New Bill Allows U.S. Expats to Be Taxed as ‘Non-Residents’

According to recent estimates, more than 5 million U.S. citizens are currently living abroad.

More than 5 million U.S. citizens live abroad, LaHood said, including “both Americans that were born and raised in the United States but have since moved abroad indefinitely, as well as ‘accidental Americans,’ or individuals who hold dual citizenship in the United States and a foreign country but are unaware of their status as U.S. citizens.”

LaHood worked closely with Tax Fairness for Americans Abroad (TFFAA) in the drafting of the bill.

Brandon Mitchener, executive director of Tax Fairness for Americans Abroad, said the group looks forward to working with LaHood “to collect feedback on this non-partisan approach and to help advance the bill to the president’s desk next year.” LaHood is hopeful the bill can be considered in a reconciliation package next year.

The bill “could easily be folded into tax reform efforts next year,” Jeff Bush of The Washington Update said in an email.

For purposes of Foreign Account Tax Compliance Act (FATCA) only, a non-resident American would be able to apply to the IRS for a certificate of non-residency to use with foreign financial institutions.

“By allowing the non-resident American to establish that he or she is not a ‘specific United States person,’ foreign financial institutions would not be required to undertake burdensome reporting requirements under FATCA, which frequently discourage them from offering banking services to Americans living and working abroad,” LaHood stated.

The non-resident American “would be exempt from certain reporting requirements (and substantial associated penalties) with respect to foreign assets and transactions, including Foreign Bank and Financial Accounts Reports (FBAR).”