[Updated July 2019] It didn’t take long. Within 24 hours of the Republican National Committee voting to seek the repeal of FATCA, the expat blogsphere was abuzz. One popular Israeli site hailed the vote as good news for Americans living abroad. While it certainly is good news, the repeal of FATCA is far from certain and the ridiculous FBAR penalties aren’t impacted by the RNC’s vote.
If you are one of the many upset over FATCA, we are sorry to rain on your parade.
FATCA – short for the Foreign Account Tax Compliance Act – requires foreign financial institutions to review their accounts and report those with ties to the United States. The law has outraged some foreign governments (our two posts last week regarding the impact of FATCA in Canada generated 72 comments and over 25,000 page views.) It has also upset privacy advocates, foreign banks (they say compliance with the law is expensive) and American expats living abroad. One of the many unintended consequences of FATCA is that many foreign banks no longer wish to have Americans as customers.
All of this might be forgivable if FATCA put a serious dent in tax evasion. Unfortunately, many experts believe the law will cost more than it brings in. When combined with the onerous penalties for having an unreported account (FBAR penalties), many say that the law fails to differentiate between criminal tax evaders and the millions of taxpayers with legitimate offshore accounts.
Sen. Rand Paul has been particularly vocal in his opposition to FATCA and even introduced legislation to repeal the law. Until now, his bill has not generated much mainstream media attention. Expats, tax lawyers and privacy advocates closely watch this type of legislation but not Main Street USA.
That changed a bit last week.
Last Friday, the Republican National Committee formally voted to seek repeal of the controversial law. An RNC official, Solomon Yue, said, “I see FATCA just like Obamacare.”
The Obama administration and the IRS continue to support the legislation.
We applaud the idea behind FATCA but not the legislation itself. Combatting tax evasion is a worthy goal and greater financial transparency is needed but as drafted, FATCA isn’t the answer.
Does the GOP’s vote last week mean anything? Again, the answer is not what many folks want to hear. At the end of the day, FATCA is important to dual nationals, foreign born Americans, expats and a few Americans with overseas business interests. It isn’t a major piece of the GOP platform and isn’t likely to be.
July 2019 Update:
This post was written in January 2014, long before Trump was elected President of the United States. Immediately after the election we heard again how FATCA would be repealed.
Our friend attorney Anthony Parent wrote in April 2018, “Set-backs be danged. This is not over, in fact, we are closer than ever to ending FATCA (Foreign Account Tax Compliance Act) and the global tax reporting nightmare for US persons living overseas.” FATCA is still here.
That same month, the U.S. Supreme Court refused to hear a dismisal of Sen. Rand Paul’s lawsuit challenging the constitutionality of FATCA.
Even if FATCA was repealed, it also won’t slow the Justice Department and IRS’ aggressive campaign against unreported offshore accounts. Add to that FBAR penalties of up to the greater of $100,000 per account or 50% of the highest historical account balance.
In recent years, the government has indicted scores of taxpayers for failing to file required FBAR forms. (Offshore accounts must be annually reported on a Report of Foreign Bank and Financial Accounts or “FBAR.”) The government has managed to find thousands of accounts all without FATCA which didn’t even fully kick when this post was first written.
The bottom line? We are happy to see rank and file Congressmen finally beginning to understand the weaknesses of FATCA. We hope that FATCA is repealed or fixed. More importantly, we hope for a broader global dialogue with banks and other nations as to how to best combat cross border tax evasion. But we aren’t holding our breath. And with a distinct turn to the left in the U.S. House of Representatives, we really aren’t optimistic.
If you are a taxpayer with unreported foreign accounts, get help fast. If you are a would-be whistleblower with information about unreported foreign accounts, keep reading!
We no longer do traditional tax work such offshore tax reporting. Today most of that can be handled competently by a good CPA firm specializing in offshore tax reporting. (If you are facing criminal prosecution, get a lawyer. Call us and if we can’t help we can find someone who can.)
Cash Whistleblower Rewards for Information about FATCA / FBAR Cheats
Our offshore tax reporting practice is now geared to offshore tax cheats and whistleblowers. If you have inside information about a person or business intentionally cheating Uncle Sam on taxes, you may qualify for a cash reward.
The IRS whistleblower program pays up to 30% of whatever is collected from wrongdoers. This includes taxpayers with unreported offshore bank accounts, cash, brokerage accounts and even life insurance with cash value. And in most instances your identity as a whistleblower can be protected.
For more information, visit our offshore tax fraud whistleblower page. Want to see if you qualify for a reward? Contact us online, by email at or by telephone at (202) 800-9791. All inquiries are protected by the attorney – client privilege and kept in strict confidence. Our tax whistleblower services are offered worldwide (you do not need to be a U.S. citizen to collect a reward).
Mahany Law – America’s Offshore Tax Fraud Whistleblower Lawyers