The worldwide system of US tax continues to give expat Americans heartburn.

American Citizens Abroad and a fellow group speaking for expat US persons, has urged the US government to lift certain tax filing and reporting requirements, saying many people can’t afford the bills.

ACA and sister organization American Citizens Abroad Global Foundation, which are bi-partisan groups, have written to Treasury officials asking for reliefs on the requirements in the recently enacted Tax Cuts and Jobs Act (TCJA). The package slashed US corporate taxes, doubled exemptions on estate taxes, capped reliefs on federal taxes from local and state taxes, among other measures. As is often the case, new details continue to emerge. 

“For thousands of Americans abroad these new provisions create a compliance nightmare and an overwhelming majority of them will not be able to comply within the time deadlines of April 15, 2018,” the groups said. 

The groups worry that American individuals residing abroad who have a reportable interest in a controlled foreign corporation will be hit. The so-called “transition” tax will affect such expats, due with their 2017 filing and many will not be able to pay it, the groups said

An expat citizen who owns a business through a controlled foreign corporation must calculate if that corporation has accumulated earnings and profits as of November 2, 2017; if so, they must calculate those earnings.

“There is no de minimis rule, which might save the day for many taxpayers having small businesses operating through what for US tax purposes is a corporation. There should be. The new rules call for reporting which, frankly, for many American individuals living abroad is nigh-on impossible,” ACA legal counsel Charles Bruce said.

ACA argues that the US must adopt residency-based taxation to solve such issues, an approach used by most countries that tax people on the basis of where they live, not on a worldwide basis.

The group has already criticised the US Foreign Account Taxation Compliance Act, enacted in 2010, which is designed to hunt expat US citizens thought to be dodging taxes. The effect of FATCA has been to encourage some lenders such as Deutsche Bank and HSBC to cease offering service to expats. Americans abroad continue to struggle in some cases to obtain access to financial services.