Category Archives: Big Beautiful Bill

The New “Seniors” $6000 Deduction Is NOT Available to “Married” U.S. Citizens Living In Canada Unless They File Jointly

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Summary:

In countries where – as per the tax treaty – the U.S. does not have taxing rights to U.S. Social Security and “Social Security Like” equivalents, the standard deduction coupled with the new $6000 bonus $12000 if married and filing jointly) may exclude large numbers of Americans abroad from actually having to pay U.S. tax. My initial reaction is that it will NOT have any impact on the requirement to file a U.S. tax return.

Of particular relevance to Americans abroad (who if married are more likely to use the “married filing separately” category) is that:

If one is married, one MUST file jointly in order to be eligible for this benefit. 71013 of the “Big Beautiful Bill” includes:

v) Married individuals.–If the taxpayer is a married individual (within the meaning of section 7703), this subparagraph shall apply only if the taxpayer and the taxpayer’s spouse file a joint return for the taxable year.

Although it is obvious why this provision is included, it is a negative for Americans abroad who are more likely to use the “married filing separately” category. To put it simply:

If you are an American abroad who is married you benefit from this provision ONLY if you file jointly with your spouse.

Part I – Possible payment of U.s. tax

1. The $6000 is per person ($12000 for a married couple filing jointly) and is an additional deduction from income. (Not available for those who file “married filing separately”!)

2. In Canada: U.S. Social Security, Canada Pension Plan, OAS and certain other pensions are taxed ONLY by Canada. See the U.S./Canada tax treaty – Article XVIII

3. This means that a U.S. citizen living in Canada who is a “Senior” effectively has (explained by the AARP as follows):

Does it replace the existing extra standard deduction for people 65 and older?

No. The new deduction is in addition to the existing extra standard deduction for people age 65-plus. For the 2025 tax year, that’s $2,000 for single taxpayers and $1,600 per qualifying spouse for married couples filing jointly.

As a result, the new $6,000 deduction is stacked on top of both the regular standard deduction — $15,750 for single filers or $31,500 for married couples filing jointly in 2025 — and the 65-plus addition.For instance, a 65-year-old single taxpayer who qualifies for the full $6,000 deduction would be able to deduct a total of $23,750 from these three tax breaks on their 2025 tax return. A qualifying 65-year-old couple could deduct up to $46,700.

What if I’m itemizing?

You can claim the new deduction regardless of whether you itemize your taxes or claim the standard deduction.

If you itemize, you stack the new deduction on top of your itemized deductions. Let’s say you’re single, 65 years old, eligible for the full $6,000 deduction and have $40,000 of itemized deductions. If you have no other deductions, you can lower your taxable income by a total of $46,000.

Bottom line: For $23,750 USD is the deduction from income. This is approximately $32,585.13 CDN (as of today’s exchange rate). Again, this means that a U.S. citizen living in Canada would have to have $32,585.12 (at today’s exchange rates) to have taxable income in the United States.

Benefit: This could really simplify the tax filing because:

– Neither form 2555 nor the FTC 1116 forms might not need to be filed

– meaning the return could conceivably be as simple as: 1040, Schedule B, Form 8333 (possibly) Form 8938, and FBAR. (Depending on your activities other forms might be still be required: Form 8621, Form 5471, etc.

You might be able to file yourself!!


Part II – Who is required to file a U.S. tax return?

According to HR Block (July of 2025):

Do I have to file taxes? Minimum income to file taxes

When it comes to filing, the following taxable income thresholds determine whether you should file a federal return depending on your filing status.

Single filing status:
$14,600 if under age 65
$16,550 if age 65 or older
Married Filing Jointly:
$29,200 if both spouses are under age 65
$30,750 if one spouse is under age 65 and one is age 65 or older
$32,300 if both spouses are age 65 or older
Married Filing Separately — $5 regardless of age
Head of Household:
$21,900 if under age 65
$23,850 if age 65 or older
Qualifying Surviving Spouse:
$29,200 if under age 65
$30,750 if age 65 or older

Some odds and ends:

1. if you are “self-employed” and have more than $400 of income then you are required to file.

