@SEATNow_org Submission to @SenFinance: Closing the Tax Gap: Lost Revenue from Noncompliance and the Role of Offshore Tax Evasion

On May 11, 2021, the Senate Finance Committee held a hearing titled: “Closing the Tax Gap: Lost Revenue from Noncompliance and the Role of Offshore Tax Evasion

You can read SEAT’s all of SEAT’s submissions, including the submission for the May 11, 2021 hearing here.

Senator Whitehouse concluded the May 11, 2021 hearing with following words:

“…. we need to continue to work on FATCA compliance. It’s too bad that we couldn’t put an extra “T” on it. Then it would say FATCAT which would be such an appropriate acronym for it.”

Yes, he really said that!

It’s pretty clear that the conduct of the Senate Finance Committee, with respect to Americans abroad continues to be malicious (and most probably willful).

In this (SEAT’s fifth submission) we closed with the observation and request that:

Part D: The Senate Finance Committee Must Include Witnesses with Knowledge Of How FATCA and Citizenship Taxation Impact Americans Abroad

The Internal Revenue Code establishes three distinct US tax regimes:

1. Non-resident Alien Tax Regime: Taxation on US source income only

2. Tax Regime for US Residents: Taxation of US residents on worldwide income (regardless of citizenship)

3. Extraterritorial Tax Regime: Taxation of the worldwide income, mostly non-US source income of individuals who are US citizens, who do not live in the United States and are tax residents of other countries. This is a separate and more punitive tax regime than that imposed on US citizens living inside the United States. To put it simply: The extraterritorial tax regime is based on citizenship regardless of economic or physical connection to the United States.

Some – including the Committee witness Professor Gamage – refer to the extraterritorial tax regime as “citizenship-based taxation”.

Every Senate Finance Committee Hearing has focused ONLY on the US Tax Regime for US Residents! The simple fact is that the United States is also operating an Extraterritorial tax regime which is applied to Americans abroad. The impact of tax reform on individuals subject to that Extraterritorial tax regime must be considered. SEAT respectfully requests that:

1. There be a special Senate Finance Hearing for the sole purpose of providing evidence of how tax reform would impact Americans abroad; and

2. SEAT should be included as participants in that hearing

SEAT continues to work very hard to get the message from Americans abroad directly to the Senate Finance Committee.

We do need your help. Please help us help you by making your own submissions as well!

John Richardson

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