The Section 965 ” Transition Tax” today

Oct 24, 2018 | FATCA, IRS - Internal Revenue Service, Uncategorized, US Tax Return 1040 / 1040NR | 0 comments

Yesterday, October 22, American Citizens Abroad, Inc. presented oral testimony at the public hearing held by the IRS and Treasury Department, “Guidance Regarding the Transition Tax Under Section 965 and Related Provisions (Ref-104266-18)”.

ACA has gone on record twice in 2018, submitting written comments to the Treasury Department, on the effects that the Transition Tax and GILTI provisions of the Tax Cuts and Jobs Act (TCJA) have on Americans living and working overseas.

At yesterday’s hearing, ACA Executive Director, Marylouise Serrato highlighted the fact that in drafting the regulations for the Section 965 regime, Treasury did not consider the effect of these regulations on Americans living and working overseas.  “Treasury Department, in our view, is not well informed about the situation of Americans abroad.  These regulations, in the eyes of tens of thousands of individuals living overseas, are maddeningly cavalier,” said Serrato.

ACA is requesting that Treasury insert a de minimis rule in the regulations.  ACA believes that by doing so the Treasury will remove from the Section 965 regime most Americans overseas affected by the law.

ACA also noted that the Treasury Department has not done its due diligence in determining how small entities will be affected by the law.  The Treasury is required under the Regulatory Flexibility Act (RFA) to evaluate the economic impact of proposed regulations on small entities, including small entities abroad.

“Treasury is not truly in touch with the reality of Americans abroad.  Foreign corporations owned by Americans abroad exist in abundance. They are an everyday fact of life,” added Serrato.

ACA believes that it is fundamentally wrong for the Treasury Department to write regulations without knowing who is affected, and to what extent, as this goes against the fundamental requirements of the RFA.

Are you affected by the “Transition Tax”?

Just in case that you do not know how the Transition Tax might affect you and your SL in Spain, we have an article on the Need to Know section of our website on this issue.


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