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ACA in the News: Does Renouncing U.S. Citizenship Make Sense For The Average American Abroad?

  Forbes (July 28, 2022) Does Renouncing U.S. Citizenship Make Sense For The Average American Abroad?   "A survey by Greenback Expat Tax Services shows that one in four expats are 'seriously considering' or 'planning' to renounce their U.S. citizenship. The burden of U.S. tax filing is the top reason for this.   Of the 3,200 expats in 121 countries surveyed, 86% feel that their issues are less likely to be addressed by the U.S. government than those of stateside Americans.   They aren’t alone in their thinking. American Citizens Abroad, for instance, advocates for taxation, compliance (specifically, 'Simplification of US tax compliance for US citizens abroad,'), and representation."   Read More...

ACA/DEG Analysis of Revenue Effects of Residence-based Taxation

Background This is the second ACA/DEG analysis of a possible version – a so-called “Vanilla Approach” – to Residence-Based Taxation (RBT). The first study was released in November 2017, as the Tax Cuts and Jobs Act was being enacted.[1]   ACA Study[2] This study analyzes economic issues relating to RBT. During 2017 and 2018, DEG, under contract with ACA, constructed a model of income tax returns associated with US citizens residing abroad and several sets of related public data. This model was employed to analyze policy proposals for RBT. It was used for presentations to Tax Committee Congressional staffs, the US Treasury, and the Joint Committee on Taxation to further their understanding of the baseline data and issues with respect to RBT. This second study updates the 2017-2018 model, significantly expanding the number of countries in the individual-income-tax-return-to-United-Nations-immigration-statistics-cross-walk (a core …

ACA in the News: Bloomberg Tax Daily Tax Report - Taxation of Americans Abroad

  Bloomberg Tax Daily Tax Report (April 26, 2022) Taxation of Americans Abroad "The U.S. could adopt residence-based taxation for expats in a revenue-neutral way, according to a study released Monday by the advocacy group American Citizens Abroad. Under the current international tax regime, U.S. citizens living abroad are subject to U.S. taxes on worldwide income. Under residence-based taxation, they would not be subject to U.S. tax on foreign income. American Citizens Abroad, which supports residence-based taxation, said those abroad should be allowed to move between the two systems at will. 'No one would be forced to do this,' the group wrote. 'No one would be made worse off, as the existing foreign earned income exclusion rules would remain for those wishing to use them.'"

The 2018 Midterm Elections: Letting your voice be heard is a Right and a Duty

Interest in Washington politics is reaching a crescendo now that the midterm elections are nearly upon us.  As with all elections, the results of the 2018 elections will have an important impact on U.S. citizens both at home and abroad, therefore you should consider voting as a “must”, irrespective of your country of residence. As an American citizen, you have the right to vote irrespective of whether you live in the US or overseas, in both primary and general elections. At the federal level, you can vote in the primary and general elections, or the general only. You can vote in both state and federal elections. Overseas voters tend to downplay the importance of their participation in the voting process. Yet ACA representatives are often reminded of the critical role their votes can play when discussing legislative matters with Members …

Chief Counsel Guidance on Passport Revocation

Notice CC-2018-005: How Chief Counsel Attorneys Handle Passport Actions On April 5, 2018, the Chief Counsel's Office provided advice in Notice CC-2018-005 to Chief Counsel attorneys who handle I.R.C.  §7345 passport actions. The Chief Counsel's Office detailed both the certification and reversal processes for “seriously delinquent taxpayers,” as well as the procedures for the judicial review of certifications. Lastly, the Notice indicates that since this is a new area of litigation, with questions still unanswered, these cases are ultimately to be coordinated with Procedure & Administration, Branches 3 and 4. Guidance re Certification and Reversal Processes Under the Fixing America's Surface Transportation Act (FAST Act), the State Department must deny a passport application by any individual certified by the IRS as having a "seriously delinquent tax debt.” [1]  Additionally, the FAST Act authorizes the State Department to revoke a passport held by an individual with seriously delinquent tax debt. The certification process itself is governed by I.R.C. §7345, which also provides taxpayers a limited right …

W(H)Ither the Tax Gap?

Professors Jay A. Soled of Rutgers University and James Alm of Tulane University analyze the “tax gap” in their recent abstract, W(H)Ither the Tax Gap?”   The paper analyzes whether the “tax gap” or the difference between what taxpayers are legally obligated to pay and what they actually pay is really growing in size or is it diminishing or “withering” away given the new economy. The authors argue that the use of credit cards, debit cards and smartphone payment apps has purged cash from its use in many economic transactions. And that the availability of third-party sources of information and computerized retail processing has curtailed the ability of taxpayers to hide income.  Access to the full abstract can be found here: 

Estate Planning for US Citizens Living Overseas

If you are a US Citizen living abroad, you may wonder if the will you executed in the United States will still work for you.  Depending on your individual circumstances, your US will may continue to work for your overseas assets.  However, there is a good chance that you need to update your estate plan.  This article discusses the issues impacting the effectiveness of US wills abroad.  This article does not discuss revocable trusts. If you have used a US revocable trust as part of your estate plan, and now live abroad, you should revisit the use of your trust with an advisor, because there could be negative implications. There are three primary issues that impact the use of a US will in a foreign country: Is your US will considered “valid” in the foreign country for purposes of admitting …

Collateral sanctions can encourage tax compliance

Collateral sanctions, which may be applied on top of penalties for tax noncompliance, can result in drivers licenses, fishing permits and even passports being automatically revoked. Joshua D. Blank published an article about collateral compliance, where he suggests that authorities should publisize these sanctions to encourage voluntary compliance. Click here for more information.