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A FATCA Repeal in the Works?

Article Summary:

Republican National Committee members are drafting a resolution calling for the repeal of a soon-to-be-implemented tax law known as Foreign Account Tax Compliance Act, or FATCA.

Photo Credit: Forbes

Original Article Text From McClatchy DC:

RNC members tackle

Republican National Committee members are drafting a resolution calling for the repeal of a soon-to-be-implemented tax law that critics say is contributing to Americans living abroad renouncing their U.S. citizenship in record numbers.

Solomon Yue, an RNC committee member from Oregon, has distributed the first draft of his resolution to repeal the Foreign Account Tax Compliance Act, or FATCA, among fellow RNC members.

A provision in the measure, passed by Congress in 2010 and due to take effect in July 2014, requires international financial institutions to provide the Internal Revenue Service with information on U.S. citizens who hold more than $50,000 in their accounts at the end of the year.

“It’s an intrusion for Americans overseas,” Yue said. “It places an undue burden on them. They’re being treated like criminals before they are convicted.”

The law was designed to catch tax American cheats hiding financial assets overseas. But many of the more than six million Americans living abroad say FATCA has made life difficult for them because several foreign banks, not wanting to deal with the IRS, are turning away American customers or closing accounts of existing U.S. clients.

The situation has become so dire that more and more expats are dropping their U.S. citizenship in order to be able to get basic banking services in the countries where they live, according to several expatriate groups.

“It’s sad that they have to choose between citizenship and livelihood,” Yue said.

U.S. Treasury Department officials dispute claims that FATCA is causing hardships for law-abiding Americans living outside the U.S.

The number of Americans who’ve dropped their citizenship has increased from 742 in 2009 to more than 1,854 thus far in 2013, according to the U.S. State Department. Some tax experts and expats believe the number is higher.

Yue’s draft resolution charges that FATCA has “inadvertently ensnared every United States citizen living overseas due to its overzealous invasion of privacy and punitive taxation and enforcement.”

“FATCA has resulted in Americans living and working overseas finding themselves, and their companies, shut out from access to banks, insurance loans and investment opportunities, and many foreign financial services providers have concluded that doing business with Americans is simply too much trouble thus decreasing America’s competitiveness overseas,” Yue’s draft resolution states.

As a result, “FATCA forces Americans living abroad to make a horribly unfair choice between renouncing their citizenship or abandoning their businesses abroad because foreign financial institutions won’t handle their transactions or accounts,” according to the resolution.

Yue’s resolution has five co-sponsors so far. He said he expects to have more once a final draft is completed and presented at the RNC’s winter meeting next month in Washington, D.C.

If the resolution is approved, Yue said repealing FATCA could become an issue that Republican congressional and presidential candidates to campaign on in 2014 and 2016.

“It’s not a question of looking for political traction,” he said. “I’m looking for what’s right for Americans abroad.”

Link to Original Article:

From McClatchy DC

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