Congress may finally pull the plug on the controversial Foreign Account Tax Compliance Act (FATCA) tax law.
Anti-FATCA campaigners Rep Mark Meadows and Sen Rand Paul are about to file a bill calling for the repeal of FATCA.
Lawmakers have already scheduled a hearing for April 26 to decide where to go next.
If they vote in favour of repeal, the House will turnover FATCA legislation that underwrites the much-criticised inter-government agreements (IGA) that underpin the relationship between the Internal Revenue Service and foreign governments.
The IGAs lay down the terms of how foreign tax authorities swap information on Americans who hold offshore savings and investments.
Letter to Treasury
Republicans Meadows and Paul have drafted a letter to Treasury Secretary Steven Mnuchin calling for him to support the repeal of FATCA, claiming the law was an abuse of executive power by former President Barack Obama.
“This is a major landmark moment,” said Nigel Green, who spearheads the campaign to repeal FATCA in Washington.
Green is founder and CEO of deVere Group, one of the world’s largest expat financial advice firms dealing with US expats.
“FATCA has only rolled on because of legally unauthorised intergovernmental agreements but if the White House and Treasury overturn the previous administration’s power-grab, that alone would doom this terrible, toxic law.”
FATCA recommendations
The letter recommends four options to Mnuchin:
- Issue a Statement of Administration Policy confirming the Trump administration will repeal of FATCA as promised in the Republican Platform
- Instruct the Treasury Department’s Office of International Affairs to cease efforts to negotiate, sign, and implement IGAs.
- Announce that the IGAs are under legal review of their authority and that if they are found to be legally infirm they may be declared invalid
- FATCA grants the Treasury Secretary authority to deem all impacted foreign institutions compliant on a temporary basis pending outcome of the legal review of the IGAs. The IRS should also be instructed to suspend enforcement of provisions impacting individual taxpayers
FATCA is a set of rules for foreign financial institutions with American customers.
They must report the details of any accounts held by Americans to the IRS each year, providing the balances are more than $50,000 for US residents and $200,000 for expats.
Financial institutions that fail to comply with FATCA face fines and possible exclusion from trading in the US.
Read the full text of the letter here [pdf]
The US has built a virtual Financial Berlin Wall to keep US persons in by punishing harshly those who have left – even those gone decades. FATCA is part of this new Berlin Wall.
JFK famously said in Berlin ‘we don’t need to build walls to keep our people in.’ Fast forward to the present day, and the US has done precisely that with its compliance and tax laws assuming all US persons live in the US (even the ~9 million who live overseas), with extra penalties restrictions and disincentives for money, accounts, and investments in countries other than the US; even if you live permanently overseas and this money, earned income, accounts, and investments, are local to you.
In an increasingly global and mobile world the US should not punish US persons living, working overseas, and expanding US influence and trade overseas. This is in complete contrast to all other OECD nations, thus disadvantaging those with US Citizenship.
While Trump has not mentioned “FATCA” or “territorial” or “residence based” taxation in regards for individuals overseas U.S. persons do hope that the new administration will address and alleviate the following situation of U.S. persons tax resident abroad:
Double Taxation (county of residence plus US tax via tax treaty gaps).
Without Representation (would never have agreed to it all).
Without US Government Services (that US resident US persons may receive).
Without a Care By The US Government For One’s Well Being (only about stick and compliance).
With Unfathomable Compliance (obligation to overlay the 74,000+ page US tax code on top of the tax code of one’s country of residence – with inevitable tax treaty gaps through which double taxation flows through).
With Excessive Compliance Cost (see above – it all requires highly specialized assistance and can’t be done with TurboTax, and you don’t use that because of the potentially bankrupting penalties (that US residents do not face for their everyday accounts in the US if not done right).
With Excessive Compliance Penalties (The U.S. tax rules punish accounts and investments that are foreign to the USA. The compliance penalties for not reporting accounts right could be bankrupting even if no US taxes are owed).
It is all un-American, has nothing to do with ‘liberty and justice for all”, it is unfair, and wrong!
Any US persons living overseas caught up in this must visit the message boards of The Isaac Brock Society , Facebook Citizenship Based Taxation and American Expatriates Groups, citizenshiptaxation dot ca and FixTheTaxTreaty dot org.
US citizenship should be about the greatest liberty in the world. Yet the truth is US persons living overseas are tremendously disadvantaged by the US government compared to nationals from all other OECD countries.
The US should join the OECD and adopt Residence Based Taxation. To align the terminology in Congress in regards to tax reform for U.S. companies and U.S. persons, Republicans Overseas is advocating for “territorial taxation” for U.S. persons overseas. Those impacted are hoping this translates to the equivalent of residence based taxation.
What about the problems that women are having? I keep meeting American women when I travel to the Middle East and Asia who tell me that they’ve been forced into a sexual relationship with a bank manager or other bank employee to maintain a basic account in the man’s name or the name of a friend. These are basic small accounts that the women need locally to function, not investment or complex accounts. Why is the US government making it possible for Third World men to sexually take advantage of American women who need basic bank accounts? This is well-known and well-documented. Women all over Asia and the Middle East are being forced by the US government with a gun to their head literally, to have sex with these men because they have been stripped of their economic rights. Other women are being forced into divorce by their husbands and left destitute.
I recall Ron Paul at the time saying it was a measure to trap Americans in America. It certainly seems to have had that effect. I still cant seem to work out why though. Perhaps it was making their wealth distribution easier, from us to them. The only thing I can think of is that they intended to really turn on the heat with financial confiscations as well as property and knew that the rats would be jumping ship so to speak. Good luck Rand and Mark