As long as Congress is undertaking efforts to reform the U.S. tax code, why not repeal the Foreign Account Tax Compliance Act. That's the suggestion that's being made by the group American Citizens Abroad. The recommendation addressing this particular tax controversy was made in the form of a statement sent to Washington, D.C., this week to selected members of the House Ways and Means Committee.
Two separate groups of lawmakers from that panel which happen to be working on elements of tax reform received the plea. One is the International Tax Reform Working Group. The other is the Financial Services Tax Reform Working Group.
ACA is a non-profit organization representing the interests of the nearly 7 million Americans who live outside of the United States. And, as readers of this blog likely know, FACTA was enacted in 2010 in response to a concern that too much American income has been shielded from taxation by being stored in foreign bank accounts. Implementation is being phased in over time.
ACA has called for repeal of FACTA before. The basis of its argument is that the law has a crippling financial effect on U.S. citizens overseas. It also says the law is not succeeding in achieving its stated objective of curbing tax evasion.
But perhaps most significantly, ACA says, the law as written poses a threat to U.S. economic recovery. Provisions that call for foreign banks to violate their own country's privacy laws and comply with U.S. laws on reporting of accounts are seen as imperialistic and threaten to spark international backlash.
And, in the face of those provisions not being workable, the U.S. government has resorted to negotiating so-called "intergovernmental agreements" with some countries. ACA says that's a strategy that hasn't been approved by Congress.
With all that as support, ACA says that FATCA should be repealed now as part of any overall tax reform efforts by Congress.
There's no word on how the latest appeal for repeal is being received on Capitol Hill.
Source: The Bahamas Weekly, "American Citizens Abroad Blasts FATCA in Comment to House Working Groups, Calls for Repeal as Part of Tax Reform Framework," James Jatras, April 5, 2013