Breaking: Congressman Holding scrapes through with ‘Tax Fairness For Americans Abroad Act’

John Richardson (tax lawyer), Olivier Wagner (tax specialist), Solomon Yue (CEO & Founder Republicans Overseas), and Jim Gosart (Republicans Overseas) discuss Congressman Holding’s introduction of ‘Tax Fairness For Americans Abroad Act’. 

by Helen Burggraf

With just hours to go before most of the United States was due to close down for the Christmas holiday, Congressman George Holding today at last delivered a long-anticipated bill aimed at addressing the enormous problems many Americans living abroad have been having that are a result, most agree, of the fact that they are taxed on the basis of their citizenship rather than jurisdiction of residence.

Among the central features of Holding’s bill is an option for American citizens who are living abroad to elect to be taxed on the basis of their residency, rather than their citizenship.

Read the full article here.

The End of the Beginning: Solomon Yue and John Richardson discuss TFFAAA

Watch as Solomon Yue (founder and CEO Republicans Overseas) and John Richardson (international tax lawyer) discuss Congressman George Holding’s ‘Tax Fairness For Americans Abroad Act – H.R. 7358″.

 

TTFI bill is introduced by Congressman Holding

Today, December 20, 2018, Congressman George Holding (NC-R) introduced the Tax Fairness For Americans Abroad Act (TFFAAA) – H.R. 7358.

The TFFAAA will not only end the double taxation of overseas Americans, it will also make Americans more competitive in the international job market and free to pursue opportunities around the world.

The TFFAAA will amend the Internal Revenue Code by offering overseas Americans a status similar to that enjoyed by corporations where foreign-sourced income is taxed in the country where it is earned.

The bill can be summarized as follows:

  • Overseas American citizens can elect to become a qualified nonresident citizen under this bill or elect to remain taxed under the existing CBT.
  • Under this bill, a nonresident citizen is defined as an individual that:
    •  Is a citizen of the United States,
    •  Has a tax home in a foreign country,
    •  Is in full compliance with U.S. income tax laws for the previous 3 years, and
    •  Either:
      • a)    Establishes that he has been a bona fide resident of a foreign country or countries for an uninterrupted period which includes an entire taxable year, or
      • b)    Is present in a foreign country or countries during at least 330 full days during such taxable year.
  • Citizens moving overseas in a ‘split year’ can still make use of the Foreign Earned Income Exemption (‘FEIE’) to cover income earned abroad during the split tax year.
  • Once a citizen has elected nonresident citizen status, the US government will no longer tax that citizen’s foreign earned income or foreign unearned income.
  • All income earned by a nonresident citizen within the United States will continue to be taxed under existing laws.
  • While individuals will not be taxed on gain from the sale of foreign personal property attributable to their time as a qualified nonresident citizen, they will still be taxed on any gain attributable to their time as a resident of the U.S. In other words, if an individual holds a foreign asset prior to their election of qualified nonresident citizen status and then sells said asset while they are a qualified nonresident citizen, the individual will only owe U.S. tax on the portion of gain attributable to the period prior to their change in status.

Republicans Overseas is working with Congressman Holding’s legislative staff and Grover Norquist (President of Americans For Tax Reform) to develop a plan for getting the bill passed in Congress in 2019.

Click here to read the bill in its entirety.

Click here for a one-page description of the bill. 

Solomon Yue writes about TTFI in AARO News October 2018

Solomon Yue, CEO and VP of Republicans Overseas, discusses how Republicans Overseas has been working towards  Territorial Taxation For Individuals. Click here for the PDF version.

John Richardson interviews Solomon Yue on TTFI

 

TTFI receives several endorsments

Territorial Taxation for Individuals is receiving endorsements from a variety of organizations that support overseas American taxpayers.

Please see the endorsement letters here:

Opportunity to submit a comment to Congress on the Repatriation Tax

The House Ways & Means Committee is holding a ‘Hearing Seiries on Tax Reform: Growing Our Economy and Creating Jobs.’ They are collecting statements for the congressional record, and this is a great opportunity to provide testimony as to the unintended and potentially disastrous consequences of the Repatriation Tax and GILTI tax regime. Comments must be submitted by May 30, 2018.

If you would like to submit a testimony about the harm these taxes will do to your business, then you can email a letter to them.  The guidelines can be found here (https://waysandmeans.house.gov/committeesubmissions/), but they are also listed below:

  1. Submissions must be emailed to waysandmeans.submissions@mail.house.gov
  2. Submissions include the email and a Word document. The Word document may be no longer than 10 pages in length. The testimony should be provided via the Word document. (See below for a draft document.)
  3. Your submission should include a list of all clients, persons and/or organizations on whose behalf you are writing. The name, company, address, telephone, and fax numbers of each witness must be included in the body of the email. Please exclude any personal identifiable information in the attached Word document.

You can find a draft letter here:  House Ways and Means – Repatriation Tax Sample Letter . Please adjust it to suit your story.

