The tax cut bill passed last week by Congress was originally scheduled to "cut" the Section 911 foreign earned income exclusion as well, thus increasing taxes for overseas Americans. American Citizens Abroad rallied with other groups representing Americans at home as well as abroad and firms who post American workers overseas, including the National Foreign Trade Council and the American Business Council of the Gulf Countries, in a campaign which led to elimination of the threat.

USA Today summarized: "Americans abroad became the targets of tax writers when the Senate tried to cut taxes by more than $350 billion, a limit demanded by moderate Republicans. To lower the net total, Senate leaders added some tax increases. The largest, worth more than $32 billion over 10 years, would have jettisoned the break that permits Americans overseas to exclude up to $80,000 in annual income from U.S. taxes ($160,000 for couples)."

David Hamod, a Washington-based consultant and long-time supporter of overseas Americans, was quoted by the IHT as saying he "was astounded by the way Americans overseas responded." Emails from concerned citizens abroad were a factor in overcoming the challenge.

ACA's Andy Sundberg, who gave an early alert of the threat to eliminate Section 911, cautions that Americans working abroad are a potentially "easy" source of funds for a Congress in need of funds. "We can expect to see further challenges to Seciton 911 in the next years," he said. "We must not lose our ability to react instantly and firmly when such challenges appear."

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Registering to vote will become easier using the new Secure Electronic Registration and Voting Experiment (SERVE). Starting 1 January 2004 it will be possible for absentee Uniformed Services personnel, their dependents and overseas citizens from participating states to use SERVE to register and vote in 2004. Meanwhile, you can still register and request your ballot using the FPCA postcard available at US consulates and local US citizens groups around the world. See the FVAP website for more details.

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In NU 115 we pointed out that retired AF Colonel "Bud" Day was awaiting a decision from the Federal District Appeals Court, Washington, D.C. Well, on 18 November 2002, in a highly anticipated, but astonishing decision, one that could have far-reaching financial implications for millions of military retirees, the U.S. Court of Appeals for the Federal Circuit, Washington, D.C. ruled that Military Retirees have no legal standing and the U.S. government is not liable to provide lifetime, government funded medical care to those servicemen and women who served their country honorably for 20+ years. (See ruling at www.fedcir.gov case 99-1402)

Retired Air Force Colonel "Bud" Day submitted a petition for a Writ of Certiorari to the U.S. Supreme Court which was placed on the court docket Feb. 24, 2003, #02-1226. Response from the government and supporting amicus briefs were due on March 26, 2003.

The Class Act Group has received three Amicus Curiae briefs in support of Colonel Days petition. For those of us that don't understand legalese, these are submissions that make a case in support of Colonel Day and request the court to decide in Col Day's favor. Those organizations filing Amicus briefs are: West Point Class of 1959, DAV, et al; and Military Officers Association of America. In the legal brief submitted by the Counsel for the Military Officers Association of America (MOAA). This quote's reference to the court is referring to the Federal District Appeals Court that ruled against Colonel Day on 18 November 2002.

Quote: "In stark contrast to what our military is doing for us, and what petitioners and their counterparts have done for us in the past, the court has sanctioned the government's immoral and ignoble breach of it's promise to World War II and Korean War military retirees. Indeed, the government's conduct in this matter is nothing short of a national disgrace-in the face of a moral and factual obligation to honor it's commitments, rather than live up to it's promises it has searched for ways to avoid them. It is indeed a sad commentary that the government's response to this problem has been to send out it's best and brightest, not to fix the problem, but instead to defend the government's factually and morally indefensible actions. With the stroke of a pen, this or the past administration could have averted this travesty. But instead, petitioners and their counterparts, including survivors of those killed in action, those wounded or maimed in combat or those held for years and tortured in prisoner-of-war camps, have been met with an arsenal of Justice Department lawyers concocting reasons why the government does not have to honor it's word." Unquote.

We must now wait for the US Supreme Court to make a decision. We don't know the amount of time the court needs but can only guess several weeks/months.

(Note: This case does not affect TRICARE-for-Life in any way.)

