Current ACA Advocacy for Tax Reform and How You Can Help
ACA Global Foundation continues funding for research work that will be presented at Congressional hearings.
If you are reading the page on our website you already know what it is like to live with the onerous IRS requirement to file US taxes regardless of your actual residence and you no doubt understand the need for the US to switch to a RBT system. That’s where ACA and our research work comes in. ACAGF has gone back to its data and research work fielded in 2017 and updating and adding to the work done by the highly regarded District Economics Group (DEG). ACAGF’s data is the only private-sector research on taxation of Americans overseas. It has already been invaluable in offices ACA has visited with and will be the lynchpin for Congressional hearings on the tax and compliance issues for US citizens living and working overseas
ACA and ACA Global Foundation can get this done because:
ACA is on-site in Washington, DC to monitor tax legislation that is on the agenda for the 117th Congress and will be taken up in the Fall of 2021.
ACA’s meetings with US Treasury and tax-writing committees tell us that individual international taxation will be addressed in upcoming legislative efforts.
ACAGF has the best private-sector research and data on the overseas American community.
Freedom of Information (FOIA) requests tell us that the IRS and the US Treasury have an incomplete picture of the community of taxpayers overseas.
ACAGF’s ground-breaking analysis of baseline information will be key to hearings held on the subject of international tax reform.
Data and research are the ‘coin of the realm” in Washington, DC and ACA continues to be the reputable and respected "go to source" for this.
Remember to donate to ACAGF’s research efforts.
How we got to where we are today.
ACA's long history in support of Residence-Based Taxation (RBT) and its body of work on the subject, starting with white papers back in the 1970s outlining the problems associated with the taxation of Americans overseas, led to ACA's development in 2014 of its RBT roadmap or side-by-side analysis which has been updated as the US tax policy has evolved in the past 5 years. ACA's work has been key in the educating process of both Congress and the tax writing committees.
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.
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. 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.
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.
WHAT IS HAPPENING NOW.
Meeting with the new Congress and Administration.
ACA has been meeting with the Administration and Congress and remains in close contact with the tax writing committees in the House and Senate, as well as with the US Treasurym the IRS and the Joint Committee on Taxation (JCT). The tax writing committees - House Ways & Means and the Senate Finance, along with the US Treasury and the IRS are all interested in addressing the tax concerns of overseas filers. ACA will be going back into these offices to present the updated research work done by District Economics Group (DEG).
ACA continues to follow up with Congressional offices identified through our write-in campaign calling for hearings - educating them on the issues and advocating for hearings which we believe will happen. ACA will keep close to existing supporters of RBT in both the Senate and the House and continue to work to bring onboard new supporters of RBT.
Although ACA's work on the subject of RBT, our research report from 2017 as well as that from 2021, are all key elements what is needed now are hearings. ACA is advocating for hearings and encourages the community to advocate for hearings as well. Read more below about how you can assist with this effort and why hearings are so important.
Latest ACA Research in support of RBT
American Citizens Abroad (ACA) has released a new economic analysis of residence-based taxation (RBT). The study is based on an analysis prepared by District Economics Group (DEG) for American Citizens Abroad Global Foundation (ACAGF), ACA’s sister organization. This latest ACA study was funded with tax-deductible contributions to ACAGF by hundreds of contributors, many of whom are ACA Members. The study shows that RBT can be adopted without losing the US Treasury any revenue. Click here to see our Press Release.
The ACA study supports ACA’s lobbying for enactment of RBT. US citizens living abroad strongly support RBT. A broad coalition of organizations, chambers of commerce and individual businesses have committed to changing from citizenship based taxation (CBT) to RBT. Residence-based taxation is the approach followed by almost all other countries.
Resulting from over 10 months’ work, the ACA study is the most comprehensive nongovernmental economic analysis of RBT. The underlying model, created by DEG, draws upon publicly available tabulations of tax returns from the IRS, projections of the US economy from the Congressional Budget Office, US Social Security Administration statistics and Census data. These data are augmented with publicly available IRS studies on US non-filers of tax returns and Federal Reserve Board studies of the distribution of wealth in the US, and then integrated with annual United Nations estimates of US migrants residing outside of the US.
The study presents estimates of, among other things, how many US citizens there are overseas (excluding US military and government employees); how many US citizens are on overseas tax returns; the income profile of overseas filers; and the projected utilization of one approach to RBT. To see more of the topline data click here.
This study is the second ACA study. It revises the RBT model developed during 2017-2018 by expanding the number of countries in a key feature of the model, so as to refine estimates of US citizens residing overseas, individuals resident in several categories of foreign jurisdictions, US tax filers, and the like. The original model having been updated, the model is adjusted to account for effects of the Tax Cuts and Jobs Act (enacted in December 2017) and the COVID-19 pandemic, and revises income profiles from the IRS’s Statistics of Income and Federal Reserve Board publications. It then estimates possible static budget effects and behavioral responses to one possible approach to RBT. This is the so-called “vanilla approach” detailed in ACA’s side-by-side analysis of current law and RBT. It is not a legislative proposal. Congress will decide the shape of RBT.
