Bankers’ Objections to FATCA Provisions Headed for Appeal
The federal law known as the Foreign Account Tax Compliance Act, or FATCA, doesn’t take effect until July, but some bankers in the U.S. say it’s already costing their industry some significant dollars. They also say the law threatens to hurt foreign investment in the country, so they’re waging a legal fight to try to scrap at least one of FATCA’s provisions.
As many of our readers likely know, FATCA is a law intended to give the Internal Revenue Service leverage in going after individuals suspected of alleged tax evasion through offshore bank accounts. But it also contains a rule that requires U.S. banks to report accounts held here by foreigners that earn at least $10 in interest a year.
The reciprocity rule is seen by many experts as essential to the law’s success, and it’s that rule that’s being challenged in federal court in the District of Columbia.
A suit filed by the bankers associations of Texas and Florida last April says the rule amounts to an undue burden and could effectively drive away foreign investors. Texas bankers say they have already seen $500 million pulled from their state because of the rule.
The government scored a win in the case last month when a judge ordered the suit dismissed. He said the rule represents a “minimal burden.” But this week, the banks announced they are appealing.
Despite the fact that FATCA has been on the book since 2010, there has been no let up in objections from opponents of the measure. Those critics call the law a blatant example of government overreach and privacy invasion.
That hasn’t stopped the government from taking action under the law, however. Those facing issues as a result would be well advised to be in touch with an experienced attorney.
Source:Reuters, “Bankers take fight over U.S. anti-tax dodge rules to appeals court,” Dena Aubin, Feb. 5, 2014
