The Foreign Account Tax Compliance Act (FATCA) is a failure and has not generated enough cash to run the government for more than 30 minutes, campaigners against the tax have claimed.
Instead of boosting treasury revenues by the $10 billion stated by the IRS, FATCA is unlikely to have recouped more than $100 million in unpaid tax and costs far more to run than is gathered in lost tax, says Nigel Green, who is leading the campaign to repeal the law.
Green, who is the CEO and founder of deVere Group, one of the world’s largest financial advice firms, argues research by Texas law professor William Byrnes shows how FATCA has failed.
He also claims FATCA is nothing more than a windfall for corporate compliance firms who have made millions of dollars from advising banks and financial institutions about how to work within the FATCA framework.
How FATCA works
“There are plausible projections that the law’s aggregate global cost is anywhere from $60 billion to $170 billion,” said Green. “That money comes out of the pockets of consumers, depositors and perhaps shareholders.”
FATCA is a data reporting tool for the IRS which demands foreign financial institutions must report the personal and financial details of any customers with American connections.
The banks must screen their data for US resident taxpayers with accounts with balances of more than $50,000 and US expats with accounts holding more than $200,000.
The IRS then compares this information with tax filings to make sure taxpayers are declaring income and gains from foreign bank accounts and investments.
According to the latest IRS figures, 282,000 foreign financial institutions are making FATCA reports, while anecdotal evidence from expats suggests many overseas banks are refusing to do business with Americans.
FATCA is a law sponsored by former President Barack Obama and is on the Republican Party list of laws for repeal.
However, despite the election promise to scrap FATCA, President Donald Trump and the Republicans have not revealed their timetable for repealing the controversial law.
Meanwhile Green has forged an alliance with around two dozen lobby groups to keep pressure on the White House and the party to carry through their pledge.
Further FATCA Information and Guidance
For more information about FATCA complete the Get Advice form here.