Territorial Taxation for Individuals is receiving endorsements from a variety of organizations that support overseas American taxpayers.
Please see the endorsement letters here:
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:
- Submissions must be emailed to email@example.com
- 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.)
- 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.
CEO Republicans Overseas
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.
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
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:
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.
Congressman Holding and Chairman Brady on the need to get rid ...
Stephen Kish, It means 9 million overseas Americans didn't get anything in the House version of the Tax Cuts and Jobs Act. However, both Congressman Holding and Chairman Brady recognized that CBT is inconsistent with the current territorial taxation for corporations as well as U.S. firms competitiveness overseas. As a result, they pledged to continue to explore. It does demonstrate the commitment from Chairman Brady to get this done. Again we need to focus on the Senate side since this fight is far from over.Posted by Republicans Overseas on Thursday, November 16, 2017
Both Congressman Holding and Chairman Brady recognized that CBT is inconsistent with the current territorial taxation for corporations as well as harming U.S. firms’ competitiveness overseas. As a result, they pledged to continue to explore moving away from CBT. This demonstrates the commitment from Chairman Brady to get this done. We now need to focus on the Senate tax bill since this fight is far from over.
By: Helen Burggraf | 17 Nov 2017
Spokespeople for organisations that have been urging US lawmakers, on behalf of expatriate Americans, to legislate for a change to a “residence-based” tax regime said today that the possibility of such a change is still alive, even if it hasn’t yet been spelled out in the latest tax reform plan to be under discussion in Washington.
Their comments came the day after the US House of Representatives passed a tax reform bill that some said was “the most sweeping tax overhaul in three decades, as President Trump moved to leave his mark on the way America does business. The approval came in spite of the objections of the Democratic members of the House and 13 Republicans, and sees the focus now shift to the Senate, which also must approve the legislation for it to become law.
Marylouise Serrato, executive director of the American Citizens Abroad, said today that although residence-based taxation (RBT) isn’t currently mentioned in the bill that was approved yesterday, “there is still movement on RBT, and [still] time for its inclusion” in the final draft. The matter, for example, could also be brought up later on, including during debate on the Senate floor.
“ACA remains hopeful, and we are busy working offices in the Senate, Joint Committee on Taxation (JCT), etc., where we have interested parties,” she added.
As reported, the ACA and other organisations representing expatriate Americans have been campaigning hard over the last few months in an effort to draw US lawmakers’ attention to what they say is the dysfunctional way Americans are taxed on the basis of their citizenship, rather than on the basis of where they live, as is the case in all but one other country in the world, the other being Eritrea.
The ACA and Republicans Overseas have been leading the charge, with such other expat American organisations as the Democrats Abroad, Americans for Tax Reform and the Heritage Foundation having also been rallying their members to get US lawmakers to end the US’s citizenship-based regime.
Earlier this year the Republicans Overseas launched a drive to get 6,400 signaturesonto an online petition calling for an end to citizenship-based taxation, while the Democrats Abroad, on 15 June, the day expats tax forms are due by the IRS, staged a “tax storm”, when expats were urged to “join Democrats around the world [in picking up your phone] to ask your representatives and senators for their support for residency-based taxation”.
Not all the expat American lobbying groups agree on the exact format the replacement tax regime should take, however, with the Republicans Overseas lobbying in favour of what it calls a “territorial taxation for individuals” regime, or TTFI.
Republican National Committee member Solomon Yue, who is also chairman of the Republicans Overseas, explained recently that although the JCT may make use of some of the research the lobbying groups have conducted in the course of their campaigns, “ultimately it will have to produce its own [formula], according to their procedures”.
The debate over whether the US should, and possibly will, move from a citizenship-based tax regime to one that is based on residency comes as expatriate Americans continue to renounce their citizenships in record numbers, driven by the hassle and expense of having to file returns and be liable for paying taxes in two countries instead of just one. Earlier this month, Bloomberg reported that, based on the most recent data from the Treasury Department, renunciations in 2017 are on track to top 2016’s record number of 5,411, which was itself a 26% jump from 2015.
The Foreign Account Tax Compliance Act, signed into law by president Obama in 2010, is widely credited with sending many expats rushing for the exits, by making the business of being an expatriate American increasingly difficult and expensive, as it requires foreign financial institutions to report to the US tax authorities on any accounts they have that are held by American citizens. Critics call it “the enforcement tool of the US practice of citizenship-based taxation”, but because it has made it difficult for Americans living outside of the US to get bank accounts, mortgages, or otherwise engage in the financial services industries in the countries in which they now reside.
Grover Norquist, President of Americans for Tax Reform, has written a letter to Chairman Kevin Brady of the House Ways and Means Committee urging him to include TTFI in the tax reform bill’s markup.