Fighting Citizenship Based Taxation:
The US practice of Citizenship Based Taxation is the source of the problems faced by US citizens living in Australia. Heitor David Pinto has written an essay outlining a legal argument that Citizenship Based Taxation is unconstitutional in the US. While the Australian government can do nothing to address this directly, there are organisations and people working to change this practice.
This page serves as a repository for opportunities to take action in the US. Please post links to relevant news stories and blog posts in the comments.
46 thoughts on “US Action”
Re-posted from Facebook:
Nothing ventured, nothing gained. We should e-mail and tweet the four moderators for the upcoming US Presidential Debates and US Vice-Presidential Debate regarding FATCA and Citizenship Based Taxation.
26 September Debate
Lester Holt: firstname.lastname@example.org / @LesterHoltNBC
9 October Debate
Anderson Cooper: email@example.com / @andersoncooper
Martha Radditz: firstname.lastname@example.org / @MarthaRaddatz
19 October Debate
Chris Wallace: email@example.com / @FoxNewsSunday
Vice-Presidential Debate: 4 October
Elaine Quijano: firstname.lastname@example.org / @elaine_quijano
Sometimes you read my mind
Re-posted from Facebook.
On Facebook Keith Redmond (American Expatriates Group) posted:
In the wake of the US election, there are several expat groups/sites that are organising letter-writing campaigns and tweet-storms aimed at the Transition team.
A good place to start is http://isaacbrocksociety.ca/lobby-the-new-us-government/
Another article: http://citizenshiptaxation.ca/nows-the-time-heres-what-they-promised-lets-hold-them-to-it/ (re-posted with comments open at http://isaacbrocksociety.ca/2016/11/09/nows-the-time-heres-what-they-promised-lets-hold-them-to-it/
Plus there are discussions ongoing at https://www.facebook.com/groups/citizenshiptaxation/
Please post any other resources/sites as replies below.
The BBC World Service is preparing a radio show titled “The Response – America’s Story” – they’re looking for 2 minute voice clips on “What do you want to tell President-elect Donald Trump about who you are and the life you lead?” Details here. (HT American Expatriates FB Group).
Heitor David Pinto has written an essay outlining arguments as to why Citizenship Based Taxation is unconstitutional in the US. You can find it here: https://drive.google.com/file/d/0B7VqDyDIAgW2VGVLNlpvNGRlM28/view
I’ve updated the body of this page to include this link (so it is easier for newcomers to find).
Congress will be considering Residence Based Taxation – this post from the American Expatriates group on Facebook gives email addresses to the relevant congressional assistants. The more letters they receive the better!
The letter I sent in response to this call for action can be found here.
Republicans Overseas Action releases White Paper on Territorial Tax Reform for Individuals. https://www.facebook.com/republicansoverseas/
Americans could comment showing support. I believe this could be the year that social media makes its mark on this subject
Anyone get any feedback from letters sent ?
A little past 2 min mark Niels mentions Territorial Tax https://www.youtube.com/watch?v=-q49OaoOSVo
After 3 min mark probably meetings in US re Tax issues
Dear President Trump: Why I’m Leaving America
Taxes #TaxTimeJAN 23, 2017 @ 08:52 AM 1,996 VIEWS
Dear President Trump: Why I’m Leaving America
Robert W. Wood , CONTRIBUTOR
I focus on taxes and litigation.
Opinions expressed by Forbes Contributors are their own.
I did not write this letter. It is a blend of a number of them I have received enunciating reasons that record numbers of Americans are renouncing their U.S. citizenship. Despite the huge protests President Trump has already drawn over social issues, and despite petitions for him to release his tax returns, other reasons motivate these renunciations. They are personal to many Americans living overseas, and are issues President Trump inherits. There is some room for hope, but whether he will remedy them remains to be seen.