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As we promised in NU 127, if any reader was able to provide us with information on how to obtain a list of what is considered hazardous material for airline transport, we would mention that person's name and information provided in this issue of the NU. Well, thanks to Mr. David Sanders who hails from Belgium, we now have a website to offer you should you desire to obtain such a listing. The web site provided by Mr. Sanders is < www.alaska.faa.gov/ancfsdo > in the Appendix marked E "list of suspicious cargo and baggage" in the table of contents but marked F in the appendix itself (may no longer be available on this site). Dave also points out that the problem seems to be that the hazard level is not based on the material, but also how it is packed and other factors, therefore personnel need to investigate and make judgments. Thanks for the information, Mr. Sanders.

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Reader John S. Hayduska informs us that: "US citizens living in Germany who are receiving US Social Security should be aware that those benefits are not subject to US income taxes. The tax treaty between the United States and Germany specifically states that US Social Security will not be taxed by the government of the United States if the individual is a US citizen and a resident of Germany. Section 6 of Publication 54 lists the countries that have Tax Treaties with the United States. IRS Form 8833 documents the exemption."

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Following are excerpts from an article on the above subject written by Ken Nakamura, American Foreign Service Association (AFSA) Director for Congressional Relations:

In general, Federal employees and Federal annuitants pay an average share of 29 percent for federal health premiums and the federal government picks up the other 71 percent. However, since October 2000, the actual impact of the share has differed between active duty employees and retired annuitants. The difference is that employees can pay their 29 percent in pretax dollars while annuitants cannot. The Office of Personnel Management calculates that being able to lower the taxable income by what is paid in health premiums saves the average active-duty employee about $434 a year. While often thought of as strictly a retiree issue, it is very much an active duty issue also. For Foreign Service members, who generally retire much earlier than Civil Service personnel, the real costs of premiums go up through the loss of the tax break for a longer period of time, when real income levels go down through retirement. The real increase in costs also hit well before other options like enrolling in Medicare with a switch to a less expensive secondary payer become possible, so generally members of the Foreign Service have to bear the higher premium costs without options.

Premium conversion has become the Washington short hand term for the benefit that makes it possible to reduce one's taxable income by the amount paid for health care premiums. This benefit is embodied in Section 125 of the Internal Revenue Code and it applies to employees in both the public and private sectors. Basically, it allows employers to permit their employees to pay for health insurance with wages excluded from both income and social security payroll taxes. Unfortunately, the tax code does not authorize annuitants to avail themselves of the premium conversion benefit.

In October 2000, President Clinton took advantage of Section 125 of the Internal Revenue Code and offered by Executive Order the premium conversion to federal employees. His Executive Order did not cover federal annuitants because he did not believe he had the necessary authority based upon the Tax Code. Thus currently neither private sector nor public sector annuitants have the premium conversion benefit.

Congressman Tom Davis (R-VA) introduced H.R. 1231 and Senator John Warner (R-VA) introduced an identical bill, S.623, in the Senate. These bills are targeted specifically at federal and military annuitants, have 190 cosponsors in the House and 23 cosponsors in the Senate respectively. The National Association of Retired Federal Employees (NARFE) with its 400,000 members has been the lead organization in efforts to change the law. American Foreign Service Association (AFSA) with just over 3,000 retiree member have been supportive of this effort and helps where we can. What is new, however, is that the inclusion of the military's TRICARE program, the Military Officer's Association of America (MOAA) has weighed in supporting these bills. MOAA brings an additional 400,000 members nationwide to the table.

H.R. 1231 and S. 623 seek to amend Section 125 of the Tax Code by specifically addressing the concerns of the military and Federal employees. The political difficulty is that it is anticipated that there would be a huge demand from the private sector seeking the same Premium Conversion benefit. That is where the cost - a multi-billion dollar impact on federal revenues - comes in. This large potential impact on federal revenues dissuades many lawmakers from supporting this legislation.

Despite these obstacles, NARFE, MOAA, AFSA and the other federal employee organizations continue to work together to seek the necessary change in law. We agree with Chairman Davis when he said that the proposal is the right thing to do, a way to recognize the importance of public service, and "an inequity that ought to be rectified." Members, especially retirees, who wish to write to their congressional delegation supporting this legislation are urged to do so.

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Those of you living in and around Geneva may wish to attend ACA's annual general meeting to be held at the American Church on Tuesday 17 June 2003 at 7pm.

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