AARO in Action

A collation of members representing AARO, ACA, FAWCO and AmCham MENA (Middle East North Africa), along with representatives from the Overseas Domestic Violence Center, convened in Washington DC during the week of April 11th for the annual Overseas Americans Week.

During the week representatives met with over 85 offices of Congressmen and Senators, along with key agencies and committees such as the Joint Committee on Taxation, the IRS and Treasury, the State Department and the GAO (Government Accountability Office).

A taxation roundtable discussion was held on Tuesday April 12th in the library of the House Ways &Means Committee Room, the Congressional committee charged with all tax policy, where representatives from the New American Foundation, National Taxpayer Advocate, House Committee on Ways and Means, White Lighthouse Investment Management, NTU (National Taxpayers Union) and AmCham MENA, spoke about the need for tax policy that empowers Americans living and working overseas.

A reception was also held on Tuesday, April 12th for the Americans Abroad Caucus and representative Carolyn Maloney attended and spoke to the group about her commitment to the issues affecting Americans living and working overseas. Thursday evening, April 14th a reception at the law offices of Baker Botts was held where Under Secretary of State for Economic, Energy, and Agricultural Affairs, Robert D. Hormats spoke and echoed the importance of having Americans "on the ground" overseas as key to US vital interests in business and export strategy.

In our meetings, major focus was put on the restricted access to banking services due to Patriot Act misinterpretation and the upcoming FATCA legislation. Our groups made legislators aware of the problem by demonstrating with our testimonials the breadth and depth of the issue. The Americans Abroad Caucus, currently chaired by Carolyn Maloney has promised action on this issue.

Another issue that was key in meetings with the offices was removing the cap on the FEIE and advocating for a move towards territorial taxation for overseas Americans. Congressman Scott Garrett of New Jersey has drafted legislation asking for the removal on the cap to FEIE and many of the offices we visited were positively disposed to co-signing the legislation. Our groups will be following up with Congressman Garrett's offices and Carolyn Maloney's offices on this. Once a number of bi-partisan co-sponsors have signed onto the bill, it will be formally introduced in the House Ways and Means Committee with the ultimate objective of having the bill incorporated as part of comprehensive tax reform legislation.

Our groups also highlighted what we have determined to be abusive penalty assessment and treatment of individuals who have gone back and filed latent FBAR reports. Penalty assessment for failure to file and or for non-willful errors were designed to catch criminal tax evaders however, ordinary citizens who have simply made errors of oversight or were badly advised are finding themselves faced with onerous penalties and financial ruin because of this.

IRS and Treasury are aware of the issue however they have no mechanism to correct the problem. Post-OAW our groups are looking for legislative avenues to correct this and have addressed the issue with the GAO and the Committee for Government Oversight. All groups continue to urge individuals who have experiences problems with FBAR, taxation, FATCA and banking access to continue to provide their testimonials through the ACA website as it was clear in our meeting in Washington that these are necessary for advancing the issue.

In our meeting with IRS and Treasury, the issue of foreign capital flight from US securities was raised as was the general problem of reduction of banking access for Americans living and working overseas, making it near to impossible for Americans to compete on a equal footing with foreign nationals for global jobs. Our groups raised the issue of a functional currency for Americans living and working overseas and this was positively received and we will be following up with Treasury on this. One positive development out of the Treasury meeting was their agreement to assign a specific individual in the agency who could act as Congressional liaison on overseas Americans issue.

In our meeting with the Joint Committee of Taxation it was noted that overall tax reform is on the table for the US this year and certainly elements of the tax code relating to Americans filing from overseas will be investigated. Our groups stressed the importance of not classifying the FEIE as a tax expenditure as this was a misnomer. Although not sympathetic to the overall double taxation issue the problem of phantom gains due to currency fluctuations was identified as a problem that could be addressed with a legislative fix. It was acknowledged that this issue was an inequity and needed a correction. Similarly the treatment of foreign pensions was recognized as a source of inequity requiring adaptation of the law.

Our groups met with the Government Accountability Office (GAO) and made a direct request for an update to their initial report from 1979/1980 (President's Export Council) where they investigated the importance of maintaining mitigating tax policy (FEIE) for Americans living and working overseas. Current studies are being conducted by the GAO with regards to the FATCA legislation and our groups will be working to request more in depth analysis from those in the legislature who have requested these studies.

Our groups met with many of the new Freshmen members of Congress and educated them on the issues facing overseas Americans and urged them to join the Americans Abroad Caucus. The groups highlighted not only the banking and taxation issues but issues of citizenship, voting, Medicare and Social Security.

A meeting with the State Department was held on Friday April 15th. A major issue of concern for our groups was the inclusion of more information on the passport forms and the sharing of this information with other departments of the US government, specifically the IRS and Treasury. The State Department gave assurances that they are consistently working to reduce the level of information requested and stressed that passport information is not widely shared with other US government agencies.