Dear Mr. President,
I am writing with a heavy heart as I prepare to give up my U.S. citizenship. My spouse too. We are not doing so to avoid paying U.S. taxes, but because we object to a system that is discriminatory and unfair to law-abiding Americans living outside the country. I hope you continue reading, as I get the sense that homelanders typically shrug off our complaints as sour grapes and tax avoidance. It is anything but.
It has become too expensive, too difficult, and frankly, too frightening, to try to comply with all of the tax filing requirements that now apply to U.S. citizens living abroad. With FATCA, even opening a local–but to the U.S. a “foreign”–bank account is difficult because I am American. In Canada where I live, many of us are dual U.S. and Canadian citizens. Having two citizenships comes with privileges—such as voting in both countries. It also has burdens, such as paying taxes in both countries. Up to a point, that is OK.
Notably, despite our U.S. status, many of us do not receive U.S. Social Security or Medicare. That means we take nothing from the U.S. Yet, we now feel like second class citizens or even criminals. For many of us, including many dual U.S. and Canadian citizens, taking on another citizenship, was not disloyal to America. In some cases, job requirements make a second citizenship either required or a good idea.
But whether or not Americans abroad acquire a second citizenship, living abroad subjects us to burdensome tax and disclosure rules and unfair retirement account treatment by the U.S. The FBAR forms we must file every year, detailing the amount in every single financial account we have, from savings to checking to investment to retirement accounts, are filed with the Financial Fraud Division of the U.S. Treasury Department. The message given here, along with the enormous fines for improper filing, make U.S. citizens feel like they are guilty until proven innocent.
Simple investments such as mutual funds, easy for those living in the U.S., are not easy for Americans abroad. Unless we are very careful, we end up with funds classed as foreign by the IRS. The taxes and compliance can be excessive. Banking and retirement accounts rules are truly discriminatory for U.S. persons abroad. Some retirement accounts abroad are still taxed by the IRS, even though they are held for retirement.
Even a Canadian mutual fund is treated far different than an American one. These are not funds that are investing in terrorist activities in the Mideast. These are funds that are invested heavily in U.S. bonds and U.S. companies, as well as in Canadian bonds and companies. The IRS considers Canadian mutual funds as “foreign investments“, they are local investments for those living in Canada.
American citizens living abroad are at a distinct disadvantage in planning and saving for our retirement. What have we done to deserve this discriminatory and second class treatment? Some costs and inconveniences are to be expected. Filing taxes in multiple countries means extra professionals and extra expense. But how much extra is fair?
The broader context is America’s global tax system and FATCA, which has also made life difficult for U.S. persons abroad. This is especially true when it is the Fraud Division that investigates even the most innocent errors in filing some of the necessary forms. Today, the overall burden and the unfairness have become too heavy to reasonably bear.
There are approximately one million Americans living and working in Canada, and millions more in other parts of the world. We are not alone in taking the previously inconceivable step of relinquishing our U.S. citizenship. What a sad state of affairs for America.
A Canadian–and American
I live in Australia rather than Canada – but otherwise I could have written this letter. Our retirement accounts (superannuation) are equivalent to social security and should probably be exempt from US tax under the tax treaty and the Social Security agreement – but most US tax professionals have treated them as employer pensions (402(b)), so now that’s what the IRS seems to expect. Similarly, I don’t think Congress had long-term expats in mind when the Passive Foreign Investment Company rules were passed in 1986. There is no policy reason (other than forcing expats to “Buy American”) for treating RETAIL mutual fund investments as PFICs. Indeed, until about a decade ago, I don’t think anyone reported these investments as PFICs – then some “conservative” tax professional decided that this was the “safe” interpretation, and now this is what the IRS expects.
Between retirement accounts, PFICs and FATCA, the US has made it nearly impossible to live a middle-class life as a US citizen outside of the US.
Robert W. WoodAUTHOR
Robert W. Wood 8 hours ago
Thank you. Yes, I agree, and arguably, the superannuation problem for Australian-Americans makes you much worse off than most U.S.-Canadians. Between that and PFICs, you are indeed between a rock and a hard place.
