The Foreign Account Tax Compliance Act was signed into law by President Obama in March, 2010; a few months later, the deVere Group announced that it would begin to formally start looking after American expatriate clients.
Seven years on, the DeVere Group is, as was reported here on Monday, embarking on a “comprehensive period of restructuring”, but two things that its founder and chief executive, Nigel Green, says are unlikely to change are its determination to look after expatriate Americans, and his opposition to FATCA.
Here, Green (pictured above) discusses his opposition to FATCA and why it remains a priority, even at a time when other issues, including the changing landscape for UK pension transfers, are also demanding his attention…
As the US Congress advances with outlining detailed tax reform legislation to present to the newly-elected president Trump, one item that I fervently believe should be at the top of the list is the repeal of the Foreign Account Tax Compliance Act, or FATCA.
I’ve been an outspoken critic of this fatally-flawed law since it was passed by a Democrat-controlled Congress, and then signed into law weeks later by Barack Obama on 18 March, 2010.
Despite being virtually unknown within the US, FATCA has been causing chaos for more than eight million American expatriates residing overseas, as well as countless “accidental Americans” and Green Card holders.
This is why, last month, deVere launched a Washington DC-based lobbying and media campaign, with the primary goal of abolishing this onerous law.
Joining forces with a team of highly experienced professionals, as well as numerous influential Congressmen and Senators, we are pushing the Campaign to Repeal FATCA into high gear.
To kick start the campaign, we travelled to Washington DC last month to take part in several FATCA-based presentations to two influential tax activist groups, which have a major role in developing the tax package to be passed by Congress this year.
DeVere Group head of public relations George Prior attended the meetings on behalf of deVere; others present included former US diplomat Jim Jatras, of the Washington-based Global Strategic Communications Group (who is also my co-leader of this campaign); Brian Garst, of the Center for Freedom and Prosperity; and Keith Redmond, an independent advocate for Americans overseas.
Among those they met with were members of the Senate Budget Committee (which, we are told, is “vital” to get onside if there is to be any hope of having FATCA repealed).
They also visited the offices of a number of Congressmen, including those of Republican Mississippi Senator Roger Wicker, co-sponsor of a Senate repeal bill in the previous Congress; Kentucky Republican Senator Rand Paul, the sponsor of that earlier FATCA repeal bill; North Carolina Republican House of Representatives member Mark Meadows, sponsor of a House FATCA repeal bill last year; and Kentucky Republican Congressman Thomas Massie, co-sponsor of Meadows’s bill.
Following these meetings, the campaign secured a letter signed by numerous tax reform groups, including the Americans for Tax Reform – a prominent tax advocacy organisation based in Washington – which it is passing on to prominent Congressional leaders, and which calls for the repeal of FATCA to be included in Congress’s 2017 tax package.
The aim of FATCA
FATCA’s objective, originally, was to catch out wealthy US residents who were using offshore financial institutions, such as banks and wealth managers in places like the Caribbean and Switzerland, to avoid having to pay tax.
But because it relied on these offshore institutions to provide the information to the US tax authorities, and introduced significant penalties for those institutions that failed to do this, it wrought an almost immediate and massive unintended consequence on America’s approximately 8.7 million expatriates, who suddenly were not able to obtain bank accounts, mortgages and other financial services and products in the countries in which they lived.
It also hit thousands who didn’t realise they were Americans – for example, Canadian “accidentals” – and long-term expat Americans who had managed to live offshore for decades without realising that they should have been filing tax returns, and suddenly found themselves hit with severe penalties for non-filing.
The numbers of Americans who have been renouncing their citizenships has climbed steadily since FATCA was first announced, hitting a record of 5,411 people last year, even though the fee for renouncing has soared to US$2,350, up from $450 before the rush. Last year’s renuncies included UK foreign secretary and former London mayor Boris Johnson, (who first publicly announced plans to renounce, in a Spectator article, in 2006).
These aren’t just names and numbers on an IRS spreadsheet, they are real people – millions of hard-working, law-abiding Americans around the world – who are in the FATCA firing line.
But FATCA’s collateral damage isn’t limited to American expats, Green Card holders, and Canadians who happened to have been born in a hospital over the border. It has also been causing mayhem within the global financial system, because, as mentioned, of its requirement that all non-US financial institutions all over the world report data on all specified US accounts directly to the Internal Revenue Service.
This is why I’m determined to see FATCA sent packing – and why I look forward to great success in 2017 for our campaign.
As Jim Jatras explains: “When that 2017 tax bill gets to President Trump’s desk for his signature, we want a measure to repeal FATCA to be in it.”