Not to scale
UPDATE 12-4-2017. The Rand Paul Repeal FATCA amendment was "tabled." Yet it is included in H.R. 1 manager's list. We are awaiting an update from Solomon Yue of Republicans overseas who is direct contact with Rand Paul's office to figure out exactly what this means.
Tracker list here: https://www.rpc.senate.gov/tax-cuts-and-jobs-act-reconciliation-tracker
FATCA has been a nightmare that has only negligibly increased revenues, if at all. According to ATR:
"FATCA was signed into law in 2010 with the goal of stopping tax evaders that were using offshore bank accounts. However, it was designed as a blunt instrument that targets any American with a bank account overseas. Most who are forced to comply are expatriate Americans who have, little if any U.S. presence.
As a result, compliance costs far outstrip any effectiveness in curbing tax evasion. American citizens overseas have become locked out of financial institutions including banks, stockbrokers, hedge funds, and insurance. Often, it is easier for these businesses to deny US citizens service."
Grover Norquist, president of ATR, applies an interesting anology to FATCA. He compares it with the ridiculusly Alternative Minimum Tax (AMT) that will be repealed as part of the tax reform package.
“FATCA is the Alternative Minimum Tax (AMT) for Americans overseas—an intrusive, complicated, painful and unfair tax regime designed to be massive overkill in hunting for coins between the cushions,” said Grover Norquist, President of Americans for Tax Reform. “We are finally abolishing the AMT—after 48 years—in the Tax Cuts and Jobs Act. We should put FATCA to sleep at the same time.”
To which I would add the worst of FATCA is yet to come. FATCA also requires US banks to endure a huge compliance burden, which up to this time they have escaped. These costs will offloaded to US consumers.
Additonally, and what is less known, FATCA imposes an incredibly vague, yet powerful withholding requirement for US businesses that send payments overseas. If a business fails to wihhold certian payments made to foreign entities, the IRS can impose a penalty of 30% of those payments on that business — and look back at several years of transactions to see how much they want to assess. Many businesses are completely unaware that they are walking time bombs — if they get caught up in an IRS examination they could be assessed taxes and penalties that will be impossible to overcome.
So yes, because of the damage done to US expats and the damage that may be done to US-based businesses, we concur with ATR:
FATCA should be repealed as part of tax reform. Earlier this year, 23 conservative and free market groups urged Congress to repeal this burdensome law in a letter to Congressional leaders. ATR urges a YES vote.