I’m sorry to say mate but this issue has been put on the backburner with the current change in administration over in the US.
I’m sure you’ll have heard the news about Trump withdrawing the US from the Trans-Pacific Partnership. At this stage the Government does not expect changes to the Australia-US Tax Treaty in the near future.
The Treasurer’s office has asked me to pass along their apologies that no action will be able to be taken on this matter for the foreseeable future.
t. 07 3893 3488
Reposted from Isaac Brock Society:
If you feel that U.S. FATCA “agreements” with sovereign nations are harmful then email your thoughts BY FRIDAY FEBRUARY 10 to email@example.com
She was filmed by Nightline never shown
For Your Information https://www.facebook.com/americancitizensabroad/I find the discussion re: Keith Redmond interesting. He is a major player regarding our cause
To keep you thinking
An ACA Proposal on Residence-Based Taxation was posted by the ACA as of December 1st. You may read a side-by-side comparison of their proposal here: https://www.americansabroad.org/…/Residency-Based_Taxation_…
+1 267-941-1000 IRS from Australia
Hitting US TV https://youtu.be/8yZS_nmPJEQ
JakDac – that Bloomberg newsclip is over 2 years old (and not actually very sympathetic to the plight of US citizens living outside the US).
AmCham CEO Niels Marquardt (ex ambassador) has been helpful re Expat tax issues(see previous videos). Let him know you are thankful for his help
If you have google voice or hangouts (free calls to US) ask the Senate Finance Committee what they are doing about Expat tax / tel 202 224 4515
Keith Redmond – founder of the American Expatriates Group on Facebook – has been a tireless (and unpaid) advocate for expat issues. He is now asking for donations to allow him to continue to focus his energy on this work. You can donated here: https://www.gofundme.com/american-overseas-advocate
See the latest action by American Citizens Abroad on 26 April – ACA submitted testimony to the House Subcommittee on Government Operations at its hearing on “Reviewing The Unintended Consequences Of The Foreign Account Tax Compliance Act [FATCA].” : https://www.americansabroad.org/media/files/files/ee3ba639/WRITTEN_TESTIMONY_OF_AMERICAN_CITIZENS_ABROAD_170426_FINAL.pdf?platform=hootsuite
Thank you for posting this, Martha. I think it is important for all US expat advocacy groups to have a respectful dialog about the best ways to assist the affected populations around the world.
I have two comments on the content of ACA’s testimony:
First, I believe the Same Country Exception is an inadequate remedy for the following reasons:
Second, the ACA RBT proposal is not what most US expats are familiar with when they hear the term Residence Based Taxation. The ACA RBT proposal requires taxpayers to buy their tax freedom and the right to be taxed based on residence with a $2,350 IRS fee. Furthermore the proposal requires annual reporting including FBAR for those citizens who have bought the right to RBT. My comments on this proposal are available here ( and here with discussion).
For those who missed it a Congressional hearing on Reviewing the Unintended Consequences of FATCA was held on Wednesday 26 April 2017. You can find a video of the entire hearing here:
And a followup press conference hosted by Republicans Overseas here:
Analysis and discussion of the hearing is available (on the Isaac Brock Society website).
Reposted from my email:
RBT Congressional Call Storm happening on Thursday June 15th – during which we hope that Americans across the world who support RBT will blitz Capitol Hill with calls demanding support for this important reform.
Ask them to remember to answer the submissions to Finance Committee made YEARS ago.
Section F. Overseas Americans
According to working group submissions, there are currently 7.6 million ? (9 million) American citizens living outside of the United States. Of the 347 submissions made to the international working group, nearly three-quarters dealt with the international taxation of individuals, mainly focusing on citizenship-based taxation, the Foreign Account Tax Compliance Act (FATCA), and the Report of Foreign Bank and Financial Accounts (FBAR).