2. Note that if your are “married filing separately” you are required to file if your income hits the $5 threshold.

https://www.hrblock.com/tax-center/income/other-income/how-much-do-you-have-to-make-to-file-taxes/

John Richardson – Follow me on X.com/expatriationlaw

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Appendices Generally show that the $6000 is a deduction that is:

1. Separate from the standard deduction; and

2. Is applied in addition to either the standard deduction or itemized deduction

Appendix A – Internal Revenue Code 63 – The Role Of The Standard Deduction

26 U.S. Code § 63 – Taxable income defined

(a) In general

Except as provided in subsection (b), for purposes of this subtitle, the term “taxable income” means gross income minus the deductions allowed by this chapter (other than the standard deduction).

(b) Individuals who do not itemize their deductions In the case of an individual who does not elect to itemize his deductions for the taxable year, for purposes of this subtitle, the term “taxable income” means adjusted gross income, minus—

(1) the standard deduction,

(2) the deduction for personal exemptions provided in section 151,

(3) any deduction provided in section 199A, and
(4) the deduction provided in section 170(p).
(c) Standard deduction For purposes of this subtitle—
(1) In general Except as otherwise provided in this subsection, the term “standard deduction” means the sum of—
(A) the basic standard deduction, and
(B) the additional standard deduction.
(2) Basic standard deduction For purposes of paragraph (1), the basic standard deduction is—
(A) 200 percent of the dollar amount in effect under subparagraph (C) for the taxable year in the case of—
(i) a joint return, or
(ii) a surviving spouse (as defined in section 2(a)),
(B) $4,400 in the case of a head of household (as defined in section 2(b)), or
(C) $3,000 in any other case.

https://www.law.cornell.edu/uscode/text/26/63

JR Commentary: The “standard deduction” is different from this new deduction for Seniors

Appendix B – Internal Revenue Code 151 – Additional Personal Deductions

26 U.S. Code § 151 – Allowance of deductions for personal exemptions

(a) Allowance of deductions

In the case of an individual, the exemptions provided by this section shall be allowed as deductions in computing taxable income.
(b) Taxpayer and spouse

An exemption of the exemption amount for the taxpayer; and an additional exemption of the exemption amount for the spouse of the taxpayer if a joint return is not made by the taxpayer and his spouse, and if the spouse, for the calendar year in which the taxable year of the taxpayer begins, has no gross income and is not the dependent of another taxpayer.
(c) Additional exemption for dependents

An exemption of the exemption amount for each individual who is a dependent (as defined in section 152) of the taxpayer for the taxable year.
(d) Exemption amount For purposes of this section—
(1) In general

Except as otherwise provided in this subsection, the term “exemption amount” means $2,000.
(2) Exemption amount disallowed in case of certain dependents

In the case of an individual with respect to whom a deduction under this section is allowable to another taxpayer for a taxable year beginning in the calendar year in which the individual’s taxable year begins, the exemption amount applicable to such individual for such individual’s taxable year shall be zero.
(3) Phaseout
(A) In general

In the case of any taxpayer whose adjusted gross income for the taxable year exceeds the applicable amount in effect under section 68(b), the exemption amount shall be reduced by the applicable percentage.
(B) Applicable percentage

For purposes of subparagraph (A), the term “applicable percentage” means 2 percentage points for each $2,500 (or fraction thereof) by which the taxpayer’s adjusted gross income for the taxable year exceeds the applicable amount in effect under section 68(b). In the case of a married individual filing a separate return, the preceding sentence shall be applied by substituting “$1,250” for “$2,500”. In no event shall the applicable percentage exceed 100 percent.
(C) Coordination with other provisions

The provisions of this paragraph shall not apply for purposes of determining whether a deduction under this section with respect to any individual is allowable to another taxpayer for any taxable year.
(4) Inflation adjustment Except as provided in paragraph (5), in the case of any taxable year beginning in a calendar year after 1989, the dollar amount contained in paragraph (1) shall be increased by an amount equal to—
(A) such dollar amount, multiplied by
(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, by substituting “calendar year 1988” for “calendar year 2016” in subparagraph (A)(ii) thereof.

