This is the header menu for legislation which affects expats
Look for an item indented below this menu choice. This is also the potential header for a letter. (Perhaps you would like to create a shorter and easier note of your own)
I submit my specifications of what is needed for tax reform, in order to provide fair treatment of US Citizens and “US persons” living outside of US territory.
The information provided here are points from a knowledgeable layman.
It is important to note that the responsibility for a fair and equitable taxation system is the responsibility of the owner of the taxation system. In this case, it is the government of the United States of America. The existing system is obviously not fair and equitable at this time, regarding “US persons” living outside of USA. It is also not competitive versus the taxation systems of how other countries tax their emigrants, expats, or diaspora.
With recent enforcement of previously-unenforced bad laws, and with passage of new legislation, it becomes urgent to make corrections. The existing enforcements of bad FBAR rules, OVDP plea-bargain programs, and the FATCA regime are active efforts by my USA government to categorize innocent and benign actors in the same category as true tax evading violators. The principles and ideas behind the US Constitution have not been applied, and in fact have been violated.
Very few US persons living out in the world understand what is happening. Of those few who indeed do understand, many are afraid, many are hiding, and many have been giving up their US citizenship out of fear.
Some principals of the tax system should have been and should be:
To assume the innocence of a person unless proven otherwise by due judicial process
To require only information which is necessary to collect taxation
To not require a person to submit incriminating evidence.
To tax persons for government services received.
To match the taxation principles of other countries
To allow US Citizens to be on-par competitive with citizens of other nations
To eliminate un-necessary paperwork (in the interest of persons, organizations, and govts)
To not allow unfair penalties for honest errors
To allow taxpayers to receive any/all information necessary to submit tax paperwork
To not create burdens upon other actors (for example foreign institutions) which would make US taxpayers undesirable.
To ensure that taxpayers are not presented with an exclusive choice of following the laws of one country versus the laws of another country.
Many of the tax problems experienced by US persons overseas are also shared by recent immigrants to USA. Their numbers are as great or greater than US persons overseas. Many of them have citizenship and strong connections to their homeland. There is also no instruction form for them as how to handle their overseas affairs via taxation. Most have no right to vote and their ability to discuss issues with their Congress/Senate is limited. This document cannot fully address their issues. It remains the full responsibility of legislators and administration to have a proper, fair, equitable taxation system for them.
In addition to my own submission, I also fully support the intentions of the submission of American Citizens Abroad. I also fully support the contents of their submission. I only add items to their submission. I also submit issues in my submission which eliminate the exit tax in the US system altogether (whereas ACA has offered a type of compromise related to Exit taxation).
ACA1 submission to the Joint Senate Finance Committee and House Ways and Means website, http://tax.reform.gov RBT ACA’s recommendation for Residence-based Taxation (RBT) Recommendations for tax reform: international taxation of individuals July 23, 2013
I also explain how these issues affect myself. Firstly, I work internationally, performing __________ services worldwide. I can fulfill all of the taxfiling expectations at any location as well as any other competing person or competing company. However, the other persons of other nationalities, who are competing for my work, are not encumbered by any distant land due to their citizenship status. Whereas other persons are able to perform work with only the normal reporting expectations, I am required to report also to USA. The amount of reporting for a US person with an international company is well beyond the capability of an individual. Since a US corporation is not accepted in most countries where I would work, it is truly impossible for myself as a US person to own & operate a business.
There is also a category of executive jobs which will never be available to me. No international corporation would accept that one its key employees would be required to report the assets of the company to the USA IRS on the FBAR form. This means jobs such as project manager, purchaser, business manager,and other higher positions will never be made available to a US person such as myself.
The similar situation arises, no volunteer organization wants a US person Treasurer to report the organization’s assets back to the USA. This can also be applicable to non-US spouses and family members, whose joint assets should not be exposed to the US IRS.
The amount of paperwork required to file US taxation from abroad is totally out of control. I live in a high-tax country (like 80% of all others) and owe no legitimate US tax. However, the potential to make mistakes is very high, the likelihood of such mistakes being detected has become exponentially higher, and the penalties for benign mistakes is ludicrous.
The existing citizenship-based (personhood-based) taxation can never be implemented completely fairly. With the principles of partially-effective exclusions and the tax-up-to-the-higher of the 2 tax rates, there are a number of items where US persons are uniquely taxed: foreign (tax-free) retirement plans, foreign (tax-reduced) parental leave and unemployment benefits, and capital gains on private homes. New items such as the Affordable Care Act, which is not useable for US persons overseas, still taxes US persons overseas and still requires a US person overseas to file one more form to prove that one should not be penalized.
It is very insulting and unconstitutional for my USA government to be requiring myself to report bank account wealth values. Especially insulting is the requirement for a US person overseas to report to the Financial Crimes Enforcement Network by June 30th of each year, to prove innocence of not having reported such wealth. And now this year, the reports are required on the poorly functioning, security-questionable FinCen internet site.
It is horrifying, that, instead of my US government informing all US persons in some humanly manner— that they should have been filing such paperwork, that the US government launched a world-wide FATCA program, using the world’s banks as a mechanism for searching out and finding US persons. The objective of this effort has never been to inform such US persons, but to apply draconian fines for not having known something (FBAR) which the US government has not even bothered to place in its IRS publication 54 up until the year 2009.
This set of actions has been so unacceptable to so many US persons, that such US persons have taken the step of renouncing ones US citizenship, in order to flee from this pursuit. Some of us, who have been active US supporters and citizen ambassadors for the USA, have completely reversed our opinion of our home country. Many persons who never would have dreamed about giving up their citizenship, have either already done so or are contemplating to do so.
Please note that, despite what has been said in the Senate and the media, that the population of US persons is obviously spread out in character as much or more so than in the homeland. We who reside overseas are not “rich” and we are not “rich tax evaders”.
What the committee must consider is that USA needs US citizens with boots on the ground around the world if it needs US products to be traded around the world. No one can do better US business than a US citizen. If the US has unfair taxation policies for its citizens and persons, than the trade balance is negatively effected (as it is today). If the tax policies are made to be fair, there will indeed be an improvement in the number of US citizens acquiring jobs and business interests around the world. And the US trade balance will improve and the US GDP/GNP will improve.