Let’s not get carried away about proposed FATCA relief
The Expat section of the Wall Street Journal has this week run a blog entitled ‘Fatca Relief Coming for U.S. Expats Via ‘Same Country Exception’?
As a long-time outspoken critic of FATCA (Foreign Account Tax Compliance Act) – which is dubbed by lobbyists at RepealFATCA.com as the ‘worst law most Americans have never heard of’ – you can imagine my intrigue, and perhaps a bit of excitement too, as I began reading the blog post.
However, my excitement soon turned into disappointment.
The article is hooked on the fact that “on a bipartisan basis, it has emerged from Washington, D.C., this summer: the congressional co-chairs of the Americans Abroad Caucus, Reps. Carolyn Maloney (D-NY) and Mick Mulvaney (R-SC), are encouraging their colleagues in the House of Representatives to support a ‘same country exception ruling to address some of the biggest problems with the implementation and enforcement of FATCA.”
The article continues that Co-Chairs Maloney and Mulvaney are rallying support in the House for a letter that will be sent to Secretary of the Treasury, Jacob Lew, and the IRS Commissioner, John Koskinen. The letter reads:
“On behalf of the roughly eight million American citizens who live abroad, we write to express our concerns regarding several tax reporting requirements imposed on U.S. citizens living abroad that have created the unintended consequence of limiting overseas Americans’ access to legitimate banking services. We respectfully request that the Treasury Department adopts a recent Taxpayer Advocate Service recommendation that Foreign Account Tax Compliance Act (FATCA) reporting excludes financial accounts maintained by a financial institution in the country of which the U.S. person is a bona fide resident.”
Whilst this is perhaps a small step in the right direction, I suspect that the ‘roughly eight million Americans who live abroad’ actually want a full repeal of this toxic law. I would suggest that the majority would consider Same Country Exception (SCE) as little more than a cop out and a thinly veiled attempt to try and sort out this disastrous tax law that as I have said previously is a “masterclass in the law of unintended consequences.”
Indeed, another blog on Isaac Brock Society’s website outlines why many are objecting to the SCE. Tellingly, it concludes: “So, hurry up and write a letter to your Congresscritter and tell them that you support Same Country Exemption. At the same time, ask them to inform all of the bank employees to close their eyes while they strip search you in the bank lobby.”
So strong is the support amongst American expats to have FATCA fully repealed, that in a recent deVere Group poll late last year, 73 per cent of Americans who live outside the U.S. are tempted to give up their U.S. passports in response to the introduction of FATCA.
I set out in this blog why I support and champion a total repeal of FATCA.