(5) Special rules for taxable years 2018 through 2025In the case of a taxable year beginning after December 31, 2017, and before January 1, 2026—
(A) Exemption amount

The term “exemption amount” means zero.
(B) References

For purposes of any other provision of this title, the reduction of the exemption amount to zero under subparagraph (A) shall not be taken into account in determining whether a deduction is allowed or allowable, or whether a taxpayer is entitled to a deduction, under this section.

(e) Identifying information required

No exemption shall be allowed under this section with respect to any individual unless the TIN of such individual is included on the return claiming the exemption.

https://www.law.cornell.edu/uscode/text/26/151

Appendix C – Relevant Text Of The OBBB

SEC. 70103. TERMINATION OF DEDUCTION FOR PERSONAL EXEMPTIONS OTHER THAN
TEMPORARY SENIOR DEDUCTION.
(a) In General.–Section 151(d)(5) is amended–
(1) by striking “2018 through 2025” in the heading and
inserting “beginning after 2017”,
(2) by striking “, and before January 1, 2026”, and
(3) by adding at the end the following new subparagraph:

(C) Deduction for seniors.–
“(i) In general.–In the case of a taxable year
beginning before January 1, 2029, there shall be allowed a
deduction in an amount equal to $6,000 for each qualified
individual with respect to the taxpayer.
“(ii) Qualified individual.–For purposes of clause
(i), the term `qualified individual’ means–

“(I) the taxpayer, if the taxpayer has attained
age 65 before the close of the taxable year, and
“(II) in the case of a joint return, the
taxpayer’s spouse, if such spouse has attained age 65
before the close of the taxable year.

“(iii) Limitation based on modified adjusted gross
income.–

“(I) In general.–In the case of any taxpayer for
any taxable year, the $6,000 amount in clause (i) shall
be reduced (but not below zero) by 6 percent of so much
of the taxpayer’s modified adjusted gross income as
exceeds $75,000 ($150,000 in the case of a joint
return).
“(II) Modified adjusted gross income.–For
purposes of this clause, the term `modified adjusted
gross income’ means the adjusted gross income of the
taxpayer for the taxable year increased by any amount
excluded from gross income under section 911, 931, or
933.

“(iv) Social security number required.–

“(I) In general.–Clause (i) shall not apply with
respect to a qualified individual unless the taxpayer
includes such qualified individual’s social security
number on the return of tax for the taxable year.
“(II) Social security number.–For purposes of
subclause (I), the term `social security number’ has
the meaning given such term in section 24(h)(7).

“(v) Married individuals.–If the taxpayer is a
married individual (within the meaning of section 7703),
this subparagraph shall apply only if the taxpayer and the
taxpayer’s spouse file a joint return for the taxable
year.”.

https://www.congress.gov/bill/119th-congress/house-bill/1/text

PLAW-119publ21

Update: 899 Penalty Tax Will NOT Go Forward – Secretary Bessent Claims Mission Accomplished!

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Prologue

I have been following the discussion about the “Big Beautiful Bill” and written blog posts about the proposed IRC S. 899 Tax titled:

“Enforcement Of Remedies Against Unfair Taxes”

The blog posts are here:

Take YOUR Money And Run: Understanding The Proposed § 899. ENFORCEMENT OF REMEDIES AGAINST UNFAIR FOREIGN TAXES

http://citizenshipsolutions.ca/2025/05/20/take-your-money-and-run-understanding-the-proposed-%C2%A7-899-enforcement-of-remedies-against-unfair-foreign-taxes/

The Proposed S. 899 Penalty Tax On U.S. Source Income And The Decision To Renounce U.S. Citizenship

https://citizenshipsolutions.ca/2025/06/25/the-proposed-s-899-penalty-tax-on-u-s-source-income-and-the-decision-to-renounce-u-s-citizenship/

UPDATE – June 26, 2025

It now appears that the S. 899 tax will NOT be included in the “Big Beautiful Bill”.

