Hi Fellow Americans small business owners:
Below is a summary of the advocacy effort since June 2018, and a description of the road ahead. Most of what follows was written with the Transition tax in mind. HOWEVER ONE CAN NO LONGER FAIL TO DISCUSS GILTI!!
1. Vast numbers of American small businesses are now annually subject to the draconian GILTI tax. This in addition to the Transition tax filing and payment obligations we have.
2. If that is not bad enough, GILTI treats us individual US Shareholders of CFCs FAR FAR worse compared to the Googles and Apples of the world.
3. In essence, under the GILTI law and proposed regulations, even if a small business owner and its US tax professional fully understood GILTI, such person would conclude that even after implementing costly advanced tax solutions, annually, they often would (i) not avoid double taxation under GILTI, and/or (ii) be able to fully comply with GILTI and remain in business.
Here is a summary of past activities.
Part 1 – from June 4 till the present
On June 4, due to our efforts, the Treasury granted small businesses with less than $1M in transition tax liability a one year extension to make the first payment of the tax. Since that time my focus has been to secure small businesses – both U.S. and foreign based - permanent relief from the two taxes. As set forth below, the attempt to resolve the exposure of American small businesses (abroad and in the US) to the Transition tax and GILTI by friendly dialogue appears to have fallen on deaf ears.
Congress-facing activity: In June 2018 I met with senior staff of 37 members of the Senate Finance Committee and House Ways and Means, and engaged in extensive follow up. One Senator's office was kind enough to produce a draft bill to exempt small businesses from the Transition tax. However, that office made clear that there was no support for the relief among any members of the Senate Finance Committee he talked to. In my opinion, Congress will not grant small businesses any relief from these taxes. Furthermore, due to political stalemate between the parties, there will be no any correction bills to the tax legislation in the lame duck session at all.
However, with the Democrats taking control of the House, they control and chair the House Government Oversight committee, whose job is to investigate Trump-Administration abuses. This can include investigating the Treasury for its abuses in our case. See americansabroadfortaxfairness.org for details about this and what you can do to help. .
Treasury-facing activity: In August 2018, Treasury issued proposed regulations for the Transition tax. In October 2018, Treasury issued proposed regulations for the GILTI tax. After investing hundreds of hours reviewing these proposed regulations, researching various procedural laws and talking to relevant US legal experts, I conclude as follows: in issuing these proposed regulations, Treasury seriously violated at least 3 federal procedural laws – (i) the Regulatory Flexibility Act (RFA), which expressly gives Treasury the authority to exempt small businesses from the Transition & GILTI taxes; (ii) the American Procedure Act (APA) and the Paperwork Reduction Act (PRA). These violations give small businesses the specific authority to sue Treasury in a relatively expedited proceeding, and the courts have the specific power under these laws to provide small businesses effective relief.
Since August, I have repeatedly sent Treasury Secretary Mnuchin and senior officials at Treasury/IRS and other agencies well-thought-out analysis citing clear-cut Congressional reports, legislative history and case law all supporting my claims. I asked that a compromise be reached in order to put the Transition tax matter to rest. But Treasury simply ignored my analysis, or at best simply concluded without any explanation that these laws did not apply to the proposed Transition-tax regulations, At this point, and based on clear written and oral feedback from senior government officials, I have concluded that Treasury will not grant relief in the Transition tax regs.
Part 2 – Next steps
1.Advocacy - what you can do. Go to americansabroadfortaxfairness.org for details.
2. Litigation. A lawsuit against Treasury/IRS to get the court to provide small businesses relief from these two taxes. I have every intention to immediately file the Transition tax lawsuit once the Final Regulations are published. A separate lawsuit as to GILTI may be required.
3. Donations/Contributions: Contributions to the cause are very important. The contributions go directly to paying the legal fees associated with filing and pursuing the lawsuit/s. Donations can be made via
(i) by credit card to https://secure.lawpay.com/pages/silverandco/operating
(iii) via a wire to a bank account. For details, wire firstname.lastname@example.org
All donations will be kept confidential.
Together we have achieved two wins from Treasury and brought broad awareness to our cause. I have every intention of continuing the battle and winning. Together (and only together) we can do it.
Under Federal and State law, this message may constitute a solicitation. Also, nothing herein constitutes legal advice or should be relied on
In addition, the terms that clarify Monte Silver's personal tax advocacy efforts, whether or not related to fundraising activity, are set forth at in the description section at www.facebook.com/groups/americansmallbusinesses. I urge you to read the terms and contact me if you have questions.