Expat Relief Absent in New Tax Law, ACA Presses for Congressional Hearing

Tax challenges for “Accidental” Americans make the US news

Relief for U.S. citizen or Green Card holders living abroad was conspicuously absent in the new U.S. tax law — but American Citizens Abroad (ACA) is calling upon Congress to hold hearings in 2018 to address what many see as unfair tax burdens for U.S. expats.

After the new Republican Party-backed tax law offered no measures of much-hoped-for tax relief for overseas residents, ACA and other business groups representing expat taxpayers will continue to press for changes before a congressional committee, ACA said. These groups include Republicans Overseas, Democrats Abroad, Americans for Tax Reform, the Heritage Foundation, and different American Chambers of Commerce overseas.

“Now is the time to lay on the table every aspect of this subject,” said Marylouise Serrato, ACA’s executive director. “The background, the workings of existing law, the numbers, the real-life stories, all need to be aired, and now’s the time to do it. Then, based on all the information, everyone can come forward with their detailed proposals.”

The new law’s lack of provisions for overseas taxpayers followed statements by elected officials indicating they sought to address what observers say are unfair tax burdens on U.S. citizens and Green Card holders living abroad.

Before the bill was signed into law, Ways and Means Committee Republicans said they were discussing measures to end taxes on foreign earned income. Representative George Holding (R., N.C.) previously publicly advocated ending taxes on foreign-earned income and reportedly said he was optimistic the proposal would be part of the bill before it was signed into law. Holding noted how multinational companies are often reluctant to hire U.S. citizens because of the extra costs to do so. Republicans also discussed repealing the Foreign Account Tax Compliance Act (FACTA) last year as part of their part platform. However, both of these provisions were missing from the recently passed tax law.

ACA last year began to publicly advocate replacing citizenship-based taxation with residency-based taxation it described as a “middle-of-the-road or “vanilla” approach.

“The details of this approach are intended as a starting point for everyone’s thinking,” said Charles Bruce, ACA’s Legal Counsel. “It’s not a legislative proposal, as such, but it will help people who want
to dive into the subject.”

The move to a residency-based taxation system for expats would reflect tax codes in other countries in the “industrialized world,” Serrato said. “Individuals should not be left tied to an arcane
and burdensome tax system based on 19th century Civil War era tax policy,” Serrato said.