The Democrats Abroad has forcefully rebutted arguments contained in a letter its Republican counterpart organization sent last week to President Trump chief of staff Mark Meadows, in which the Republicans Overseas called on Meadows to use an executive order to address some of the key tax issues U.S. expats have been struggling with.
In its letter, which is dated Sept. 6 (Sunday), signed by the DA's "Taxation Task Force," and posted on the Democrats Abroad's taxation news page by Australia-based Taxation Task Force chair Carmelan Polce, the Democrats Abroad says the RO's missive to Meadows "does not provide reasonable relief for Americans abroad," and goes on to list how it would go about legislating for such relief.
Among other points, the DA letter notes, "digging into the details of the [Republican] document, one finds that the request does not actually extend to providing retroactive TCJA transition tax exemption to businesses registered or headquartered abroad", a reference to President Trump's Tax Cuts and Jobs Act of 2017, which, as this and other publications have reported, has caused significant problems for Americans abroad who own their own small businesses.
"The proposed relief would only apply to small businesses as defined in the Small Business Act (SBA) – those that are registered in the U.S., headquartered in the U.S. or operating primarily in the U.S."
What's more, the DA letter continues, "The draft executive order suspends FATCA for everyone, not just Americans abroad, which means that tax cheats will be given a pass to use offshore accounts to hide assessable income from the U.S." This is a reference to President Obama's 2010 Foreign Account Tax Compliance Act, which was aimed at stopping wealthy Americans from hiding assets in non-U.S. bank accounts, but which has caused significant problems for Americans abroad, in part by making non-U.S. banks around the world reluctant to have as account-holders anyone with American citizenship, or even a Green Card.
Since FATCA came into force in 2014, an Organisation for Economic Co-operation and Development has introduced a global version of FATCA known as the Common Reporting Standard, which more than 100 countries have now signed up to, but which the U.S. has not.
Also in its letter, the Democrats Abroad said it sought "simplified taxation filing for Americans abroad, and an exemption from taxation filing for income they generate abroad (Residency Based Taxation)" and "FATCA reforms to eliminate the foreign financial accounts of Americans living abroad from all FATCA reporting, and [an] end [to] the banking lock-out...embodied in the Overseas Financial Access Act introduced by Rep. Carolyn Maloney in each of the last two Congresses."
The Democats Abroad is the official overseas arm of the U.S. Democratic Party, and in July, was represented by 21 delegates at the Democratic National Convention. Because they were "pledged", delegates, they were obliged to vote for a specific candidate.
As reported here in July, a frustration for many expat Democrats has been the Democratic Party’s lack of interest in expat issues and concerns, as was evident in its failure to add to its official 2020 election platform any of the issues expats have been calling for, in some cases for years, such as replacing the citizenship-based tax regime with one based on residency.
Thus far, neither Meadows, Trump nor Democratic presidential nominee Joe Biden has issued a statement in response to the Republicans Overseas letter.
To read the DA response to the Republicans Overseas' letter to Meadows, click here.
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