US congressman introduces new FATCA repeal bill

A Republican member of the US House of Representatives has introduced a bill aimed at repealing the American bank account information disclosure legislation known as FATCA, as the Republican party appears to be making its expat-popular anti-FATCA stance an issue ahead of the November presidential election.

H.R. 5935 would “repeal provisions of the Foreign Account Tax Compliance Act, included as part of the 2010 HIRE Act, that were originally designed to prevent tax evasion by increasing US  Government access to foreign bank accounts held by US citizens”, according to a press release on the website of the bill’s sponsor, North Carolina congressman Mark Meadows, (pictured), on grounds that the legislation violates Americans’ privacy rights.

“Ultimately, it is clear that FATCA goes well beyond what is appropriate, and requires a level of disclosing information to the IRS that violates Americans’ Fourth Amendment rights and places unnecessary burdens on taxpayers,” Representative Meadows said, in a statement.

“I encourage my colleagues to support a repeal of FATCA, and demonstrate a commitment to upholding our Constitution as the law of the land.”

The bill is similar to legislation introduced in 2013 by Republican Senator Rand Paul of Kentucky, and has two original co-sponsors, Rep. Jeff Duncan (R-SC) and Rep. Mick Mulvaney (R-SC).

Senator Paul’s original anti-FATCA bill received considerable attention, particularly in expatriate circles, but failed to reach the Senate floor. Paul was also involved in a lawsuit that sought to abolish FATCA on legal grounds, which also failed.

The Republican Party has been critical of FATCA, a Democratic Party initiative,  since it was signed into law by President Obama – who is a Democrat – in 2010.

In January 2014, the Republican Party formally approved a resolution that called for the repeal of FATCA, in the form of a Republican National Committee vote. The chief sponsor of the RNC resolution was a China-born, naturalised American from Oregon named Solomon Yue, who is vice chairman and chief executive of Republicans Overseas.

As reported, it was a Republican expatriate group in Israel that temporarily derailed Israel’s implementation of FATCA. As with Representative Meadows’ bill, it argued that FATCA sing to use to gather and share the tax-relevant information on American holders of Israeli bank accounts and other financial accounts would violate Israel’s privacy and human rights laws.

The Israeli high court ruled against the FATCA opponents on Monday, saying in essence that they considered FATCA, as it was to be implemented in Israel, “an appropriate mechanism for addressing the problem of tax evasion”, according to the online edition of  the Israeli daily newspaper Haaretz.

Prez candidates views sought

Meanwhile, the American Citizens Abroad, a Washington, DC-based organisation which represents American expatriates, has said it is seeking clarification from both the Democratic and Republican presidential candidates on their positions with respect to “issues affecting Americans living and working overseas”, including FATCA.

However, none of the eight specific issues ACA is seeking an official stance on is whether the candidate supports FATCA in itself; rather, ACA wants to know where the candidates stand with respect to proposals to introduce a “same country exemption” for expats. This, ACA explains in its letter to the candidates, “would exempt both Americans and foreign banks from reporting on American clients who are legitimately resident in a foreign jurisdiction”.

It isn’t known exactly how many Americans live abroad, but the latest US State Department estimate is that there are around 8.7 million.

ABOUT THE AUTHOR
Helen Burggraf
Helen Burggraf is the editor of International Investment. A US-trained journalist, she has worked in Rome, New York City and London, covering everything from the fashion and retailing industries to the global drinking water and water-treatment sector, private equity, and most recently, the international cross-border financial services/advice industry.

Read more from Helen Burggraf

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