H.R. 5800 – To establish a commission to study how Federal laws and policies (except US Citizenship Taxation) affect United States citizens living in foreign countries

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The Readers Digest Version

Yes, this post is a bit long. If you don’t want to read it, here is the “Readers Digest” version in the form of a tweet:

Now, on to the explanation …

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Introduction

The attitude of the US Government (Congress and Administration) toward the US Government inflicted suffering of Americans abroad is:

“It’s not that they don’t care. It’s that they don’t care that they don’t care!”

This weekend Twitter was the forum for an extensive and lively discussion of three bills introduced by one or more members of the Americans Abroad Caucus. The Caucus is currently chaired by Rep. Carolyn Maloney (D-NY12), Rep. Maria Salazar (R-FL27) and Rep. Dina Titus (D-NV01). The purpose of the Caucus is described by AARO as:

The Americans Abroad Caucus is a group of legislators in the House of Representatives who, by joining, show they understand and care about their overseas constituents. They value the contribution to their district of these internationally-based citizens and understand the importance of overseas markets.

In other words (aspirational as this may be), the purpose of the Americans Abroad Caucus appears to be:

“A group of US legislators that cares about Americans abroad and care that they do care.”

Three Recent Bills From One Or More Members Of The Americans Abroad Caucus

The current (117th) Congress ends on December 15, 2022. At present three bills have been “introduced” by one or more members of the Americans Abroad Caucus. Regardless of intention, the bills:

– will not achieve what their titles suggest they are intended to achieve; and

– indicate that the drafters of the bills have little or no understanding of (1) the problems of Americans Abroad and (2) that those problems can be solved only by the severance of U.S. citizenship from the definition of U.S. tax residency.

The three bills are:

1. H.R. 5799 – “Overseas Americans Financial Access Act” – Congresswoman Maloney

Banking access is a problem for Americans abroad because the U.S. defines them as U.S. tax residents. If citizenship were severed from tax residency then Americans abroad would no longer have FATCA induced banking access problems. H.R. 5799 doesn’t even allude to this.

2. H.R. 6057 – “Tax Simplification For Americans Abroad Act” – Congressman Beyer

Double taxation, retirement planning and general living are problems for Americans abroad because the U.S. defines them as U.S. tax residents. If citizenship were severed from tax residency then Americans abroad would no longer have these problems. H.R. 6057 doesn’t recognize that citizenship taxation is the problem, does not suggest severing citizenship from tax residency and actually reinforces the relationship between citizenship and taxation.

H.R. 6057 maintains and reinforces US citizenship as a sufficient condition for US tax residency. It does NOT sever citizenship from tax residency.


3. H.R. 5800 – “Commission On American Citizens Living Abroad Act of 2021” – Mrs. Carolyn B. Maloney of New York (for herself, Ms. Salazar, Ms. Titus, and Mr. Beyer)

Commentators on Twitter and other social media platforms have suggested that the establishment of a Commission to understand the lives and discrimination suffered by Americans abroad is the most important of the three bills. One commentator describes it’s importance this way:

Yet (this is why it’s important to read these bills and not just talk about them) the bill disregards the problem of the US imposing worldwide taxation on U.S. citizens living overseas. It is important to understand what this bill actually says. It’s also important to understand why supporting this bill, as it is written, may be very damaging to Americans abroad.

To put it simply:

There is no evidence that the drafters of H.R. 5800 even think that the US taxation of overseas Americans is a problem. Read the bill yourself!

These bills are always full of pomp, circumstance, formal language and more. Let’s analyze the exact text of the bill in terms of two components:

First – The title of the bill and what it supposed to do …

SECTION 1. SHORT TITLE.

This Act may be cited as the “Commission on Americans Living Abroad Act of 2021”.

SEC. 2. ESTABLISHMENT.

There is established a commission to be known as the “Commission on Americans Living Abroad” (in this Act referred to as the “Commission”).

Okay, so the purpose is to create a commission to study the lives of Americans Living Abroad. At face value, this appears to be a reasonable step forward. After all, how/why should Congress make changes if they don’t understand the problem? So, far so good …

Second – What are the things that the Commission is directed to study?

