The Financial Accountability and Corporate Transparency Coalition (FACT Coalition) sent a letter to the Committee on Oversight and Government Reform with three recommendations to improve the implementation of the Foreign Account Tax Compliance Act (FATCA). The full letter can be read below or downloaded here.
Questions & Answers about the Foreign Account Tax Compliance Act (FATCA)
FATCA is the Foreign Account Tax Compliance Act, which was adopted in 2010 to help pay for the HIRE (Hiring Incentives to Restore Employment) Act. FATCA requires foreign financial institutions (FFIs) to determine if accounts they have opened are held, directly or indirectly, by Americans and, if so, disclose them to the Internal Revenue Service (IRS). Any FFI that refuses to provide this information to the United States is subject to a 30% withholding tax on the FFI’s U.S. source income.
The Financial Accountability and Corporate Transparency Coalition (FACT Coalition) sent a letter to House lawmakers Tuesday urging them to oppose H.R. 2054/S. 869 and defend the Foreign Account Tax Compliance Act (FATCA).
Every year, your employer, bank, the Social Security Administration, and anyone holding or investing your savings, sends you and the Internal Revenue Service (IRS) information about your accounts. This is a long-standing U.S. practice that combines patriotism and accountability and has created a culture of tax compliance.
However, for U.S. citizens living abroad and wealthy individuals with accounts in foreign banks, there was little accountability. While most Americans with foreign bank accounts paid the taxes they owed, some did not. For those, FATCA was passed.
Strengthen Measures against Offshore Tax Evasion — Don’t Repeal Them
The offshore tax haven lobby is out in force this month — kicking off a media and lobbying blitz against the Foreign Account Tax Compliance Act (FATCA), a sensible transparency measure to ferret out offshore tax evaders.
The Wall Street Journal editorial board completely misconstrues FATCA as government overreach in its March 2nd editorial, “My Big Fatca IRS”. The Journal writes:
“Almost since the Foreign Account Tax Compliance Act (Fatca) became law in 2010 to go after fat cats stashing money abroad, these pages have reported that it has led the IRS to treat law-abiding Americans as criminals…
“With the GOP controlling Congress and White House, the time is ripe for Republicans to make good on their pledge and give Fatca the heave-ho.”
The Journal’s editorial was echoed last week by several pro-tax haven groups in a letter to lawmakers. The editorial and the letter are off-base.
America Is the World’s Newest Tax Haven
If I asked you to name the world’s biggest tax haven, you might come up with the Cayman Islands, Bermuda, or Luxembourg. Those of you following the recent series of so-called “corporate tax inversions” might guess Ireland.
You probably wouldn’t think of the United States, but the latest edition of Bloomberg Businessweek points its finger squarely at Uncle Sam—and not without reason.