What is the problem?

Issues arise when investing in foreign mutual funds or foreign pensions that are taxed as PFICs or Passive Foreign Investment Companies under the US tax code. Currency fluctuations also present an issue for US citizens as they can cause "phantom gains," gains resulting solely from the change in value of the US dollar (required for filing US taxes) against the currency in the country where an individual lives.

The enactment of recent tax evasion legislation; the Foreign Account Tax Compliance Act (FATCA) legislation, the increased enforcement of Foreign Bank Account Report (FBAR), the Patriot Act, and foreign government tax legislation such as the European Alternative Investment Fund Managers Directive (AIFMD), has in some cases, resulted in the denial and/or closure of both retail and investment financial accounts, both domestic and foreign-based, for Americans resident overseas.

The Patriot Act, which recommends application of stricter guidance for banks “Know Your Client” requirements, is also having an effect on US citizen’s ability to maintain financial accounts in the United States when they are no longer resident in the US. Foreign legislation such as the European, Alternative Investment Fund Managers Directive (AIFMD), may disallow certain US mutual funds to be sold or managed for US clients resident outside the United States also complicates the situation.

ACA tracks and advocates to correct some of the worse problems that complying with the US tax code imposes:

What are we doing about it?

ACA is the only organization representing US citizens overseas that has advocated for the adoption of residence-based taxation (RBT), taxing income based on where it is earned, since its creation in 1978.  ACA has taken concrete steps to build awareness of and acceptance for a roadmap to RBT.


  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 gives the Congress and tax writing committees a roadmap for RBT.

  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 for the Congress and tax writing committees.

  3. Alongside our advocacy for RBT, ACA also advocates for the recognition of more foreign pensions and US equivalent for tax filing purposes. Individuals who are invested in foreign government mandated pension plans are not using these instruments for tax evasion purposes.  The IRS can, through tax treaty conditions, recognize many as US equivalent.

View our submissions to Congress about this issue and others here.

How can you help?

What have we achieved so far?

In 2014 we developed our side-by-side comparative or RBT roadmap (need link) which has been updated as tax policy has evolved over the years. ACA’s sister organization ACA Global Foundation produced two research studies to determine the size and make-up of the community of US citizens living and working overseas as well as, ran a cost analysis for ACA’s RBT roadmap which indicated that RBT can be made revenue-neutral (no cost the US Treasury) to implement.

Congressman Holding’s Tax Fairness for Americans Abroad Act of 2018 (TFAA) was a major step in the process for tax reform.  Congressman Holding, a long supporter of tax reform for Americans overseas, introduced legislation in the 115th Congress in December 2018.  His legislation proposed a residence-based approach to taxing Americans living and working overseas.  This was the first time that legislation in support of American overseas taxpayers was introduced in the US Congress. ACA provided a technical explanation of the bill ACA Explains "Tax Fairness for Americans Abroad (TFAA)" - Residency-based tax bill old pages | Washington, DC |

In 2022 three bills addressing the tax and compliance issues facing US citizens overseas were introduced in Congress; Congressman Beyer introduced the Tax Simplification for Americans Abroad Act  (H.R.6057) and Congresswoman Maloney introduced the Commission on Americans Living Abroad Act (H.R.5800) and H.R.5799 - 117th Congress (2021-2022): Overseas Americans Financial Access Act | | Library of Congress  Congresswoman Maloney is no longer in office however, Congresswoman Titus (D-NV), Chair of the Americans Abroad Caucus has reintroduced into the 118th Congress (2023) the Commission on Americans Living Abroad Act (H.R.2729) and Congressman Beyer has reintroduced the Tax Simplification for Americans Abroad Act (with additional refinements). ACA has provided a technical explanation of the bill aca-explanation-beyer-bill-2023-230914.pdf ( ACA anticipates that the Overseas Americans Financial Access Act H.R.5799 - 117th Congress (2021-2022): Overseas Americans Financial Access Act | | Library of Congress will be reintroduced into Congress shortly.

Where can I find out more?

In this Section

Mutual Fund Restrictions

General Investing