GENEVA, SWITZERLAND – There’s a better way for the IRS, the US tax office, to collect money, a group of US citizens says, noting that it is “alarmed and vexed” at costly and cumbersome Fatca legislation the US is enacting. Its suggestions were unveiled Saturday in London.
American Citizens Abroad (ACA), based in Geneva but representing Americans worldwide, says the new proposal offers “a different, but far simpler approach to taxing Americans overseas – one which could actually increase total tax receipts from Americans overseas.”
The ACA proposal “would replace the current citizenship-based taxation with residence-based taxation, under which American residents overseas would pay taxes on a basis very similar to that applied to non-resident aliens, with US-source income withheld at source. This would align US tax policy with that of virtually every other country on the planet. In addition, ACA calculates that implementing the new proposal would dramatically improve tax receipts to the US Treasury and improve the US export picture”, the group says in a statement issued 8 December.
British-based attorney Geoffrey Morson outlined ACA’s proposal at the IBC International Withholding Tax Summit in London. Morson is a tax litigator and international tax planning specialist experienced in the IRS programme, Offshore Voluntary Disclosure Initiative. “Both ACA and I as a tax professional obviously advocate the most stringent observance of the tax laws. Nevertheless, it is important that the double taxation and double filing issues be addressed so that overseas Americans can compete on a level playing field and sell US products to foreign buyers.”
Morson views current law as an export killer, says ACA. “It is unrealistic to hope for a world-class export economy when your tax system is telling the people needed to sell your products that they should pack up their laptops, throw in the towel and just come home.”
“Since 91% of the tax filings submitted by overseas Americans result in no tax due, adoption of our proposal would permit a far more efficient use of both IRS and taxpayer resources”, noted Jackie Bugnion, ACA’s Tax Team Director. “Our tax code makes Americans too expensive to hire, so US and foreign firms understandably replace them with qualified professionals from other countries without income tax, FBAR or FATCA filing requirements and the immense legal and financial jeopardy they entail. How can you work effectively when FATCA prevents you from opening a bank account?”