US institutions and individuals are becoming increasingly aware of the existence of the Foreign Account Tax Compliance Act, which received little media coverage in the States until a US senator earlier this month introduced a bill to repeal certain of the act's provisions, arguing that they infringed "upon basic constitutional rights".
As reported, Kentucky Sen Rand Paul, who is a Republican, introduced Senate bill 887 because, he said, FATCA diminished the privacy protections of Americans, while at the same time being a “poor tool” for combating tax evasion and a potential threat to foreign investment in the US.
A few weeks earlier, two US state banking industry associations filed suit in Washington against the US government, claiming that FATCA’s onerous reporting requirements would mean that they could stand to lose billions of dollars in business, as foreign investors took their money elsewhere.
One member bank in one of the two states – Texas and Florida – “reported losing $50m in deposits” as a result of the new rules, according to the lawsuit, which names the IRS and the Treasury Department as defendants, Reuters reported on 18 April, the day the suit was filed.
Credit union organisation objects
The day after Sen Paul unveiled his bill, an organisation which represents America's credit unions, the Credit Union National Association, threw its support behind it. "We share your concern that FATCA, if left in place, will impose billions of dollars of compliance costs on US credit unions and banks annually," Bill Cheney, CUNA's president and chief executive, wrote on 8 May.
Cheney went on to express "concern" that that other governments would reciprocate with similar legislation, noting that the "the European Union is considering adopting a 'European FATCA' which would regulate US credit unions and banks in the same manner that the United States' FATCA purports to regulate credit unions and banks in the European Union".
Meanwhile, a petition has appeared on the website of MoveOn.org, a liberal/progressive public policy advocacy group which has had a history of championing Democratic candidates and liberal causes, calling for FATCA’s repeal. The petition aims to collect 2,000 signatures (it has 1,950), and will be sent to the US House of Representatives and President Obama.
Local newspaper coverage
Even local US newspapers are beginning to carry articles which mention how FATCA's provisions could affect their readers.
The Albany Times-Union, for example, which covers the greater Albany area in Upstate New York, was among the US dailies which earlier this month ran a PRWeb-provided piece, written by a Texas tax specialist, on the various ways US taxpayers with "unreported income and investments overseas" could be caught out. The article, by Perfect Tax of Plano, Texas, describes Form 8938, which is used to report information under FATCA, as "exhaustive" and notes that it "requires taxpayers to record detailed values of financial assets".
It then includes a link to background on FATCA on its website, www.perfecttax.com.
The same piece also appears on the website of the Houston Chronicle.
One publication that has been covering FATCA for some time is the New York Times, the website of which is the most read news website in the US. (It owns the International Herald Tribune, which will rebrand later this year as the International New York Times.)
Last April, David Jolly, whose stories appear in both publications, observed in a blog accessed on the Times's website that the irony of FATCA is that it was always intended to target wealthy Americans at home -- not those abroad, even though so far, they are the ones most aware of it.
In his column, "Americans, the Tax Man Cometh", Jolly noted that there was a case for the argument that expat Yanks being ensnared by FATCA were actually “'collateral damage' in a broader tax battle" being waged against tax evaders living in the US. Commenting on Jolly's piece, a federal tax attorney from Sacramento, California, agreed, noting that the way FATCA had been written it appeared "as though no one in Washington was even thinking about the ex-pat community when FATCA was enacted".