An early indicator of this decision came from Zorka Milin here:

This was followed by a general announcenent from Secretary Bessent here:

Senator Crapo here:

Representative Smith here:

Good commentary here:

I will add more later.

John Richardson – Follow me on X.com @ExpatriationLaw

The Proposed S. 899 Penalty Tax On U.S. Source Income And The Decision To Renounce U.S. Citizenship

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Update – June 27, 2025 – The 899 Penalty Tax has been removed from the “Big Beautiful Bill”:

Introduction – It’s The American (A)Way

The United States tax system is designed to impose punitive tax, reporting and penalties on the non-U.S. income and assets of Americans abroad. Nonresident aliens (those who are neither U.S. citizens nor residents) are taxable ONLY on their U.S. source income.

This reality has driven many U.S. citizens (living abroad) to renounce U.S. citizenship. It has also caused many Green Card holders to abandon their green cards. This is the consequence of U.S. citizenship-based taxation – a system that defines tax residency in terms of one’s citizenship (one may not reside in one’s country of citizenship) – regardless of one’s actual residence. (Green Card holders are deemed to be U.S. tax residents regardless of their residence.)

The United States taxes ALL U.S. source income regardless of the recipient of the income. Therefore, the practical impact of citizenship taxation is to impose U.S. taxation on the non-U.S. source income of individuals who do NOT reside in the United States. To put this in visual terms:

A person born in the United States, with no U.S. source income, is subject to U.S. tax, reporting and penalties on income received from the country where that individual lives.

A Summary Of How Different People Are Subject To U.S. Taxation

1. The United States taxes ALL individuals – regardless of citizenship or residence – on U.S. Source income.

2. The United States taxes its RESIDENTS – regardless of citizenship – on worldwide income.

3. The United States taxes U.S. citizens – regardless of residence – on worldwide income. The United States is the only major country that taxes its citizens on their worldwide income when they do not live in the country.

4. The United States taxes nonresident aliens (those who are neither citizens nor residents) on U.S. source income.

The 2025 “Big Beautiful Bill” proposes a new S. 899 of the Internal Revenue Code. This new section would impose a more punitive U.S. tax regime on the U.S. source income, received by some, but not all, nonresident aliens. The more punitive regime would be imposed on nonresident aliens who are tax residents of countries that are described as “offending foreign countries”. “Offending foreign countries” are countries that the U.S. deems to impose unfair taxes on U.S. corporations or persons. To be clear, the tax paid imposed on the individual, would be based on the tax policies of the country where the individual is resident for tax purposes!

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Senate Finance Committee Response To The “Remittance tax” Proposed In The “Big Beautiful Bill”

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The Senate Finance Committee has responded to the “Big Beautiful Bill”. It has made changes to the “remittance tax” as originally proposed.

Here is how I interpret the Senate proposed rules for the remittance tax found on page 388 of the Senate Bill:

https://www.finance.senate.gov/imo/media/doc/finance_committee_legislative_text_title_vii.pdf

1. General rule of 3.5% tax on remittance transfers for all people all day, every day.

2. Transfers which are funded by WITHDRAWALS from bank/brokerage accounts listed in 5312(a) of the Bank Secrecy Act are excluded (this solves the problem of most people). It means that this applies to Western Union (and others), etc (who may not continue in this business).

3. If cash, check, etc. is PROVIDED for the transfer then the 3.5% tax applies even if it is a commercial bank listed in 5312(a) that is facilitating the remittance.

4. Those who do/did pay the 3.5% remittance tax, who have a Social Security Number, can get some kind of tax credit. (This appears to be an attempt to make it more expensive for “some” undocumented people to send funds home.)

