Jan 15, 2007: AmCham Continues Full Court Press to Change Housing Exclusion Limitation for American Expats in Moscow

The following is the text of a letter sent to U.S. Secretary of the Treasury Henry M. Paulson from AmCham President Andrew Somers regarding the housing exclusion limitation for American expatriates living in Moscow. Click here to download a copy of the letter in .pdf format and a list of Moscow-based U.S. taxpayers who endorsed the letter.

November 30, 2006

Henry M. Paulson, Jr.
Secretary
U.S. Department of the Treasury

Dear Secretary Paulson,

On behalf of U.S. taxpayers working and residing in Moscow, we urge the U.S. Department of the Treasury to increase to market level the housing exclusion limitation established for Moscow in IRS Notice 2006-87 of October 6, 2006. The limitation in Notice 2006-87 does not remotely reflect the current Moscow residential rent market. If this error of fact is left standing by Treasury, Americans here will suffer an unfair and excessive tax burden. Worse, American competitiveness in a market which has become an engine of growth for American companies will be severely threatened. The already disturbing trend of global corporate expat policies to favor non-American taxpayers for executive positions abroad will be accelerated for the Russian market, reducing the impact of American business values and practices.

Current and trend data for the Moscow residential rent market can be found in our submission to Treasury dated June 27, 2006, which also cites the Mercer Report release of June 26, 2006, confirming that Moscow has surpassed Tokyo as the world’s most expensive city.

Earlier this week we welcomed the news that the data entry for Moscow in the State Department’s Housing Allowance Table, used to set the Moscow limitation in IRS Notice 2006-87,  was revised significantly upward. The revision was based on current housing cost information for Moscow embassy staff provided to State by Ambassador William Burns. At a minimum we ask that Treasury revise for the tax year 2006 the Moscow limitation in IRS Notice 2006-87 in accordance with the new State Department data for Moscow. We also however note the generally accepted fact that private sector executives pay significantly more for housing than government staff and that State’s Housing Allowance Table was never intended as a source for international tax policy treatment of private sector expats. In this regard we respectfully suggest that it would be appropriate for Treasury to consider the Moscow housing data submitted to Treasury in June by AmCham Russia.

The undersigned and the nearly 200 Moscow-based American executives named in the attachment to this letter thank you for your consideration and trust that Treasury will give urgent consideration to revising Notice 2006-87 for the current tax year.

Sincerely,

Andrew B. Somers

cc:
Carlos M. Gutierrez
Secretary
U.S. Department of Commerce

William Burns
U.S. Ambassador to Russia