Americans Abroad Fight for Tax Fairness!

Congressman Holding's legislation (introduced in the 115th Congress in December 2018) proposes a residence-based approach to taxing Americans living and working overseas.  The basic principle of the bill mirrors the thinking behind ACA’s residence-based taxation (RBT) approach, that is, separating foreign-source and US-source income and excluding from US taxation specified foreign-source income earned when a US citizen is a qualified resident abroad. The toggle switch determining whether an individual is taxable on US income – and not on foreign income – is residency. The bill excludes from US taxation income earned unrelated to the United States for qualified non-resident US citizens.

A summary outline of the bill, prepared by Rep. Holding’s office, can be found here. Along with a more detailed summary prepared by ACA here.

Congressman Holding has long been a proponent of tax reform for Americans living and working overseas.  ACA, together with other overseas organizations, regularly met and provided Congressman Holding with input, data and suggestions on tax law changes, informing and otherwise educating him and his staff on the critical tax and compliance problems facing Americans living and working overseas.

Important tax compliance advocacy and research work by ACA was key in the educating process of both Congress and the tax writing committees.   

1. ACA’s side-by-side comparative showing how and where changes needed to be made to the current Citizenship-based taxation regime to make it Residence-based.
2. ACA data and research by contractor District Economic Group (DEG) to provide data and revenue estimates for ACA’s side-by-side which includes critical baseline data on the asset composition and size of the overseas community, is vitally important to development of the legislative proposals. 

As reported in early December of 2019 in Politico, Congressman George Holding of North Carolina is retiring at the end of 2020. ACA regrets that Congressman Holding will be leaving Congress and thanks him for his work on behalf of US citizens living and working overseas. Although Congressman Holding was the leading champion for RBT, there are other Representatives in Congress who support tax reform for Americans overseas.

ACA has begun meeting with the new Administration and Congress. Much of ACA's work in the early part of 2021 will be virtual given continued COVID lockdown.  We have already attended a conference with the Joint Committee on Taxation, the Senate Finance and the House Ways and Means.  We will be following with more virtual meeting with staffers on all the afrementioned committees, as well as meet with the new staff at the IRS. 

ACA will continue to follow up with Congressional offices identified through the write-in campaign calling for hearings - educating them on the issues and advocating for hearings. ACA will keep close to existing supporters of RBT in both the Senate and the House.  

To help the community better understand ACA's strategy for Residence-based taxation (RBT) in 2021, listen in on our presentation made at the 2021 Expat Financial Summit.

Hearings need to be held so that the committee can hear about the wide range of tax compliance issues facing the overseas Americans community from stakeholders and citizens.  With knowledge from hearings the tax writing committees and legislators can look at specifics of the legislation for refinement.  Specific treatment of items like Social Security income, income associated with the new “transition tax” and GILTI, and different types of PFIC income, will need more consideration and details will need to be worked out to determine how these income streams will be taxed under a new residence-based regime.  

ACA was the first organization to make a call for hearings. On December 29, 2017, ACA called upon Congress to hold hearings on tax reform for Americans abroad.  Hearings by the US House Ways & Means Committee addressing the wide-range of tax issues facing US citizens living and working overseas is the next step in the legislative process.  In September of 2019 ACA launched the "Americans Abroad Fight for Tax Fairness!" write-in campaign, to support efforts for Congressional hearings, making it easy and simply for supporters to send an appeal to their Representatives in Congress, along with the members of the House Ways & Means Select Revenue Committee - the tax writing committtee - to hold hearings on the tax and compliance issues for Americans living and working overseas. So far over 20,000 messages supporting hearings have been sent to Congressionals offices. 

ACA joined the RBT Coalition, a group of organizations representing Americans overseas, tax advocacy organizatsions, think tanks, Ameircan business and social organizatsions (AMchams, Americans Clubs) and tax and investment professionals who are calling for adoption of RBT.  The Coalition will not posit any platform for RBT but will bring awareness to the compliancy issues facing Americans overseas and demostrate that support for RBT comes from a wide-range of groups and organizations. Coalitions such as this are key in building support on Capitol Hill for change.  Learn more about how to join/support the Coalition here: RBT Coalition.

ACA held a series of Webcasts to educate and update the community and Congress on Congressman Holding’s "marker bill" outlining the general principal of Residence-based taxation.  The tax-writing committees will need to run through the code, item by item, to determine how income streams will be treated for taxation in order to refine an existing bill or draft a new bill. This why Congressman Holding's work is still important and why hearings are key to advancing on this work. Only by understanding the breath of problems and issues can Congress understand how to treat these in legislation.

ACA is hosting webinars with various groups and organizations interested in the subject matter.  To see the complete list of webinars hosted in 2019 and 2020, click here. 

ACA also hosts monthly podcasts with updates on ACA's work.

A key piece of knowledge for Congress is ACA’s revenue estimates our side-by-side comparative.  ACA’s work includes data on the makeup of the community of Americans overseas, their tax filing status and asset makeup, as well as demographic data.  ACA will continue to use the data we have developed and share this with offices we meet with and stakeholders that we bring on board.  ACA, through ACAGF, will field additional research projects to help provide more data on the community. This research will certainly be presented at hearings.

ACA is working alongside other groups advocating for tax reform; Association of Americans Resident Overseas (AARO), Democrats Abroad, Republicans Overseas (RO) and various US Chambers of Commerce, notably the Asia Pacific Chambers of Commerce (APCAC), Americans for Tax Reform (ATR), National Taxpayer Union (NTU), etc. ACA will continue to bring in new stakeholders in order to grow the consortium of advocates for tax reform.  Some of the groups have already joinged the RBT Coalition and we welcome others to join as well.  

Join ACA's "Americans Abroad Fight for Tax Fairness!" write-in campaign calling for hearings!

DONATE to ACA and ACAGF! Two ways to donate today, you pick! 

First, American Citizens Abroad Global Foundation (ACAGF, which focuses on education and research) is continuing to raise monies for additional analysis leading to improved database and detailed revenue estimates. Detailed revenue estimates on different pieces of the “Tax Fairness for Americans Abroad Act of 2018” and similar proposals are extremely important because they help refine and reshape the legislation. It is important that stakeholders, like ACA, representing Americans abroad, be able to delve deeply into the numbers to provide offices with the data needed to draft or refine legislation. Donations to ACAGF are tax deductible*.  Donate today.

Second, ACA, which advocates (lobbies) for legislation is raising funds to do just this – lobby for enactment of a residence-based taxation regime. It will pound the pavement and walk the hallways of the Capital, meeting with Members, Members staffs and staffs of the committees, like Joint Committee on Taxation, House Ways and Means Committee, and Senate Finance Committee. It will hold meetings with other “players” to educate and get everyone pushing in the same direction. It will work to activate others that, in turn, will lobby in favor of legislation. The effort needs to be as well-organized and executed as the corporate effort. Donations to ACA for lobbying are not tax deductible*.  Donate today.

*Tax-deductible funds raised by ACAGF will not be used for lobbying.