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.”
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.