SEC. 4. DUTIES.

(a) Study.—

(1) IN GENERAL.—The Commission shall conduct a study on how Federal laws and policies affect United States citizens living in foreign countries, including civilians and members of the Armed Forces.

JR Commentary – Yes, this seems like a good idea. It is a general statement, in the nature of a platitude. It speaks of studying “laws” and “policies”.

(2) MATTERS STUDIED.—The matters studied shall include the following:

JR Commentary – These are the matters that MUST be included. Anything else is clearly optional and not important enough to merit the “MUST” study list. Watch carefully and see what is NOT included in “MUST” study the list!

(A) Federal financial reporting requirements for a United States citizen living in a foreign country, including the requirements under section 5314 of title 31, United States Code.

JR Commentary – This is about FBAR.

(B) Federal policies and requirements that affect the ability of a United States citizen living in a foreign country to access foreign and domestic financial institutions, including requirements under chapter 4 of the Internal Revenue Code of 1986 (commonly known as the “Foreign Account Tax Compliance Act”) and requirements affecting financial institutions imposed by the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA Patriot Act) (Public Law 107–56).

JR Commentary – This is about FATCA.

(C) Federal requirements for a spouse, child, or another family member of a United States citizen living in a foreign country who is not a United States citizen to become a United States citizen.

JR Commentary – This is about the rules for the acquisition of US citizenship.

(D) The ability of a United States citizen living in a foreign country to vote in Federal, State, and local elections in the United States, and the process for such a citizen to vote in such elections.

JR Commentary – This is about voting rights.

(E) The processes by which a United States citizen living in a foreign country interacts with Federal programs such as Social Security and Medicare.

JR Commentary – This is about claiming US government benefits generally and Social Security and Medicare specifically.

(F) Which Federal agencies have jurisdiction over each Federal program that serves United States citizens who live in foreign countries and possible methods to improve the collaboration of and coordination between such Federal agencies.

JR Commentary – Improving the regulatory environment that governs Americans abroad.

H.R. 5800 – “The Commission On Americans Living Abroad Act of 2021” is underinclusive. The taxation of Americans abroad (in principle and in practice) is excluded from the specific list of matters that MUST be studied under the Act. Yet US citizenship taxation is the source of ALL problems experienced by Americans abroad.

A combined reading of H.R. 6057, H.R. 5799 and H.R. 5800 make it clear that the Americans Abroad Caucus does NOT view the US taxation of Americans abroad as – the “original sin” – the problem from which all other problems follow.

I hate (really) to continue to be “the heavy” who points out what these proposed laws actually say. I do appreciate the work of all individuals working to end the nightmare of US citizenship for Americans abroad. But, the time has come to agree that there is ONLY one solution to this problem that will:

– solve the problems of all people, all the time and under all circumstances

– that will not play favourites (providing relief to some and not others).

That one solution is:

The US must sever citizenship from the definition of tax residency!!

Notice I am NOT saying the solution is residence-based taxation (RBT). Different people have different definitions of what RBT means. In most cases (for example Beyer Bill 6057) US citizenship is NOT severed from tax residency.

My personal view is that Bill 5800, by not including the US taxation of Americans abroad in their “MUST” study list, assumes the continuation of US citizenship taxation.

Each of Bills H.R. 5800, H.R. 6057 and H.R. 5799 need massive improvements.

So, what should be done? The first step is to establish agreement that (as explained by SEAT member Karen Alpert) the objective is severing citizenship from tax residency. Without an agreement on this objective no solution is possible.

If you are a US citizen abroad who cares about your future, cares about your family and cares about your country of residence, you should think very carefully before voting for a party or candidate who is NOT committed to severing citizenship from tax residency!

John Richardson – Follow me on Twitter @Expatriationlaw

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H.R. 5800 – The Full Text

https://www.congress.gov/bill/117th-congress/house-bill/5800/text?r=7&s=1

Shown Here:
Introduced in House (11/01/2021)

117th CONGRESS
1st Session
H. R. 5800

To establish a commission to study how Federal laws and policies affect United States citizens living in foreign countries.