Legislation introduced into Congress.
Helping with efforts for hearings is the fact that three pieces of legislation have been introduced in Congress.
On November 19, 2021 Congressman Beyer introduced the Tax Simplification for Americans Abroad Act (H.R.6057). The bill provides for a simplified tax filing form for certain Americans living and working overseas and also expands the definition of foreign earned income eligible for exclusion under the Foreign Earned Income Exclusion (FEIE, section 911 of the Internal Revenue Code). New categories of income would be eligible for exclusion such as; pension income, disability payments, etc. As a service to the community, ACA has written a brief explanation of the elements of the bill, however, an official technical explanation may be provided by the Congressional tax writing committees and, when made available, ACA will share with the community along with our commentary. Also, there is no estimation of revenue effects as of this date.Congressman Beyer’s bill is a good step forward however it is not Residence-based taxation (RBT) or a replacement for RBT.
On November 1, 2021 Congresswoman Maloney also introduced two pieces of legislation, The Overseas Americans Financial Acccess Act and the Commission on Americans Living Abroad Act. The Overseas Americans Financial Access Act is "safe harbour" legislation for FATCA filing, similar to ACA's recommendation for "Same Country Exemption" for FATCA filing. The bill modifies tax reporting requirements that apply to foreign financial institutions and individuals with foreign financial assets to create exceptions for the foreign accounts of certain U.S. residents or citizens living abroad. The Commission on Americans Living Abroad Act would create a commission to investigate the legislative and regulatory issues of US citizens living and working overseas.
Introduction of these bills into Congress indicates that Congress is getting the message that something needs to be done about the taxation of Americans overseas. ACA has been instrumental in getting this message into Congress through our advocacy in Washington, DC and our write-in campaigns calling for the Congress to hold hearings. Hearings are exactly what is needed and are the essential next step in the process of tax reform for Americans overseas. Although these bills address some of the specific filing issues for US citizens overseas, they do not address the greater problems associated with the current Citizenship-Based Taxation (CBT) regime which can only be addressed by serious tax reform and adoption of Residence-Based Taxation (RBT).
ACA applauds Congressman Beyer and Congresswoman Maloney's efforts to address the tax and compliance issues of Americans overseas and supports his efforts to bring attention to the concerns of Americans abroad. At the same time, ACA stands firmly behind adoption of Residence-Based Taxation (RBT). RBT is the only way to address all the tax and compliance issues of Americans Abroad. ACAGF’s research work has demonstrated that RBT can be adopted, can be revenue neutral (not cost the government) and super tight against abuse.
The importance for ACA's call for hearings.
As the Congress continues to work on tax legislation, hearings will be held. Offices in Congress have signaled that treatement of individual overseas taxpayers will be part of the discussion and that hearings should be held so that the committees can understand the wide range of tax compliance issues facing the overseas Americans community from stakeholders and citizens.
A key component for hearings is the presentation of good data and information on the community of Americans living and working overseas. An accurate count of the number of Americans living overseas, data on the revenue generated by CBT and data on the asset and income make-up of Americans overseas, are essential. American Citizens Abroad Global Foundation‘s (ACAGF) 2017 research by our contractor District Economics Group (DEG) to provide revenue estimates for ACA’s side-by-side analysis of CBT and RBT has already provided offices in Congress with some of this vital information. ACAGF’s follow-up research project with DEG to update our 2017 report will be issued shortly and ACA will be returning to offices on Capitol Hill that are involved in the writing of tax legislation and in the scoring (evaluating the cost) of legislation, such as, Congressman Beyer’s bill, to present our research and data. Surprisingly, the government does not have complete data on the community of overseas Americans, and ACAGF’s research project has provided them with a more complete and accurate picture.
With knowledge from hearings the tax writing committees and legislators can look at specifics and determine how best to craft legislation to address these problems. Specific treatment of items like Social Security income, income associated with “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. 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 simple for supporters to send an appeal to hold hearings to their Representatives in Congress, along with the members of the House Ways & Means Select Revenue Committee. ACA has recently lauched an additional campaign calling on House Ways & Means Commitee Chairman Richard Neal to make hearings a PRIORITY for the Committee: https://www.americansabroad.org/call-on-house-ways-and-means-committee-to-hold-hearings-on-americans-abroad/
Revenue Neutrality and ACA research and data.
