Protests are rising against the US Foreign Account Tax Compliance Act (FATCA) as a coalition of 23 groups is lobbying Congress to repeal the law.
FATCA was approved by former President Barack Obama in 2010 as a tool for uncovering Americans avoiding tax by hiding cash and investments overseas.
Since then, more than $10 billion in lost tax has been recovered from more than 100,000 taxpayers by the Internal Revenue Service (IRS).
Election pledge
Republicans pledged to scrap FATCA if Donald Trump took power, but so far, the election promise has not been raised by the President’s staff or in Congress.
The anti-FATCA coalition has now written to a host of key senators and congressmen arguing FATCA:
- Fails to target the wealthy avoiding tax by moving money and assets offshore
- Traps millions of US expats with reporting requirements and tax penalties
- Leads foreign financial firms to shun doing business with Americans
- Costs the IRS more to recover money than other tax laws
- Encourages other countries to target American firms with ‘tax grabs’
“FATCA violates our most-cherished principles of due process, presumption of innocence, personal privacy, and national sovereignty. It does not accomplish its stated objectives but does inflict untold collateral harm at great cost,” says the letter.
“Penalising the innocent through measures aimed at targeting the guilty was “unacceptable and un-American”.
Ruining lives
Members of the coalition include the American Commitment, Taxpayers Protection Alliance, Competitive Enterprise Institute, Institute for Policy Innovation, Citizen Outreach, the Campaign to Repeal FATCA and the Small Business and Entrepreneurship Council.
Nigel Green, CEO of one of the world’s leading financial advice forms for expats, the and co-leader of the Campaign to Repeal FATCA, said: “FATCA has been ruining the lives of Americans abroad and pulling money out of the global financial system for no benefit. It’s exactly the kind of counterproductive and burdensome regulatory scheme Donald Trump has pledged to get rid of.
“I am thrilled to see US taxpayer advocate groups weighing in with congress to repeal the Obama-era FATCA. It’s time for citizens in other countries to show the same kind of backbone and help get this costly mistake off the statute books.”
The $10 Billion recovered – most of it was before FATCA and through other enforcement mechanisms. So it is an error to suggest that the $10 Billion recovered is due to FATCA.
The estimate of recovery from FATCA to the IRS is $8.7 billion over 10 years. Information from the initial years are that receipts are far lower, and potentially below IRS administrative costs of the program.
While revenues are discussed costs should also be discussed such as an estimated $200+ billion in implementation and ongoing costs for banks. This is before the U.S. bank costs of becoming wihholding agents and this part of FATCA has not yet been implemented.
Additional costs to the “innocents” (private as well as business) include costs of bank and financial accounts being denied to overseas Americans as a result of the 30% withholdings extortionate threat to overseas banks from the U.S. if U.S. compliance is not met.
The Constitution was not mentioned above, nor the 7 claims that FATCA is unconstitutional. One claim is that the FATCA IGA Treaties were never submitted to the U.S. Senate for review and ratification but exist on the authority of Obama Executive Order. This is in violation of the Senate Treaty Power in the Constitution which suggests that the President may not make any treaties they want in disregard of the Senate. This is only 1 of the 7 claims.
I can confirm that a number of banks in Germany do no longer accept U.S. citizen as customers.
And they are not even hiding that fact. Straight in the face they are telling you that they don’t want you as customer because you are an US citizen and there is too much risk because of FATCA. Same goes for the case if you have dual citizenship Germany/USA. They don’t accept you.
This feels unreal if you get your account terminated for this only reason and only few banks would open a regular account with you..
This law is so bad. And if it is true that it was signed as Executive Order, Donald Trump could and should repeal as soon as possible.