Yesterday the New York Times published an Op-Ed about FATCA entitled “An American Tax Nightmare.” The piece is a fairly accurate portrayal of the problems FATCA has created for ordinary Americans living abroad.
The piece goes on from there with less accuracy and a measure of speculation dressed up as fact. Importantly, the piece suggests that Democrats Abroad and the Democratic National Committee have neglected the interests of Americans abroad where FATCA is concerned.
As you know, Democrats Abroad established the FBAR/FATCA Task force in 2011 and has been working to reform FATCA for the last four years. Our recommended FATCA reform is the Americans Abroad Safe Harbor. This provision would exempt from FATCA reporting the accounts of American citizens who are legally resident in the country in which the account is held. The non-partisan organisations representing Americans abroad[1] also support the Safe Harbor reform and are actively advocating for it. Further, the Democratic National Committee demonstrated its support for FATCA reform with a resolution passed at its meeting in August 2014.
The Op-Ed specifically denigrates Democrats Abroad for not supporting a legal repeal of FATCA. We all know that Americans abroad need FATCA relief URGENTLY. Even the sponsors of the repeal effort admit that there is no prospect of a Congressional repeal of FATCA – by this Congress or the next.
Officials at Treasury have indicated to us that the Safe Harbor could be implemented via a change to the FATCA regulations. No time-consuming, partisan bickering-inducing legislative instrument would be required. This is why so many have come to support reform as the better solution.
The Op-Ed notes that a court challenge to the constitutionality of FATCA is also in train. We expect a lawsuit to be filed at any time (perhaps timed nicely to coincide with the 15 June tax filing deadline for Americans abroad). If the lawsuit were to succeed it, also, would take years.
It bears repeating: Americans abroad need relief urgently. It makes no sense to chase solutions we know won’t have any impact on the lives of Americans abroad for years to come.
Democrats Abroad has forwarded a Letter to the Editor of the New York Times which we expect to be published as soon as possible. Special thanks to Joe Smallhoover and Stanley Grossman for their fast and excellent work drafting it and to Maureen Harwood for her edits.
Democrats Abroad FBAR/FATCA Task Force
14 May 2015
[1] American Citizens Abroad, Association of Americans Resident Overseas and Federation of American Women’s Clubs Overseas.