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In the latest indication that tax-law changes in Washington, DC, have a chance of moving forward, Senate Finance Committee Chairman Orrin Hatch a Republican from Utah, and Ron Wyden, the ranking Democratic Senator from Oregon, have launched a new effort to seek input from the public on bipartisan tax reform.
A recent press release states that their goal is to provide additional data, input and information to the Committee’s bipartisan working groups. Of the five working groups, two are very specific to overseas Americans, International Tax and Individual Income tax, and their email addresses are: International@finance.senate.gov and Individual@finance.senate.gov.
In the past decade, overseas Americans have spoken out against US tax and financial legislation, arguing that they’re excessively burdensome. While still small, the number of Americans taking the extreme step of giving up their citizenship is on an alarming upward trend.
I encourage you to participate in the Senate’s call for comments. Submissions to the working groups have the following requirements as stated directly in the press release:
ADDITIONAL SUBMISSION REQUIREMENTS:
All submissions must be submitted as a pdf attachment. The attachement should be saved using the name of the organization/individual submitting the recommendations.
Parties should list the name of the tax working group they wish to contact in the subject line of the email.
Please include contact name, organization (if the submission is being submitted on behalf of a group), phone number, and email address, in the body of the email.
Submissions will be accepted through April 15, 2015, and made public at a later date.
If the above directions are not followed, the Committee reserves the right to not include the submission.
If technical problems are incurred, parties can contact the Committee at +1 202-224-4515.
IF YOU ARE UNCERTAIN ABOUT WHAT TO INCLUDE IN YOUR LETTER, I SUGGEST INCLUDING SOME OF THE FOLLOWING:
Write about your individual situation; keep it personal.
Support changing the US Federal tax system to a residency- rather than citizenship-based system for individuals.
Support for a same-country exception when reporting “foreign” bank accounts under FATCA so that if (for example) you are an American living in Canada, your Canadian accounts are not considered “foreign” for you or your foreign financial institution.
Highlight the cost and complexity of your annual filings.
Highlight the cost of double taxation and excessive reporting, especially of foreign pension funds.
Write professionally and constructively without insulting the readers. Anti-American sentiment won’t improve the case for change.
Keep your writing concise - one page if possible.
My personal favorite suggestion to the panel and the IRS is to consider changing the definition of a US person in section 7701(a)(30) of the federal tax code. By changing the definition of a US person for tax purposes in the code (e.g. if. a US person meets the bona fide residence test or physical presence test for two or three consecutive tax years, they are no longer considered a US person for federal income tax and reporting purposes). This is a change that should not need legislative action and would provide a lot of overseas Americans with tremendous relief.
While the chances of getting all of the changes that expats are looking for are slim, this should not be a reason to abstain from writing to the Senate or contacting the office of your Representative. US expat issues are on the radar screen in Washington; there are allies in Congress; and if tax reform is done without considering international issues, it will likely be many years until the issues are addressed again.