FATCA Update - April 2017

It’s been a big week for the Foreign Accounts Tax Compliance Act (FATCA) in Washington DC.

Rep Maloney introduces Same Country Exception Bill

On Tuesday April 25, 2017 Americans Abroad Caucus Chair Rep Carolyn Maloney (D-NY) introduced HR2136, the Overseas Americans Financial Access Act (OAFAA) in the House of Representatives.  The bill embodies our FATCA reform recommendation, the Same Country Safe Harbor Exemption from FATCA reporting for Americans abroad.  

Congresswoman Maloney’s House speech introducing the bill is here.  

This reform has the support of all our colleague organisations representing Americans abroad, as well as the National Taxpayer Advocate.  We plan on supporting the bill strongly in our Congressional Door Knock next month.  We will also publish an information pack for the Global Action Team to share with groups across Democrats Abroad interested in gathering members to write letters or postcards to Representatives seeking their sponsorship of the bill.

House Holds Hearings on FATCA Consequences

The OAFAA bill was introduced ahead of hearings held Wednesday April 26th by the Government Operations Subcommittee of the House Oversight and Government Reform Committee “Reviewing the Unintended Consequences of the Foreign Accounts Tax Compliance Act”.  Democrats Abroad, working through legislative aides on Rep Maloney’s staff, has been trying since the hearing was scheduled to get a witness on the list to testify.  As Republicans control the Committee (and all Congressional Committees) it was not surprising that we were not successful.  Nevertheless Democrats Abroad made a submission to the Subcommittee and we expect it will be published in due course.

Of course a written statement is not as powerful as speaking directly to the Committee in the hearing.  Had we testified, Democrats Abroad would have reiterated our support for a switch to Residency-based Taxation.  Failing that, we support the Safe Harbor exemption from FATCA reporting for Americans abroad.

Our scepticism about this hearing has always run high.  Government Operations Subcommittee Chair Mark Meadows (R-NC) introduced a FATCA Repeal bill in the House of Representatives last month.  The same bill was introduced in the Senate by Senator Rand Paul (R-KY), who testified at the hearing as a witness.  Senator Paul, as you may know, was a plaintiff, now an appellant, in the lawsuit challenging the constitutionality of FATCA.  The rest of the witnesses bar one were also strident FATCA opponents, including famed Citizens United lawyer Jim Bopp who represents Republicans Overseas. 

The one witness who spoke in support of FATCA is a retired legislative aide.  She worked for retired Senator Carl Levin (D-MI) and is deemed to be the architect of FATCA.  She spoke strongly of the law’s importance as a critical deterrent to tax evasion – and not in favour of the Safe Harbor.

Fortunately Democratic members of the Subcommittee members Rep Maloney and Delegate Eleanor Holmes Norton (D-District of Columbia) spoke strongly in support of the Safe Harbor as a mechanism for both relieving the FATCA burden and maintaining the law’s original intent to discourage and apprehend tax evaders.

By the end of the hearing Chairman Meadows indicated he is open to compromise in developing a FATCA remedy for Americans abroad.  That may stretch credulity given Meadows’ lead sponsorship on the House bill to repeal FATCA, but we will are taking his comments at face value.  He asked the witnesses to get back to the Subcommittee with three recommendations to modify FATCA.  Democrats Abroad will also make a submission providing recommendations.  And we will continue to monitor the Government Operations Subcommittee and Chairman Meadows, looking for opportunities to work with them and others in developing a remedy that both addresses the problems FATCA is causing for ordinary, hard-working Americans abroad and protects its ability to fight financial crimes that underwrite terrorism and facilitate trafficking in drugs, arms and humans, as well as fight tax evasion.

Thanks to Katie Solon and Joe Smallhoover

Many thanks to International Chair Katie Solon and DA France Chair Joe Smallhoover for attending the hearing on Democrats Abroad’s behalf.  They had valuable discussions on the edges and in the breaks of the hearing with FATCA reform allies and opponents, as our FATCA advocacy work clearly will go on.  Katie and Joe also met yesterday with officials at Treasury who have carriage of FATCA. 

Our engagement with regulators and legislators about FATCA is in its 6th year.  We are grateful to all those who have contributed to this important advocacy work over that time.

Please contact us at any time with questions or comments. 

Respectfully submitted,

FBAR/FATCA Task Force

Carmelan Polce, Chair (Singapore)

DeeDee Gierow (Sweden)

Michael Ramos (Australia)

Joe Smallhoover (France)

Orlando Vidal, Ex Officio (UAE)