5. The Senate proposal describes the credit as refundable (“REFUNDABLE INCOME TAX CREDIT ALLOWED TO INDIVIDUALS WITH WORK-ELIGIBLE SOCIAL SECURITY”) . Yet, the actual proposed legislation describes it as ONLY a credit against tax – ‘‘SEC. 36C. CREDIT FOR EXCISE TAX ON REMITTANCE TRANSFERS BY INDIVIDUALS WITH WORK ELIGIBLE SOCIAL SECURITY NUMBERS.” So, it is NOT clear that this is to be a “refundable tax credit”. In addition, the language of the proposed legislation is ambiguous.

6. The ambiguity described in “5” above is illuminated and reinforced by the actual proposed language which reads:

‘‘(a) IN GENERAL.—In the case of any individual, there shall be allowed as a credit against the tax imposed by this subtitle for any taxable year an amount equal to the aggregate amount of taxes paid by such individual under section 4475 during such taxable year.”

A plain reading suggests:

– it is NOT clear whether the credit is refundable

– it is NOT clear whether the credit is available if no tax is actually owed

(This can (I think) be interpreted to mean that if no tax is actually imposed that the credit is not available.)

All of this can be fixed. But, I don’t think that the proposed legislative language is clear.

John Richardson – Follow me on X.com @Expatriationlaw

A #GILTI Carveout For INDIVIDUAL CFC Shareholders Of Certain Virgin Islands Corps

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Introduction and purpose:

The Big Beautiful Bill (“BBB”) Contains many surprises. Yesterday, I wrote a first post about a section of the BBB that addressed the application of the GILTI rules.

GILTI, Americans Abroad And SEC. 111110 Of The Big Beautiful Bill: The Good, The Bad And The Ugly

That post was largely based on an interesting expose in the Washington Post. This called attention to the fact that a provision in the BBB appears to provide a GILTI carveout to a U.S. C Corp. That expose failed to mention that the same section of the BBB also created an ongoing carveout for individual shareholders of Virgin Islands CFCs that appear to be “service oriented” businesses. So that the implications of this are clear, I will put it this way:

The BBB creates an opportunity for “United States Shareholders” of Controlled Foreign Corporations who are INDIVIDUALS – regardless of where they live in the world – to avoid the GILTI tax on certain kinds of income. Interestingly, U.S. citizens living abroad are still required to pay GILTI on the service oriented CFCs in their country of residence. There comes a certain point (we are well past it) where there should be an acknowledgement (even from the tax compliance community) that the U.S. tax system is deserving of nothing more than scorn and ridicule. It’s quite obvious that the “service businesses” owned by U.S. citizens abroad are exactly the same kinds of businesses that are based in the Virgin Islands and owned by U.S. residents.

Unpacking the proposed legislation

“(i) Qualified virgin islands services income.–The term `qualified Virgin Islands services income’ means any gross income which satisfies all of the following requirements:

“(I) Such gross income is compensation for labor or personal services performed in the Virgin
Islands by a corporation formed under the laws of the Virgin Islands.

“(II) Such gross income is attributable to services performed from within the Virgin Islands by
individuals for the benefit of such corporation.

“(III) Such gross income is effectively connected with the conduct of a trade or business within the Virgin Islands.

“(ii) Specified united states shareholder.–The term `specified United States shareholder’ means any United States shareholder which is–

“(I) an individual, trust, or estate, or

“(II) a closely held C corporation (as defined in section 469(j)(1)) if such corporation acquired its direct or indirect equity interest in the foreign corporation which derived the qualified Virgin Islands services income before December 31, 2023.

“(iii) Regulations.–The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out this subparagraph and subparagraph (A)(i)(VI), including regulations or other guidance to prevent the abuse of such subparagraphs.”.

What does this mean? What would be an example of a CFC that would qualify?

Let’s break this down. Imagine a tax preparation firm owned by a resident of the State of New York. Let’s imagine that he incorporates a Virgin Islands Corporation. The U.S. resident is the sole shareholder. The Virgin Islands Corporation is clearly a CFC. The purpose of the corporation is to provide tax preparation services for Americans abroad. He names the business “Virgin Islands Tax Prep”.

