A group of activists is looking to hitch a repeal of a 2010 law requiring foreign banks to disclose account data of U.S. taxpayers to an overhaul of the tax code, reports Bloomberg.
The Foreign Account Tax Compliance Act requires foreign banks to disclose U.S.-owned accounts to the Internal Revenue Service. The law, which the Campaign to Repeal FATCA seeks to eliminate, has been criticized for the taxpayer compliance cost largely outweighing the $800 million in additional tax revenue each year that the Joint Committee on Taxation projected the law would raise.
A repeal of the legislation would be welcomed by conservative lawmakers who view it as an intrusion on taxpayer privacy. Sen. Rand Paul (R-Ky.) and Rep. Mark Meadows (R-N.C.) have introduced bills to repeal the law in previous years. Neither office responded to an inquiry about plans to re-introduce legislation this year.
Tax overhaul will “be a heavily decorated Christmas tree, with everyone trying to get their provision in there, but we think we have an advantage because there is language in the Republican platform supporting FATCA repeal,” James George Jatras, of Global Strategic Communications Group, told Bloomberg BNA Feb. 7.
Jatras is a former U.S. diplomat and Senate staffer. He is co-leading the group with FATCA critic Nigel Green, chief executive officer of deVere Group in the U.K.
The announcement comes on the heels of Ways and Means Committee Chairman Kevin Brady (R-Texas) taking to the speaking and television circuit to sell his tax plan to the public and his colleagues in Congress. The Ways and Means office didn’t respond to a request for comment on whether FATCA repeal is under consideration in the tax overhaul package.
A Republican aide told Bloomberg BNA he frequently receives e-mails from U.S. taxpayers complaining about the law, but hasn’t heard about an in-person meeting discussing repeal.
The law was passed during President Barack Obama’s administration as a way to crack down on offshore tax evasion. FATCA requires foreign banks to tell the IRS about accounts held by U.S. persons or face a 30 percent withholding tax on their U.S.-source income in some cases.
The JCT projected FATCA would raise $8.7 billion over a decade, meaning its repeal would require offsets if Republicans pursue a revenue-neutral tax overhaul package as they have stated. Jatras said the plan hasn’t raised the money estimated and the only people benefiting from the law are tax advisers who get paid to handle the reporting requirements and compliance issues for their clients.
“It’s scathing as to how little bang for the buck there is on this law,” Jatras said. “There is not enough lipstick in the world to make this pig kissable.”