(International Investment) – An anti-FATCA lobbying group led by key US Republican Party members has vowed to take its fight against the Foreign Account Tax Compliance Act to the Supreme Court, in the wake of a US Court of Appeals decision, handed down on Saturday, that affirmed a lower district-court ruling dismissing a legal attempt to derail the legislation.
In a statement on its website, the Republican Overseas Action group said it intends to continue its campaign against the law, arguing that it is causing “real harm” to overseas Americans – contrary, they say, to what the court said in its ruling.
The Court of Appeals ruling found that the plaintiffs – who included Kentucky Republican senator Rand Paul, who has been campaigning against FATCA almost since it was signed into law in 2010 by President Obama – lacked the standing to sue, and that the harms they claimed to have suffered as a result of the law were not, in fact, directly caused by it.
“I am very surprised that the court is unwilling to recognise the very real harm that FATCA is imposing on overseas Americans,” James Bopp Jr, the lead lawyer for the plaintiffs in the case, says in the statement.
“The court maintains that the decisions of banks not to serve US citizens is just a voluntary decision on their part, not as a result of FATCA.
“They also state that those citizens who have not filed their FBAR or FATCA forms are under no threat of prosecution.”
Among the genuine harms he said FATCA had imposed on the plaintiffs, Bopp went on, were the loss and/or denial of bank accounts and mortgages “by banks afraid of FATCA’s penalties” as well as “the very real threat of prosecution by the US Treasury, IRS, and the US Financial Crimes Network against those citizens who have not filed their FBAR and FATCA forms”.
Solomon Yue, vice chairman and chief executive of the Republicans Overseas Action group, said his group also intended to continue its fight, and would “file an appeal to the US Supreme Court” imminently.
In addition to Senator Paul, the seven plaintiffs included expat US citizens, some but not all of whom are members of the Republican party.
As reported, elements in the Republican party have opposed FATCA almost since its inception, and in September, a Republican member of the US House of Representatives, Mark Meadows of North Carolina, introduced a bill aimed at repealing it.
A group known as the Republicans Overseas Israel also mounted a Supreme Court challenge to the enforcement of FATCA in that country, which ultimately was unsuccessful.
FATCA was signed into law in 2010 in the wake of the global financial crisis, as an attempt by the US to target the undeclared offshore accounts of Americans, many of whom had been found to be making use of bank accounts in places like Switzerland to avoid their US tax obligations.
Almost at once, however, American expatriates began to find that the financial institutions in the countries in which they lived began insisting they take their accounts elsewhere.
The US Internal Revenue Service also began coming after American expats who had failed to file tax returns – as they are required to do, no matter how long they have lived abroad, unless they renounce their US citizenship – many of whom hadn’t realised they were required to do so. American expats are also obliged to pay tax to the US on some of their income if, for example, it is not taxed by the government where they live.
British politician and former London mayor Boris Johnson, for example, who was born in the US, was hit a few years ago with an IRS demand for tax on the sale of his first home, located in London. The UK would not have taxed the sale, therefore the US regarded it as due.
Within a few years the number of renunciations began to soar, which it has continued to do, even after the US made it significantly more expensive and difficult to do so.