He then visits the Virgin Islands for the purpose of hiring and training individuals who are residents of the Virgin Islands. He trains them in the art of U.S. tax return preparation (including GILTI), forms and penalty abatement. They are being trained for the purpose of being employed by “Virgin Islands Tax Prep”.

The business is a spectacular success. Let’s consider whether “Virgin Islands Tax Prep” qualifies for the GILTI carveout.

Again, here are the rules:

“(i) Qualified virgin islands services income.–The term `qualified Virgin Islands services income’ means any gross income which satisfies all of the following requirements:

“(I) Such gross income is compensation for labor or personal services performed in the Virgin
Islands by a corporation formed under the laws of the Virgin Islands.

JR Commentary: Clearly “Virgin Islands Tax Prep” is formed under the laws of the Virgin Islands. The gross income of the company is solely payment for the labor and personal services required to file U.S. Expat Tax Returns.

“(II) Such gross income is attributable to services performed from within the Virgin Islands by
individuals for the benefit of such corporation.

JR Commentary: The whole purpose of going to the Virgin Islands to hire and train tax preparation employees is to prepare tax returns in the Virgin Islands for the benefit of “Virgin Islands Tax Prep”.

“(III) Such gross income is effectively connected with the conduct of a trade or business within the Virgin Islands.

JR Commentary: Obviously the gross income is compensation for services performed by a Virgin Islands company from inside the Virgin Islands.

Notice also that competitors of “Virgin Islands Tax Prep” in any other part of the world will pay the GILTI tax.

Now, close your eyes and substitute for “Virgin Islands Tax Prep” any other kind of service business. Also, reflect on the fact that Americans broad will pay GILTI tax on CFC service income in their country of residence. But, U.S. residents can avoid the GILTI tax by incorporating a company in the Virgin Islands.

My point:

The services businesses of CFCs located ANYWHERE should be exempt from GILTI!

Why is the Virgin Islands the only “Possession” that receives this benefit?

John Richardson – Follow me on X.com @Expatriationlaw

GILTI, Americans Abroad And SEC. 111110 Of The Big Beautiful Bill: The Good, The Bad And The Ugly

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Introduction and purpose

GILTI – found in IRC 951A – is one of the most problematic manifestations of U.S. citizenship taxation. It has caused huge compliance problems and costs for Americans abroad. The costs are composed of (1) the compliance costs of Form 5471 and (2) the possibility of the payment of U.S. taxes. All businesses understand that taxes are a cost of running a business. GILTI has imposed costs on the businesses run by Americans abroad that citizens of other countries do not have.

To put it simply:

As explained in the following short video done with Republicans Overseas Tax, GILTI imposes costs on U.S. citizens that citizens of other countries do not have.

Unsurprisingly, organizations representing Americans abroad have (independently of efforts to end citizenship taxation) worked to achieve relief from GILTI for Americans abroad. ACA (“American Citizens Abroad”) has consistently argued that Americans abroad should be exempt from the 2017 TCJA Transition Tax and GILTI provisions. For example:

“ACA continues its advocacy for the application of a de minimis ruling that would take out from the Transition Tax and GILTI regimes small businesses run by US citizens living and working overseas.”

https://www.americansabroad.org/tcja_and_gilti_regimes_us_businesses_overseas

The “Big Beautiful Bill” does NOT include any direct relief targeted for Americans abroad. Nevertheless, the “Big Beautiful Bill” includes some provisions that may be helpful to individual shareholders of CFCs (that include Americans abroad).

The purpose of this post is to identify three respects in which the Big Beautiful Bill impacts Americans abroad. I will refer to them as:

1. The Good – By extending the tax cuts, the GILTI income exclusion will remain at 50% and not be increased to 66 2/3% (as IRC 250 and the 2017 TCJA would require). This is relief for ALL shareholders of CFCs which therefore includes Americans abroad.