While the co-chairs were not able to produce a comprehensive plan to overhaul the taxation of individual Americans living overseas within the time-constraints placed on the working group, the co-chairs urge the Chairman and Ranking Member to carefully consider the concerns articulated in the submissions moving forward
Ask therm to specifically make public the inclusion of RBT for US Expats
firstname.lastname@example.org. The deadline to respond is July 17, 2017.
Reps have Twitter and Facebook pages too !!!
Maybe review points made in Expat Survey
Expat voter turnout and the potential effect that it may have had on the outcome of a US presidential election.
The number of US expats around the world is larger than the combined populations of Washington D.C., plus the nine smallest US states
US expats surveyed do not feel their interests are fairly represented by the US government
Inclined to vote if a candidate had made a point to address their concerns
Do not feel they should be required to file US taxes while living abroad
MANY Citizens renouncing
The top three things that Americans living abroad would like to see addressed by the US government are:
1) The repeal of citizenship-based taxation
2) Simplification the tax filing process
3) An increase in the Foreign Earned Income Exclusion and other deductions/credits to lower tax burden
Honourable Orrin Hatch, Chairman, Senate Committee on Finance
2017 Tax Reform Submission. Thank you for this opportunity.
This letter is directed at your topic #4: updating the international tax system for INDIVIDUALS.
1. Shift to Territorial/Residence Based Taxation for individuals.
2. Repeal FATCA.
Both 1) and 2) are in the Republican Party Platform.
I reference the 2015 submissions to the Senate Finance Committee Bi-Partisan Workgroup on Tax Reform. In 2015 the committee did nothing with the submissions.
Of the 347 submissions to the International Taxation working group in 2015, 245 (71%) were about issues of concern to U.S. Persons living outside the USA, the rest related to corporate taxes. Listed here: http://fatca.eu.pn/
Of the 448 submissions to the Individual Taxation working group, 215 (48%) focused on taxation of US persons living outside the USA.
There are general aims of tax reform that cut across all the four areas you outline.
U.S. tax laws stipulate that U.S. Persons are considered U.S. residents for tax purposes no matter where in the world they live. This introduces double taxation. Persons tax resident in other countries already pay a fair share of tax as required by those countries.
Double taxation of Americans abroad is similar to this hypothetical situation: if a person who lived in New York State now moves to Texas and if New York still required taxation of this person as if they were still a resident of New York. In my opinion, most Americans would find such double taxation objectionable.
Tax treaties mitigate double taxation. However, they also guarantee double taxation on any additional tax, tax at a higher rate, tax under a different name, or tax at a lower threshold the U.S. has but not one’s country of residence. Australia for instance has a higher tax free threshold than the U.S. These areas of double taxation have been called tax treaty gaps.
The Foreign Earned Income Exclusion (FEIE) covers earned income. There are other types of income. If one lives for some time in another country they may acquire retirement funds and investments as part of building family financial security.
In Australia, the government mandates payment by employers to a retirement accounts called “superannuation.” IRS rules categorize a superannuation fund as a “nonqualified pension fund.” The U.S. tax laws do not allow credit for Australian tax paid on superannuation, while the Australian government does not allow credit for U.S. tax paid on superannuation as the accounts are Australian source. This is one example of double taxation guaranteed by the tax treaty, an example of a “tax treaty gap.”
When one lives overseas all accounts/assets may be local to this person yet penalized as “foreign” under the U.S. tax code. Persons living overseas must report accounts to the U.S. Financial Crimes Enforcement Unit as if under suspicion of being a criminal, and face potentially bankrupting fines for not reporting a form right even if no tax is owed.
Approximately 92% of the 9 million U.S. Persons overseas live in equal or higher taxing jurisdictions compared to the U.S. The U.S. tax code treats 100% of them as under suspicion of evading U.S. taxes. Such treatment should be reserved for U.S. residents with accounts in known tax havens.
Taxation without representation.
Americans learn of the phrase and injustice of “no taxation without representation” in the founding of America. U.S. Persons living overseas may vote yet their votes get diluted among the 50 states. They have no representation such as in the French Parliament from representatives only focusing on persons abroad. U.S. Persons overseas never would have consented to the double taxation.
