ACA to Treasury: 'de minimis rule' needed for GILTI and Transition Tax (and btw, RBT is needed too)

The American Expat Financial News Journal (June 10, 2021)

ACA to Treasury: 'de minimis rule' needed for GILTI and Transition Tax (and btw, RBT is needed too)

'The American Citizens Abroad has written to seven top U.S. Treasury officials, including Treasury Secretary Janet Yellen and IRS Commissioner Charles Rettig, to urge it to 'revisit' the way President Trump's 2017 Tax Cuts and Jobs Act is affecting the small- to medium-sized businesses owned by Americans overseas – in addition to urging them to take other actions, including 'the true corrective measure' of switching the U.S. to a residence-based tax (RBT) regime.

Inserting a de minimus rule into the TCJA's Transition Tax and GILTI regulations would at least represent a 'necessary and desireable' start in the direction of helping to ease a burden that has already caused many overseas American business owners to 'simply [throw] up their hands,' in part merely because the cost of calcuating the tax they would be deemed to owe would be so great, ACA officials Marylouise Serrato, Charles Bruce and Jonathan Lachowitz say in their five-page letter.

But the best corrective measure for addressing the many problems Americans abroad are struggling with, they go on to add, remains 'the adoption of residence-based taxation (RBT).'

The ACA has lobbied U.S. officials for years to move the U.S. to an RBT system, which the rest of the world (apart from Eritrea) practices, from the U.S.'s current citizenship-based tax (CBT) regime, which the ACA and other organizations, officials and tax experts blame for most of the complex financial and tax problems American expats have been struggling with for more than a decade.

Earlier this year, the Washington, DC-based advocacy organization, via its sister organization, the ACA Global Foundation, announced plans to finance fresh research into the RBT vrs CBT issue, citing what it said at the time was its belief that Washington lawmakers would be revisiting the RBT issue later this year, and that this data could therefore be instrumental in helping to make the argument for the change.

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