2. The Bad – Certain kinds of CFCs – with individual U.S. citizen shareholders – carrying on business in the U.S. Virgin Islands will have their income excluded from the GILTI inclusion. The Virgin Islands are a U.S. territory. There is no comparable provision for:

(a) U.S. citizens running small business corporations in foreign countries; or

(b) U.S. citizens running small business corporations in other U.S. territories

This is bad because it reflects an indifference to the special problems of Americans abroad.

For commentary see the following X.com thread …

3. The Ugly – Some (but not all) CFCs with C corporation shareholders are apparently receiving a “carveout” from GILTI inclusionsl The carveout is for certain kinds of income earned in the U.S. Virgin Islands. Washington Post reporter Jeffrey Stein suggests that this is the result of paid lobbying and not a conclusion based on sound tax policy. This allows for the inference that the application of U.S. tax laws, depends on your ability to “buy” the legislation you want.

For commentary, see the following X.com threads …

The “Big Beautiful Bill” And The Obfuscation Of What The Change Means

Changes to tax laws often appear in large Omnibus bills. Omnibus bills make it easier to hide the changes in tax laws. The ability to hide change is magnified in two ways.

First – Burying The Proposed Change In A Section That Appears To Describe Completely Unrelated Issues

The GILTI changes appear in SEC. 111110 Of The Big Beautiful Bill. Interestingly, SEC. 111110 appears under the following heading:

Part 2–Additional Tax Relief for American Families and Workers

It is quite obvious that the proposed GILTI changes have NOTHING to do with “Additional Tax Relief For American Families and Workers”.

Second – by including in the legislation ONLY the change in the language of the statute.

The language is meaningless without taking the time to go to the original legislation and parse the changes.

Therefore, in the following Appendixes, I have identified the text of the changes and incorporated those changes into the original legislation. This will allow (if you are interested) to see what the legislation will look like after the proposed changes are implemented.

Specifically:

Appendix A – Identifies the relevant text in the Big Beautiful Bill

Appendix B – Identifies the existing legislation (IRC 951A)

Appendix C – Incorporates Appendix A into Appendix B which results in the identification of what 951A (the GILTI rules) would be AFTER the changes proposed in SEC. 111110 of the Big Beautiful Bill

John Richardson – Follow me on X.com @ExpatriationLaw

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Take YOUR Money And Run: Understanding The Proposed § 899. ENFORCEMENT OF REMEDIES AGAINST UNFAIR FOREIGN TAXES

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Update – June 27, 2025 – The 899 Penalty Tax has been removed from the “Big Beautiful Bill”:

Update – June 22, 2025:

The Senate version of the Big Beautiful has been released. The full text is here:

https://www.finance.senate.gov/imo/media/doc/finance_committee_legislative_text_title_vii.pdf

In general, the Senate version retains the substance and principles of the House version.

The Senate version begins on page 138.

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Attention (At Least) Residents Of Countries With DSTs (“Digital Services Tax):

The Trump administration’s “Big Beautiful Bill” includes a provision to impose punitive taxes on nonresident aliens, with U.S. source income, who are residents of countries that have “Digital Services Taxes” (and other taxes applying to U.S. persons that they deem to be unfair).

This is “pretty rich” coming from the one country in the world that through it’s “citizenship tax” regime imposes taxation on the non-U.S. source income of received by people who don’t live in the United States!

At present the following countries (including Canada) impose DSTs. Note that the imposition of certain kinds of taxes (in addition to DSTs) may subject individual nonresident aliens to punitive taxation.

Generally, the law would impose, in addition to the existing U.S. tax, an additional tax, ranging from an additional 5% to an additional 20%.

Bottom Line:

Nonresident aliens who hold U.S. securities, U.S. real estate or have income that is effectively connected to the United States (“ECI”) may want to consider liquidating these investments.

My initial reaction and analysis suggests that Canadian residents will be particularly impacted by this measure. I will update this post as necessary and appropriate. Nevertheless:

“To Be FORMWarned Is To Be FORMArmed!”

This will not effect immediately. You have time to ponder this and understand it. This will not take effect immediately.

To understand the reasons, tax and general methodology for this conclusion, read on …

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