CUNA joined the World Council of Credit Unions this week supporting legislation that would repeal the Foreign Account Tax Compliance Act (FATCA). The organizations wrote to Sen. Rand Paul (R-Ky.) and Rep. Mark Meadows (R-N.C.), who sponsored the bills, S. 869 and H.R. 2054.
“This important legislation will repeal FATCA and put a stop to the law’s increasing regulatory burdens on U.S. credit unions and banks, and help expatriate Americans maintain access to financial services,” the joint letters read. “FATCA has also caused a significant number of Americans living overseas to renounce their U.S. citizenship in order to maintain access to financial services. The additional due diligence and tax withholding requirements from FATCA necessitate additional credit union and bank staff resources.”
FATCA placed new and significant compliance costs on U.S. credit unions, CUNA President/CEO Jim Nussle and World Council President/CEO Brian Branch wrote, particularly those that engage in remittances or have members who are not U.S. citizens.
Under FATCA, U.S. credit unions are classified as “withholding agents” and are required to perform due diligence and withhold a 30% tax on some cross-border payments.
“At its core, FATCA runs afoul of basic privacy rights enshrined in the Bill of Rights by requiring financial institutions to report account information to the Internal Revenue Service, even if the IRS has no reason to suspect an account holder of violating any law,” Nussle and Branch wrote.
The House Oversight and Government Reform subcommittee on government operations, chaired by Meadows, will conduct a hearing Wednesday to discuss the unintended consequences of FATCA.
Paul is scheduled to testify at the hearing, which begins at 2 p.m. (ET), and will be streamed live on the committee’s website.