In the American Revolutionary era Samuel Adams labelled British taxation of the Colonies as “tributary slavery.” Such a phrase suggests an arbitrary and one-way nature of the taxation.
Today the double taxation of U.S. Persons overseas may arguably be more egregious than what Samuel Adams referred to. When King George III ruled the Colonies there were services and protection of local property provided to the Colonists, while today the U.S. provides no U.S. resident services or protection of local property to U.S. persons living in other countries. Additionally the Colonists were not subject to compliance and tax from two different sovereigns.
Justification of Taxation.
I introduce Immanuel Kant who states that taxation is justified when it increases human autonomy with provision for survival needs (services) in exchange, or for the protection of property. The United States government provides no U.S. resident services (roads, unemployment, food stamps, etc.) to U.S. Persons overseas, nor does the U.S. government provide U.S. Persons overseas protection of local property (laws, police, courts, etc.). Services and protection are provided by the government of the country one is a tax resident of in exchange for the fair share of taxes paid. As the U.S. Government does not provide local services and local protection of property the U.S. claim of tax jurisdiction is not justified over U.S. persons tax resident in other countries.
The United States is an outlier in the world taxing based on citizenship instead of the international norm of taxation based on residency. The U.S. impedes the building of family financial security and of businesses through double taxation on U.S. Persons overseas. This burden is additional to what nationals in other countries face including expats from other countries.
It may be said that Russian citizenship offers more liberty than U.S. citizenship in regards to living in another country unshackled by double taxation. Sergey Brin of Google is not required to pay double tax to Russia or face tax cheat potentially bankrupting penalties for not reporting accounts right.
The overlay of the 76,000+ page U.S. tax code on top of the tax code of Australia or any other country is a sum greater than the complexity of the two codes considered separately then added together. There are different tax years, currencies, and types of taxes. The laws often conflict with the best tax breaks and incentives of one country often cancelled by the other.
For most Americans overseas the double taxation does not make sense and is unfathomable. Expensive tax assistance is often needed even for simple situations.
There should be establishment of this U.S. tax Payer Right: The Right to simple and easily understood taxes. There must be some check on Congress adding forms upon forms and taxes upon taxes.
Compliance Cost Minimization.
There should be establishment of this U.S. Tax Payer Right: The Right to compliance cost minimization.
All the additional forms for “foreign” accounts and earnings no better illustrate that the U.S. government has not considered or been checked by the expense and time required to comply with U.S. taxes. As most U.S. persons overseas receive tax credits, complying with U.S. tax becomes an expensive and time consuming exercise only really to the benefit of the compliance industry, as most people living overseas do not owe U.S. taxes.
Under a shift to Residence Based Taxation, once tax residency has been established in another country, and if there are no U.S. assets and income from U.S. source then there should be no reporting or forms, just like for nationals abroad from all other countries. U.S. Persons should then be taxed as non resident aliens.
Reducing the number of forms and taxes will benefit IRS administration.
Donald Trump in Warsaw recently highlighted the danger of “the steady creep of government bureaucracy that drains the vitality and wealth of the people. The West became great not because of paperwork and regulations but because people were allowed to chase their dreams and pursue their destinies.”
FATCA adds complexity, cost, and disadvantage for U.S. Persons overseas. FATCA is illustrative of the U.S. government’s insensitivity to inflicting compliance costs and consequences on U.S. Persons Overseas.
Republicans Overseas has a lawsuit that FATCA is unconstitutional on 7 claims. In Canada there is a lawsuit that the FATCA IGA violates the Canadian Charter of Rights (similar to U.S Bill of Rights) that prohibits discrimination based on national origin. In France legal action is brewing with the E.U. and France in regards to FATCA instigated bank discrimination against Accidental Americans.
While the FATCA IGAs require banks of the world not to discriminate against U.S. Persons as a result of FATCA compliance such discrimination has been widespread (especially in Europe) as banks fear bankrupting penalties if they miss reporting even one U.S. person account.
