By Nigel Green
Founder and chief executive of deVere Group
Definitive action to banish the Foreign Account Tax Compliance Act to the history books is long overdue. It’s time for the Republicans to honour their campaign pledge that if they win, they would “call for repeal” of toxic FATCA.
As such, together with Jim Jatras, my co-leader of the Campaign to Repeal FATCA – a Washington DC-based lobbying group launched earlier this year – we have written an emphatic open letter to the Honorable Steve Mnuchin, as still no steps have been taken to eradicate the “worst law most Americans have never heard of.”
FATCA, enacted in 2010, has been causing chaos and destruction on a worldwide scale throughout the global financial system.
Set up with the aim of catching ‘fat cat’ tax evaders who stash funds offshore, FATCA requires all non-U.S. financial institutions in every country across the globe, (including banks, credit unions, insurance companies, investment and pension funds) to report data on U.S. accounts to the Internal Revenue Service.
Should any nation refuse to comply, FATCA will impose devastating, economy- crippling financial penalties.
Indeed, within the five-page letter dated November 14, it states: “We are writing to you on the supposition that in a democratic country, elections should have consequences. When a political party stands before the electorate on declared principles and makes specific promises, those principles and promises should be reflected in how that party governs under its mandate from the voters.”
This is in reference to the 2016 Republican Platform that read: “The Foreign Account Tax Compliance Act (FATCA) and the Foreign Bank and Asset Reporting Requirements result in government’s warrantless seizure of personal financial information without reasonable suspicion or probable cause. Americans overseas should enjoy the same rights as Americans residing in the United States, whose private financial information is not subject to disclosure to the government except as to interest earned. The requirement for all banks around the world to provide detailed information to the IRS about American account holders outside the United States has resulted in banks refusing service to them. Thus, FATCA not only allows ‘unreasonable search and seizures’ but also threatens the ability of overseas Americans to lead normal lives. We call for its repeal and for a change to residency-based taxation for U.S. citizens overseas.”
Furthermore, as we said in the letter: “This Republican pledge to repeal FATCA rests on the deepest and most cherished American principles, not least a decent respect for the privacy of citizens who are not engaged in lawbreaking and are not even suspected of doing so. Even the IRS’s own Taxpayer Advocate Service has criticized FATCA’s 'enforcement-oriented regime with respect to international taxpayers' with its 'operative assumption [that] appears to be that all such taxpayers should be suspected of fraudulent activity, unless proven otherwise'.
“We are confident that legislative progress is being made and that FATCA will be repealed in the near future. We are writing to you now because of our disappointment that no positive action has yet been taken by the other part of the apparatus of government, in the Executive Branch. This includes the Department of the Treasury.”
In effect, FATCA is an extraterritorial diktat that infringes on other countries’ sovereignty rights with its intergovernmental agreements; burdens other countries’ financial institutions; and is highly damaging to consumers and taxpayers.
Moreover, the law is irrevocably detrimental to the eight million U.S. citizens who reside overseas.
Indeed, as Jim Jatras affirms: “To put it bluntly, after the passage of a full year since Election Day 2016, by all indications the Obama Administration remains firmly in power as far as FATCA is concerned.”
As such, the pre-election victory promised action must now be taken to ensure this highly polemic, burdensome law is eradicated once and for all