Republicans Overseas submitted a presentation to the White House explaining the Repatriation Tax, why it is so disastrous for overseas Americans, and potential remedies. You can read it here:  http://republicansoverseas.com/wp-content/uploads/RO-Transition-Tax-Overview.pdf

Republicans Overseas continues to work towards implementing Territorial Taxation for Individuals. The passage of TTFI would end the double taxation of overseas Americans by ending  citizenship-based taxation. The passage of TTFI would also connect individual taxation with corporate taxation by putting both on a territorial basis.  We hope to soon share news on proposed TTFI legislation.

Sincerely,
Solomon

Solomon Yue
CEO Republicans Overseas

Treasury grants two month extension on repatriation tax

The Department of the Treasury has granted a two month extension for making the first payment of the Repatriation Tax included in the Tax Cuts & Jobs Act of 2017.

The full advice from the Treasury can be read here.

The relevant information on the Repatriation Tax can be found on page 36. A picture of the relevant page is included at the top.

Our understanding is that this extension is granted automatically and without having to apply for it, but we do urge individual business owners to seek professional tax advice if in doubt.

Republicans Overseas thanks everyone who signed a petition, both ours and that sponsored by Monte Silver. We still have more work to do, but we now have a little more time in which to accomplish it.

RO requests a House Hearing on the harmful impact of the ‘Repatriation Tax’

Republicans Overseas has requested a House hearing on the harmful impact of the ‘repatriation tax’ on the small business corporations owned by overseas Americans.

‘Attached is an RO PPP on the severe and unintended consequences of the repatriation tax contained within the Tax Cuts & Jobs Act 2017 on small businesses owned by overseas Americans.

Since this is a complicated issue, it is easiest to explain it by contrasting the impact of the Tax Cuts & Jobs Act 2017 (‘TCJA’) on Apple stores which are wholly owned foreign subsidiaries of the Apple corporation with independently-owned Apple stores run as small businesses by overseas Americans in Hong Kong.

1) The repatriation tax specified by the TCJA for multinationals’ foreign subsidiaries is 15.5% while it is 17.5% for American-owned overseas small businesses.

2) The Tax Cuts and Jobs Act failed to recognize the differences in Apple company-owned stores and Apple independently-owned stores.

3) Apple brings its foreign company stores’ profits home to the US to open new company stores, create jobs, and increase profitability.

4) Apple independently-owned stores’ owners will not immediately bring home to the US their retained earnings because their profits are used to finance inventory purchases, pay for their living expenses, and save for their retirement while they are living in their host country.

5) Apple corporate shareholders will pay the 15.5% transition tax on Apple company-owned stores, but these Apple company-owned stores will then pay 0% corporate income tax to the IRS after that due to the implementation of territorial taxation for corporations.

6) Apple independently-owned stores’ individual shareholders will pay the 17.5% transition tax but will still need to pay individual income tax to the IRS every year due to citizenship-based taxation.

7) Apple independently-owned stores’ individual shareholders have been using their retained earnings as working capital to self-finance their businesses due to foreign banks denying them basic banking services, including business loans and lines of credit under FATCA.

8) This 17.5% becomes a triple jeopardy for Apple independently-owned stores’ individual shareholders: they receive no tax credit for payment of the transition tax to US to offset the tax owed to the country of residence; individual shareholders may not have the money to pay this tax; and if the owners use working capital to pay this transition tax, it makes it more difficult to self-finance, which could lead to bankruptcy.

9) The first installment of this tax is due by April 15, 2018.

10) Failure to pay the first installment by April 15, 2018 means that the total tax would be due immediately.

We need to have a House hearing to demonstrate the severe and unintended consequences of TCJA and to allow the House the opportunity to offer timely solutions for the law-abiding overseas Americans who will suffer under this tax.’

You can read the presentation here:

Addressing the harmful impacts of the repatriation tax on overseas Americans

RO responds to ACA letter on RBT

Republicans Overseas is dedicated to ending citizenship-based taxation, but we are not a signatory to the letter published by the AARO on asking Congress to implement RBT (residence based taxation).

The ACA wrote this letter and circulated the draft to us, asking us to join as a signatory. We declined for three key reasons:

  • Republicans Overseas will not support organizations that attack members of the House and Senate who support ending CBT. ACA attacked Congress over a non-existent proposal to eliminate the cap on ‘911’ – the Foreign Earned Income Exemption. This is poor politics, bad manners, and loses organizational credibility.
  • Republicans Overseas will never accept the ACA’s RBT proposal because it includes an exit tax and a carve-out for FATCA. These are non-starters and discriminatory towards overseas Americans.
  • The United States government seems likely to move to Territorial Taxation for Corporations (TTFC). If the US moves to TTFC, why would it then move to RBT for individuals? This would leave the US with an even more complicated mishmash of tax systems. TTFI (Territorial Taxation for Individuals) would align the corporate and individual tax systems by taxing all income at source. At this stage, TTFI is clearly the more logical option.

Republicans Overseas welcomes the support of all organizations dedicated to ending CBT and implementing TTFI. We continue to work with our champions in the House and Senate to fight for the inclusion of TTFI in this Tax Reform Bill.

You can read the letter here.