Democrats Abroad summarised some of the early impacts of FATCA on Americans Abroad in a research report titled: FATCA: Affecting Everyday Americans Every Day.
FATCA should be repealed, in my opinion, because of constitutional issues and the consequences on U.S. persons overseas from the threat of bankrupting fines on banks for noncompliance. If the U.S. wishes information on accounts overseas, the CRS is a way forward that focuses on reporting non-resident accounts.
Shift to Residence Based Taxation as revenue neutral.
I defer to the submission from Jacqueline Bugnion in regards to this area.
A shift to residence based taxation will encourage American based companies to send Americans to live overseas to expand trade, encourage U.S. companies overseas to hire U.S. persons as current policies disincentivizes hiring of Americans, encourage non-U.S. companies to hire and promote U.S. persons especially for positions that involve signature authority over bank accounts, and encourage talent from other countries to work in America without fear of double taxation should they return to their countries of origin.
Infringement of sovereignty of other nations.
In my opinion, the U.S. claim of double tax jurisdiction over tax residents of other countries disrespects the sovereignty of other nations. The U.S. has forced other nations to violate their public policies of residence based taxation when they have felt forced to submit to the U.S. claim of double taxation in their tax treaties with the U.S.
The double tax claim denies equal financial opportunities for citizens of other countries resident in those countries and represents, in my opinion, U.S. intervention into the internal affairs of other nations.
The infliction of by some estimates of $200+ billion FATCA compliance costs and U.S. extraterritorial law on the banks of the world, while reneging on promises of reciprocity of ‘like for like’ data, all may add to international misgivings for dealing with the U.S.
The current situation of double taxation of U.S. persons overseas is, in my opinion, Un-American and a situation that The Founding Fathers would not approve.
A U.S. shift to Residence Based Taxation and a repeal of FATCA will align U.S. taxation with American founding principles and the residence basis of taxation practiced by all other OECD countries. The disadvantage of U.S. citizenship overseas will be removed compared to nationals from other countries.
While Republicans are focused on the terminology of shift to “territorial taxation ” for companies, I hope that the Senate Finance Committee prepares legislation along these lines identical to the Residence Based Taxation for individuals as practiced by all other nations in the OECD. Companies should not be prioritised over “we the people.”
Thank you for your consideration.
Regards, Joe Citizen
The author consents to publication on the web and for reprint.
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Working hard Karen and Joe
Read some great submissions at
In the US Tax reform is on the agenda. If we have over 100K AU/US duals we should help out check out ” Let Washington Hear From You!”
1,759 published expatriates in Q2 2017 Federal Register list
Write to your representatives
Now is the time to write your US representatives about tax reform. Follow the links for suggested draft letters, or write your own. Please consider sending a copy to Republicans Overseas so they can deliver a large pile of letters to the White House at the beginning of October.
For more about the Territorial Tax for Individuals proposal – see the discussion on the Isaac Brock Society – http://isaacbrocksociety.ca/2017/09/12/call-to-action-from-republicans-overseas/ and on our wiki – https://wiki.fixthetaxtreaty.org/doku/doku.php?id=wiki:contents:us_tax:tax_reform
There’s a petition drive between now and 13 March 2018 to help convince Congress to act in 2018. Find out more here: https://www.facebook.com/groups/AmericanExpatriates/permalink/937719513060788/
Are you an American citizen with a small business that is classified by the IRS as a controlled foreign corporation (CFC)?
By now you should be aware of the repatriation/transition tax that was enacted as part of the 2017 tax reform. For US expat business owners this new tax amounts to a retroactive confiscation of capital.
Monte Silver has been actively opposing this new tax. He is asking all affected taxpayers to write to the US Treasury to object to certain aspects of the proposed regulations issued in August. Explanation and a template are available at http://www.americansabroadfortaxfairness.org/. (Internet archive version at https://web.archive.org/web/20180913212451/http://www.americansabroadfortaxfairness.org/)