A legal challenge claiming a US tax law aimed at uncovering hidden offshore earnings and investments violated constitutional rights has been thrown out again by a judge.
The campaign, led by Kentucky Senator Rand Paul argued the Foreign Account Tax Compliance Act – better known as factor – infringed privacy granted under the US constitution to citizens.
Paul and his co-claimants were challenging a decision against them in a lower court.
In August, the Sixth Circuit threw out their case claiming the breach of privacy they alleged resulted from FATCA was not directly caused by the law, which did not give them the standing to bring the matter before a court.
Now, the US Supreme Court has upheld the ruling, effectively ending the action as there is no higher court to listen to their case.
Campaign to scrap FATCA
FATCA demands foreign financial institutions must report the balances and earnings of US taxpayers from bank accounts, investments or other financial holdings to the US Internal Revenue Service (IRS) each year.
Introduced in 2010, more than 100 countries and 300,000 financial institutions outside the US have signed up to the reporting regime.
Paul and other fellow Republican senators have opposed FATCA since former president Barack Obama introduced the law in 2010.
The indirect consequence of FATCA was US expats found many foreign financial institutions decided not to deal with them, so they could avoid the cost of complying with the law.
In November, Paul and some fellow Republicans tried unsuccessfully to persuade Congress and President Donald Trump to repeal FATCA in recent months, although scrapping the law was part of the Republican manifesto for the 2016 elections.
Little hope of repealing FATCA
“As we work to reduce the massive tax burden Washington has placed on the American people, we should also stand up for their Fourth Amendment right to privacy by rejecting the bulk collection of the financial information of Americans who live overseas,” said Paul.
“The law has impeded international financial transactions and investment by leading many foreign banks to simply deny services to Americans rather than navigate the burdens and costs of compliance.”
Now, the outlook for repealing FATCA looks bleak unless the US decides to join the international common reporting standard, a tax information swapping network of 100 countries.