The Campaign to Repeal FATCA has sent a letter pushing Congress to include repeal of the Foreign Account Tax Compliance Act in any tax reform package sent to the White House.
Under FATCA, which came into effect in July 2014, all non-U.S. financial institutions are required to report the financial information of American clients who have accounts holding more than $50,000 directly to the IRS.
The official aim of the legislation is to try and combat tax evasion. However, its opponents claim FATCA’s dragnet approach will be highly ineffective at achieving this serious and worthwhile objective.
The March 21 letter, addressed to Speaker of the House Paul Ryan, U.S. Senate Majority Leader Mitch McConnell, Ways and Means Committee Chairman Kevin Brady, and Senate Finance Committee Chairman Orrin Hatch, makes five key points:
- FATCA fails in its primary goal to catch wealthy tax cheats;
- It ensnares innocent Americans with excessive reporting requirements and draconian penalties for the slightest oversights;
- FATCA makes U.S. citizens living and working abroad toxic assets in the eyes of both financial institutions and employers;
- The onerous law’s compliance costs far outstrip the revenue it collects; and
- It encourages other nations and international organizations to pursue aggressive tax grabs that threaten American businesses and the global economy.
“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,” says Nigel Green, founder and CEO of deVere Group and co-leader of the Campaign to Repeal FATCA.
He continues: “I am thrilled to see U.S. 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.”
Enacted in 2010 by a Democrat-controlled Congress and signed into law by Barack Obama, FATCA is virtually unknown to most Americans but has been wreaking havoc with the global financial system outside the U.S.
Touted as a weapon against “fat cat” tax evaders stashing funds offshore, FATCA is instead an indiscriminate information dragnet requiring all non-U.S. financial institutions (banks, credit unions, insurance companies, investment and pension funds, etc.) in every country in the world to report data on all specified U.S. accounts to the IRS.
“Every government has a right to see its laws enforced and tax evasion investigated and prosecuted. That’s not what FATCA does, though. It has punished everybody, innocent as well as guilty, and consumers and taxpayers worldwide. It’s a windfall for the compliance industry and no one else. Repeal FATCA!” added Green.
The 2016 Republican Platform calls for FATCA’s repeal, denouncing the law’s “warrantless seizure of personal financial information without reasonable suspicion or probable cause” and its threat to the “ability of overseas Americans to lead normal lives.”
In addition, because of FATCA, a growing number of U.S. citizens are giving up their American citizenship.
Meanwhile, OneNewsNow reported that FATCA is having adverse effects on millions of American expatriates “who simply want to work, save, and live their lives without being hammered by the government.”
“There are a number of homeland American journalists who have maligned us in the media, always associating us with wealthy tax cheats living the high-life overseas. That is the furthest from the truth,” Keith Redmond, an American living overseas, told OneNewsNow.
“We are average people, just like in the United States. We’re trying to work, save, and just live our lives.”
Redmond compared FATCA to a “sledgehammer trying to catch a few ants.”
Redmond says he and many other Americans overseas are seeing their banking and checking accounts closed. In certain countries, he adds, Americans are being denied mortgages or having their mortgages revoked on their homes.
Redmond says many Americans overseas feel as though they have no other choice but to rescind their citizenship.
Ironically, the U.S. government’s refusal to take part in a global system for exchanging bank data has moved it above the Cayman Islands in a financial secrecy list compiled by the Tax Justice Network, Bloomberg reported.
The U.S. trails only Switzerland and Hong Kong in a league of offshore havens after refusing to comply with information-sharing standards created by the Organization for Economic Cooperation and Development, according to London-based TJN, which campaigns for greater transparency in finance.
That’s despite the U.S. creating its own system of data collection: FATCA.
(Newsmax wire services contributed to this report).