IN THE HOUSE OF REPRESENTATIVES
November 1, 2021
Mrs. Carolyn B. Maloney of New York (for herself, Ms. Salazar, Ms. Titus, and Mr. Beyer) introduced the following bill; which was referred to the Committee on Oversight and Reform, and in addition to the Committees on Financial Services, Ways and Means, the Judiciary, House Administration, and Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL
To establish a commission to study how Federal laws and policies affect United States citizens living in foreign countries.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the “Commission on Americans Living Abroad Act of 2021”.

SEC. 2. ESTABLISHMENT.

There is established a commission to be known as the “Commission on Americans Living Abroad” (in this Act referred to as the “Commission”).

SEC. 3. MEMBERSHIP.

(a) Number And Appointment.—The Commission shall be composed of 10 members appointed by the President, of whom—

(1) two members shall be appointed from among individuals recommended by the Speaker of the House of Representatives;

(2) two members shall be appointed from among individuals recommended by the minority leader of the House of Representatives;

(3) two members shall be appointed from among individuals recommended by the majority leader of the Senate; and

(4) two members shall be appointed from among individuals recommended by the minority leader of the Senate.

(b) Qualifications.—

(1) LIMIT ON OFFICERS OR EMPLOYEES OF THE UNITED STATES.—Not more than 6 members shall be officers or employees of the United States.

(2) POLITICAL PARTY AFFILIATION.—Not more than 6 members of the Commission may be of the same political party.

(3) EXPERTISE.—

(A) OFFICERS OR EMPLOYEES OF THE UNITED STATES.—Members of the Commission who are officers or employees of the United States shall be appointed from among individuals whose employment is directly related to the matters to be studied by the Commission under section 4(a)(2).

(B) OTHER MEMBERS.—Members of the Commission who are not officers or employees of the United States shall be appointed from among individuals who—

(i) have lived in a foreign country for not less than one year;

(ii) are members of organizations that represent United States citizens living in foreign countries; or

(iii) have other experience that is relevant to the matters to be studied by the Commission under section 4(a)(2).

(c) Period Of Appointment; Vacancies.—Members shall be appointed for the life of the Commission. Any vacancy in the Commission shall be filled in the same manner in which the original appointment was made. Any vacancy in the Commission shall not affect its powers.

(d) First Meeting.—Not later than 60 days after the date on which all members of the Commission have been appointed, the Commission shall hold its first meeting.

(e) Meetings.—The Commission shall meet at the call of the Chairperson.

(f) Quorum.—A majority of the members of the Commission shall constitute a quorum, but a lesser number of members may hold hearings.

(g) Chairperson.—The President shall select a Chairperson for the Commission from among its members.

SEC. 4. DUTIES.

(a) Study.—

(1) IN GENERAL.—The Commission shall conduct a study on how Federal laws and policies affect United States citizens living in foreign countries, including civilians and members of the Armed Forces.

(2) MATTERS STUDIED.—The matters studied shall include the following:

(A) Federal financial reporting requirements for a United States citizen living in a foreign country, including the requirements under section 5314 of title 31, United States Code.

(B) Federal policies and requirements that affect the ability of a United States citizen living in a foreign country to access foreign and domestic financial institutions, including requirements under chapter 4 of the Internal Revenue Code of 1986 (commonly known as the “Foreign Account Tax Compliance Act”) and requirements affecting financial institutions imposed by the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA Patriot Act) (Public Law 107–56).

(C) Federal requirements for a spouse, child, or another family member of a United States citizen living in a foreign country who is not a United States citizen to become a United States citizen.

(D) The ability of a United States citizen living in a foreign country to vote in Federal, State, and local elections in the United States, and the process for such a citizen to vote in such elections.

(E) The processes by which a United States citizen living in a foreign country interacts with Federal programs such as Social Security and Medicare.

(F) Which Federal agencies have jurisdiction over each Federal program that serves United States citizens who live in foreign countries and possible methods to improve the collaboration of and coordination between such Federal agencies.

