Republican party leaders want to repeal President Barak Obama’s flagship Foreign Account Tax Compliance Act (FATCA) because Americans are flocking to give up citizenship over the new law.
FATCA is an anti-tax evasion measure designed to stop Americans hiding cash and assets overseas.
From July 2014, American taxpayers with offshore holdings must report any accounts with a balance of more than $50,000 with their annual tax filing to the Internal Revenue Service.
Thousands of foreign financial institutions must also tell the IRS about the financial details of their American customers.
The Republicans say the number of Americans renouncing citizenship has doubled in five years.
They also claim numbers will rise as the law takes effect and that FATCA is expensive and is unlikely to recover more lost tax than the global tax reporting network costs to run.
Unfair law
The party leadership – the Republican National Committee – is drafting a resolution to go before Congress calling for the repeal of FATCA.
“This is unfair on Americans. The law treats them as criminals and violates their right to privacy,” said a spokesman.
FATCA came about as a result of a US Treasury investigation into tax evasion by American citizens with secret bank accounts in Switzerland.
In recent months, several Swiss banks have faced fines of millions of dollars and one private bank has closed.
Switzerland has now lifted the veil of banking secrecy and pledged to comply with FATCA as a result of the court battles.
However, the Republicans say the ripple effect of the action and FATCA means many foreign banks and financial institutions are turning away American customers, who face financial difficulties accessing their cash from abroad.
Banks turn away US expats
The main group affect are 6 million US expats who must file tax returns to the IRS even though they no longer live in the States.
The US Treasury rubbishes the claims, releasing figures showing just 742 Americans handed back their passports in 2009, while the number has risen to 1,854 in 2013.
If the draft resolution is supported by the Republicans, FATCA will still go ahead as scheduled, but could become a campaign issue for candidates in forthcoming elections.
“The draft has five sponsors so far and more are expected to sign up,” said a party spokesman.
“FATCA makes life difficult for Americans abroad who miss out on insurance, loans and investments because financial institutions prefer not to work with FATCA, so ditch their US clients. Some have to make the decision of giving up citizenship or their financial rights because of this.”
I think Fatca will weaken America ‘s business influence oversea as it is hard for everyone to deal with Americans due to the clumsy laws and paper works.
Hmmm…no rich foreigner or successful business person would want to marry any us citizens or residents now !!!!
Which rich foreigner in the right mind wants to marry an American and reveal their oversea banking accounts and business interest to IRS ?