US Expats Demand Tax Reforms

ACA (American Citizens Abroad), is pushing congress for a new Expat tax system

London, UK (Pryce Warner International) February 21st, 2012 – As part of their efforts to achieve this ACA recently met with congressional staff to negotiate a new residence-based tax system for US Expats.

The current form of tax for US Expats is citizenship-based, which ACA is pushing to change along with other reforms that they believe would help increase America’s competitiveness.

Other reforms the ACA are pushing for include; eliminating the cap on foreign earned income, allowing overseas residents to use the currency of their residence as their functional currency and allow foreign net wealth taxes to be creditable against the equivalent US taxes.

Jackie Bugnion, ACA Senior Director, commented: “There is already a strong movement in Congress to shift corporate taxation from worldwide to residence-based taxation in order to level the playing field for U.S. companies competing in the world economy…Following the same logic, I met with Members of Congress to convince them that the U.S. should make this move for individuals as well, to allow Americans to compete on that same level playing field.”

Another reform ACA is pushing for is the repeal of the Foreign Account Tax Compliance Act (FACTA). The ACA argue that FACTA’s reporting requirements on the holdings of US Expats in foreign banks are too severe. They argue that this problem is compounded by the fact that the IRS has yet to fully state the regulations relating to these requirements.

However, IRS Commissioner Doug Schulman, commented: “Last week we put out detailed regulations for implementation of FATCA—with the goal of achieving the policy goals of the legislation by focusing on the accounts with the highest risk of non-compliance, and trying to minimise burden. For instance, we piggy-backed on know-your-customer rules for most of the due diligence that needs to be performed on existing accounts, delayed difficult withholding provisions for a minimum of five years while implementing the core withholding provisions sooner, and allowed global financial institutions to avoid withholding even if all their affiliates could not meet the strict requirements of participation from day one.”

Despite this, the ACA state that they are determined to repeal the reporting requirements of FACTA and continue to lobby congress to ensure a fair deal for US Expats around the world.

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By Aneil Fatania
Financial Editor
Pryce Warner International Group
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