(b) Consultation With Outside Organizations.—In conducting the study under subsection (a), the Commission shall consult with organizations that represent United States citizens living in foreign countries.

(c) Reports.—

(1) INITIAL REPORT.—Not later than one year after the date of enactment of this Act, the Commission shall submit a report to the President, Congress, and the head of any Federal agency identified in subsection (a)(2)(F), which shall contain a detailed statement of the findings and conclusions of the Commission, together with its recommendations for such legislative and administrative actions as it considers appropriate.

(2) UPDATE.—Not later than one year after the date on which the Commission submits the report under paragraph (1), the Commission shall submit an update to the President, Congress, and the head of any Federal agency identified in subsection (a)(2)(F), which shall describe any administrative actions taken by the head of any Federal agency pursuant to the recommendations in such report.

SEC. 5. POWERS OF THE COMMISSION.

(a) Hearings And Sessions.—The Commission may, for the purpose of carrying out this Act, hold hearings, sit and act at times and places, take testimony, and receive evidence as the Commission considers appropriate.

(b) Powers Of Members And Agents.—Any member or agent of the Commission may, if authorized by the Commission, take any action which the Commission is authorized to take by this section.

(c) Obtaining Official Data.—Subject to section 6103 of the Internal Revenue Code of 1986, the Commission may secure directly from any Federal department or agency such information as the Commission considers necessary to carry out this Act. Upon request of the Chairperson of the Commission, the head of such department or agency shall furnish such information to the Commission.

(d) Mails.—The Commission may use the United States mails in the same manner and under the same conditions as other departments and agencies of the United States.

SEC. 6. COMMISSION PERSONNEL MATTERS.

(a) Compensation Of Members.—Each member of the Commission who is not an officer or employee of the United States shall be compensated at a rate equal to the daily equivalent of the annual rate of basic pay prescribed for level IV of the Executive Schedule under section 5315 of title 5, United States Code, for each day (including travel time) during which such member is engaged in the performance of the duties of the Commission. All members of the Commission who are officers or employees of the United States shall serve without compensation in addition to that received for their services as officers or employees of the United States.

(b) Travel Expenses.—The members of the Commission shall be allowed travel expenses, including per diem in lieu of subsistence, at rates authorized for employees of agencies under subchapter I of chapter 57 of title 5, United States Code, while away from their homes or regular places of business in the performance of services for the Commission.

(c) Staff.—

(1) IN GENERAL.—The Chairperson of the Commission may, without regard to the civil service laws and regulations, appoint and terminate an executive director and such other additional personnel as may be necessary to enable the Commission to perform its duties. The employment of an executive director shall be subject to confirmation by the Commission.

(2) COMPENSATION.—The Chairperson of the Commission may fix the compensation of the executive director and other personnel without regard to chapter 51 and subchapter III of chapter 53 of title 5, United States Code, relating to classification of positions and General Schedule pay rates, except that the rate of pay for the executive director and other personnel may not exceed the rate payable for level V of the Executive Schedule under section 5316 of such title.

(d) Detail Of Government Employees.—Any United States employee may be detailed to the Commission without reimbursement, and such detail shall be without interruption or loss of civil service status or privilege.

(e) Procurement Of Temporary And Intermittent Services.—The Chairperson of the Commission may procure temporary and intermittent services under section 3109(b) of title 5, United States Code, at rates for individuals that do not exceed the daily equivalent of the annual rate of basic pay prescribed for level V of the Executive Schedule under section 5316 of such title.

SEC. 7. FEDERAL AGENCY RESPONSE.

Not later than 180 days after the date on which the Commission submits the report under section 4(c)(1), the head of any Federal agency that is affected by a recommendation in such report shall submit to the President, Congress, and the Commission a response to such recommendation, including any plans to take administrative action pursuant to such recommendation.

SEC. 8. TERMINATION.

The Commission shall terminate on the date on which it submits its update under section 4(c)(2).

SEC. 9. AUTHORIZATION OF APPROPRIATIONS.

There is authorized to be appropriated $2,000,000 for each of fiscal years 2022 and 2023 to the Commission to carry out this Act, to remain available until the termination of the Commission.

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