Many people ask, which is the better argument for RBT– making the argument for “fairness” or arguing “on the numbers” that it not be a revenue loser? Answer is both. Fairness can get attention and backers. But if it loses revenue, RBT will be swimming up the waterfall known as budget reconciliation. Proponents of RBT will probably want it added to a big budget bill designed to pass under the reconciliation process. If it’s a revenue loser, it would be barred under established guidelines. No “ifs” “ands” or “buts”. That’s why the ACA/DEG exercise grinding the baseline data and revenue estimates, which lead to making it revenue neutral and tight against abuse, are ABSOLUTELY CRITICAL. Listen to Marie Sapirie of Tax Analyst talk about Reconcillation rules and how they impact the passage of legislation, making the need for good numbers essential. Listen to Marie Sapirie of Tax Analyst talk about Reconcillation rules and how they impact the passage of legislation, making the need for good numbers essential American Citizens Abroad TaxCast (podbean.com). Read about Senate Reconciliation Rules and the Byrd Rule here.American Citizens Abroad TaxCast (podbean.com). Read about Senate Reconciliation Rules and the Byrd Rule here.
The US Treasury, the IRS and Congressional offices lack much of the detailed data and research on the overseas taxpayers. Recent Senate Hearings held on May 11 have show this. The US Treasury and the IRS have some data from tax returns using the FEIE (flags an overseas resident) and FBAR filings but these offices lack comprehensive data on the size and make-up of the community. ACA has been able to provide offices with more data with its landmark 2017 research project funded by ACA's sister organization, American Citizens Global Foundation.
The 2017 research project was done by District Economics Group (DEG) using ACA's "side-by-side" roapmap for residence-based taxation as a basis, the report provided data on the size, geographic hic location, income make up and tax reporting for overseas filers. This research is in the hands of the tax-writing committees and the Joint Committee on Taxation but needs to be updated and expanded.
ACAGF has raised the funds for this expanded research which will be a key document in hearings held on tax reform for overseas taxpayers. ACAGF anticipates completion of this reserach project by the year-end of 2021. The importance of updating this research cannot be overstated. ACAGF's research work is the best private-sector data and ACA and DEG are respected as the "go to source" by the offices directly involved in tax reform. See our recent webinar "Parting the Veil: Analyzing the Revenue Effects of Residence-Based Taxation (RBT)" with an extensive discussion of the importance of revenue neutrality for RBT with panelists Charles Bruce, ACAGF Chairman and Legal Council and District Economics Group (DEG) principal, Michael Udell.
ACA joins the RBT Coalition.
ACA joined the RBT Coalition, a group of organizations representing Americans overseas, tax advocacy organizatsions, think tanks, Ameircan business and social organizatsions (American Chambers of Commerce, 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 organizations. Coalitions such as this are key to building support on Capitol Hill for change. Learn more about how to join/support the Coalition here: RBT Coalition.
On July 7, 2021, ACA hosted a webinar "Parting the Veil: Analyzing the Revenue Effects of Residence-Based Taxation (RBT)" with panelists Charles Bruce, ACAGF Chairman and Legal Counsel, and District Economics Group (DEG) principal, Michael Udell. Learn about the important of data and research to support RBT and why revenue neutrality is so important. DEG is an independent, non-partisan economic consulting firm providing specialized economic analysis and insights into federal, state, legislative and regulatory policymaking. Click here for presentation slides.
On May 25, 2021, ACA hosted a webinar on how Residence-Based Taxation (RBT) can be passed by the Congress. What is the current landscape in Washington, DC, what work needs to be done, what data and information does the Congress and Administration need, and how can organizations like ACA and individuals help make this happen. Click here for presentation slides.
In 2019 and 2020, ACA held a series of Webinars 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 that are interested in, and support tax reform for Americans overseas. To see the complete list of webinars hosted in 2019 and 2020, and upcoming events in 2021, click here.
ACA also hosts monthly podcasts with updates on ACA's work.
ACA's work with stakeholders.
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), AmCham Abu Dhabi, Americans for Tax Reform (ATR), National Taxpayer Union (NTU), Adrain Leeds Group, Expat Exchange, 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 joined the RBT Coalition and we welcome others to join as well.
What can you do today to support ACA’s efforts.
Join ACA's "Americans Abroad Fight for Tax Fairness!" write-in campaign calling for hearings!
DONATE TODAY TO HELP OUR EFFORTS!
ACAGF's reserach and educational efforts. American Citizens Abroad Global Foundation (ACAGF, which focuses on education and research) research and educational efforts have only just begun. ACAGF is fielding additional analysis leading to an improved database and detailed data on overseas taxpayers. This data will be presented at hearings and go directly into the hands of the tax writing committees, the US Treasury, the IRS and Representatives that support adoption of RBT. It is essential so Donate today.
Want to help more? ACA, which advocates (lobbies) for legislation is conintues to raise funds to do just this – lobby for enactment of a residence-based taxation regime. Funding for advocacy and lobbying efforts help us to continue to 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. ACA will also activate other stakeholders that, in turn, will lobby in favor of legislation. Donations to ACA for lobbying are not tax deductible*. Donate today.
*Tax-deductible funds raised by ACAGF will not be used for lobbying.
Click to see ACA's past efforts on RBT:
ACA Explains "Tax Fairness for Americans Abroad (TFAA)" - Residence-based tax bill
RBT and the 2018 Midterms. What’s Next?
Tax Cuts and Jobs Act (TCJA). What Happened? What’s Next?