Residence Based Coalition requesting a hearing on taxation of Americans overseas

3 min
Published on: 18-07-2022 Last modified on: 31-01-2024

The Residence Based Coalition send a letter to the members of the House of Representatives requesting a hearing on the taxation of Americans living abroad.

Residence Based Coalition

The Residence-Based Taxation Coalition (RBT Coalition) is a consortium of organizations and businesses which support the enactment of Residence-based taxation (RBT) in place of the current system of Citizenship-based taxation (CBT). 

RBT requesting a hearing on taxation of Americans abroad

The RBT Coalition wrote to request that the House Ways & Means Committee or the Subcommittee on Select Revenue Measures, hold a hearing on taxation of Americans abroad, related tax and compliance issues, and, more specifically, three bills dealing with these subjects.

These bills are Congressman Beyer’s “Tax Simplification for Americans Abroad Act (H.R.6057)” and Congresswoman Maloney’s two pieces of legislation, “Commission on Americans Living Overseas Act (H.R.5800)” and the “Overseas Americans Financial Access Act (H.R.5799)”.

Citizenship-based taxation

The United States taxes worldwide income, foreign as well as domestic income, based on citizenship. This is commonly called Citizenship-based taxation (CBT). Residence-based taxation (RBT) taxes individuals based on where income is earned. RBT would not tax Americans truly residing outside the US on their foreign income. They would remain taxable on US income. The United States’ system of taxation based upon citizenship is unique in the world.

The Residence-Based Coalition is nonpartisan. It does not advocate for a particular approach to drafting RBT. It leaves it to Congress to develop detailed provisions. It simply advocates for a change in the general approach. Individual members of the RBT Coalition will have their own ideas on the details.

With a hearing, all the relevant issues could be laid on the table and all the interested parties could be heard. The Joint Committee on Taxation and Treasury Department could present information on the history of the tax treatment of Americans abroad, the workings of the various existing statutory and treaty rules, the population and characteristics of American taxpayers residing outside the US, and other critical subjects.

Americans residing abroad, and their businesses, could tell their stories and describe the problems they experience. The many problems of complying with existing income and reporting rules could be explored.

Congress with the 2017 Tax Cuts and Jobs Act addressed the subject of taxation of foreign income for corporations. Taxation of American citizens living abroad deals with many of the same issues for individuals. Individuals have largely been ignored in the past. A hearing would quite usefully direct attention to them.

The Residence Based Coalition:

Americans Overseas

We, the founders of Americans Overseas, were born in the Netherlands and obtained our American nationality through our (American) mother.

When we heard about the US tax system for the first time around 2013, we were in total disbelief (it can’t be true!), anger (how can they do this?), fear (am I going to get fined or pick up other problems?), and panic (what should I do?). It is (unfortunately) true that there is an additional American tax levy. But there’s no information from the local government, and when approached, the consulate referred us to the IRS, and the IRS was impenetrable.

That’s why we started this initiative to help people from all over the world by providing accurate information about the US tax system to avoid unnecessary panic, and offering help free of obligation and free of charge. If needed, we have a network of affordable professionals (accountants) who can help you with your tax obligations.

If you have more questions about the taxation of Americans living abroad, you can contact us at Americans Overseas.

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Understanding the US tax system, the obligations, and all the additional terms can be difficult. Especially if one lives outside of America. Is your question not answered? Contact us.

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