric, Publius, and the many others who make the painstaking effort to keep tabs on what these folks are doing. As important as it is for everyone, it takes a special kind of mind to follow it all.
@Eric, I second MuzzledNoMore’s thanks and comment above. Your research and writing gives us access to a level of understanding and information which is beyond many/most of us.
And a quote from an article ( http://www.jdsupra.com/legalnews/tax-policy-update-15357/ ) mentioned in your post above (noted originally by Publius) just shows me that those abroad will continue to have to fend off new abusive measures if they want to remain US citizens living outside the US;
“…Both of the tax-writing committees aim to pay for the extension by eliminating the refundable portion of the child tax credit for American taxpayers living abroad who claim the foreign earned income exclusion under Section 911 of the tax code….” (and thanks Publius ! for http://isaacbrocksociety.ca/2015/04/29/senate-finance-committee-posts-submissions-and-shadow-raider-reports-to-brock/comment-page-2/#comment-6035552 ).
Already those ‘abroad’ with non-US citizen children cannot claim any child tax credit. Apparently a US citizen parent with a non-US child doesn’t deserve any help with child rearing expenses. BUT, the RESP education savings and RDSP disability savings of such non-US child is at the same time deemed by the US to be taxable and vulnerable to the FBAR penalty fundraiser – based on that same US status parent IF the US person parent is signatory on that child’s ‘foreign trust’ accounts (as Calgary411 has explained before, much better than I can).
great work again from Eric, thank you so much, in sorting this out for the rest of us non-professionals.
Eric–it seems from news reports that the bill with the passport revocation is just a side dish (politically speaking) to the main bill. Am I understanding correctly that if the main bill goes down in flames (which seems likely after yesterday’s events) then this side bill with the passport revocation is by definition also a no-go?
Absolutely above my comprehension! I always wait for somebody to explain. Maybe there is rhyme and reason – method – in this? I am sure many many voters don`t understand what these politicians are doing. Maybe this is why we get so little of an echo from the public. And they can slip and slide all sorts of things into their voting.
Maybe it’s because the government has a Republican majority in the house and senate now….? They are at least willing to punish expats less than Democrats…..hmmmmmm
@Eric, appreciate your news that involved keeping tabs on the “congresscritters”, a term that will now stick in my head. Hope that the onerous passport revocation stays out of the final bill; glad that the House had the good sense not to incorporate it.
For those of you with insomnia, all the Congresscritters’ howling and chittering on H.R. 644 can be found here (Ctrl+F for “I yield 1 minute to the gentleman from Arizona” to get past all the procedural trivia)
Note: they said nothing about passport revocation, either positive, negative, or neutral. Pretty much no one in the Homeland is even aware of those provisions; I haven’t seen any news articles mentioning it, just us and a couple of tax lawyers. The House customs bill just happened to have different changes with different fees and whatever than the Senate bill, so they didn’t need the passport revocation thing as a revenue offset. No deep meaning to it like one party hates expats more than the other.
Pete Sessions (R-TX, the chairman of the Committee on Rules), who happened to save us from the Senate version of the customs bill, once tried to banish all renunciants (not just those with tax debts):
Thanks for walking us through this complex maze, Eric. So appreciated.
Here is a Global Research piece from today:
TPP: U.S. Congress Rejects Fast Track “Trade Promotion Authority” – For Now
Let’s hope that words similar to those of the above quote cited by Calgary will be said of the success of our lawsuit, and also of our larger war against CBT.
@MuzzledNoMore, I second that. And given how very far we all have come altogether, since the beginnings of IBS (and for some, before that even) I think we have every reason to continue to believe that we will prevail.
The reason why DATCA was knocked back probably had more to do with US banks paying lobbyists stop the US Government costing them $Bs in IT costs to comply.
Who’s more powerful? The Democrats or US bank’s lobbyists?
That’s the real question. Please remember US politicians are up to the eyeballs in lobbyist money.
The average US Congressman has to raise $10,000 everyday to get re-elected. That kind of money doesn’t come from $50 donations at a time.
Sounds like the measures to screw US persons abroad weren’t killed on their own merits, but were merely collateral damage. I would expect them to reappear someday, as “offsets” to some other bills.
Interesting story –
Swiss court rules in favour of a Swiss bank employee objecting to her personal details being sent to the US as part of a DOJ investigation into Swiss bank employee assisting US taxpayers to open Swiss accounts.
The bank says it will appeal. IMO it’s more foreign court blowback to US extraterritorial behavior. The battle continues.
Not clear if they mean the Senate versions of customs & TAA (i.e. with passport revocation & the FEIE/child tax credit refundability cut) or the House versions (without either).
Today I read a story about a lady changing her name by deed poll in the UK. If someone has a EU passport, they could in theory for about £80 change their name, and have their passport re-issued in the new name. Of course the IRS will still get their birth date, but it’s going to make tracking down and proving it’s them a very manual process.
As for the name, I would pick a common one and Google it to see how many results come up.
At least it would make the IRS having to go request from the local US Embassy the hassle of ‘researching’ the individual. For some countries, like Germany, the records are not online and would require someone travelling to the actual town and locate the records.
Food for thought.
@Don, I’ve had a similar thought with regard to women who kept their maiden names(happens frequently in Canada) when marrying. It would be really easy just to change your name to your spouse’s name (no legal issues, just paperwork) so that all your banking records are no long under the same name as your US birth certificate.
If the US wants to persist with CBT at least make it a more manual process and expensive. Let’s not allow them to simply be able to drill down from data supplied by FFIs. Make them work for it.
Imagine if all 7 million US-expats simply changed their names? Your US passport for US travel, your foreign passport for travel outside and US and your foreign financial life.
Cross checking against FATCA data would become unreliable and unpredictable.
Yes Don, lets confuse and delay them with unreliable and unpredictable data (hehehe…my bad kitty side is showing).
I’ve already picked out a new name if needs be. Would 20 million google hits be sufficient? Smith has a billion but it’s not a good auditory match to my first name. Mohammed has 200 million and Singh 400 million but they probably wouldn’t work well with my German/Irish/Scandinavian heritage. There’s a certain group which uses the name change game all the time to their own advantage so I don’t see why we can’t too.
Yes name changing adds another layer of complexity for the IRS, however, if they throw enough manpower at it, they’ll get to the bottom with some effort. The real solution is get another lawsuit going in the European Courts and against a FFI who has changed their T & Cs to stop the flow of data.
I think EU courts would be sympathetic to a legal challenge as long as you can argue the IGA breaks for example Articles 5 and 14 in the EU Human Rights Convention for example.
Article 14 says “ex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status”
If the banks painting a picture that collection of FATCA data isn’t discriminatory because they make it appear at the front end that they’re asking every nationality this information then proceed in the backroom to ‘data discriminate’ doesn’t at least break Article 14 – what on earth would?
Banks need to be questioned in open court about the data collection process from beginning to end. Whichever way the cut the cake they are putting US person’s names in a separate bucket from everyone else’s. Then proceed to ask them what other nationality’s data is sent to tax authorities and how many instances this has happened. A clever solicitor who leaves them no wiggle room is needed.
Just because you can see, hear or witness discrimination doesn’t mean it isn’t happening.
@WhiteKat, “(hehehe…my bad kitty side is showing).”
The Dark Kitty…….