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ACA’s onsite presence in Washington, DC is key to keeping awareness of the issues affecting the community of Americans overseas top of mind with the legislature. In early February 2015, ACA Executive Director, Marylouise Serrato and ACA Tax Team Director, Jackie Bugnion, were in Washington, DC knocking on doors to keep focus on ACA’s Residence-based taxation proposal (RBT).

ACA was back engaging in tactical meetings with House Ways & Means and Senate Finance, the two key tax writing offices of the US legislature. ACA has met with all the committee members for these two tax writing offices, and ACA continues to update those offices, making return visits, providing them with research, testimonials and practical information on the continuing problems facing overseas Americans.

ACA can report that tax reform is on the table and key tax writing offices and the legislature are getting their ideas worked up into formal proposals. All the offices we met with were clearly aware of the need to simplify international taxation, both for corporations and individuals. Legislation like FATCA has made Congress aware that filing taxes from overseas is no simple matter, that the cost for compliance far outweighs the average tax owed, and that fear of making errors in filing is causing undue burden and concern for Americans who live and work overseas.

Congress knows that something needs to be done and ACA’s RBT proposal has been well-received and is top of mind with all the tax writing offices ACA met with in February 2015. ACA continues to push for RBT. Since it is unclear when tax reform will take place, ACA also continues to advocate for corrections to the existing Citizenship-based taxation (CBT). ACA advanced discussions on four key areas for correction to the existing code; recognition and fiscal treatment of foreign pensions on terms comparable to US pensions, use of local currency as functional currency for calculation of capital gains, applicability of foreign tax credits against the 3.8% Net Investment Income Tax and penalization of contributions to Social Security and Medicare taxes:

1. US Tax Code for the 21st Century - Social Security Taxes

2. US Tax Code for the 21st Century - NIIT 3.8%

3. US Tax Code for the 21st Century - Functional Currency

4. US Tax Code for the 21st Century - Foreign Pensions

ACA met with many legislators who have heard from their constituents about their tax filing issues. The importance of writing to your Representative in Congress cannot be overstated. Offices that receive letters with personal details and information on issues get noticed. ACA saw evidence of this in meetings we held with both House and Senate offices.

ACA also met with the Americans Abroad Caucus Co-Chair offices of Representatives Carolyn Maloney (D-NY) and Mick Mulvaney (R-SC). The Caucus is aware of the issues facing American overseas taxpayers and they were clear in communicating that the needs of the community of Americans overseas should be taken into consideration in any tax reform proposals put forth to Congress.

Also in February 2015, ACA’s Legal Counsel Charles Bruce, along with representatives of other overseas organizations, met with key members of the US Treasury. ACA presented to Robert Stack, Deputy Assistant Secretary for International Tax Affairs, its recommendation for Same Country Exception to alleviate the problem of bank account “lockout” that overseas Americans are experiencing as a result of anti-tax evasion legislation such as FATCA.

In brief, Same Country Exception would give “safe harbor” to Americans legitimately living and working overseas, characterizing accounts owned by Americans resident abroad with a bank or other foreign financial institution located in their country of residence as local and not offshore. This would take these accounts out of the due diligence and the reporting requirements of FATCA for both the individual and the foreign financial institution.

The proposal was well received and ACA and other overseas groups have been asked to provide Treasury with more evidence on the lockout problem so that Treasury can review the problem in detail prior to deciding whether to make regulatory changes.

ACA is working on providing Treasury with testimonials and results from recent surveys on tax reporting like the current survey being fielded by Greenback Expat Tax services in cooperation with ACA Global Foundation and the University of Kent survey fielded last year. Data from these surveys will be used in follow-up meetings scheduled for later this year.

Be sure to check this ACA website for updates on our work on RBT and on FATCA.