By Sam Obenhaus
Does Americans’ right to privacy extend far enough to
protect their hidden foreign bank accounts?
Will a law requiring foreign financial entities to disclose information
on all American account holders lead those institutions stop doing business
with Americans? The Republican National
Committee (RNC) says yes and voted to repeal the Foreign Account Tax Compliance
Act (FATCA) at its winter meeting.
The Act was passed in 2010 but goes into effect this
July. Its principle objective is to make
it harder for U.S. citizens – primarily those living within the U.S. – to evade
taxes by stashing money in offshore accounts.
However, banks, libertarians, and non-resident U.S. citizens, among
others, are all opposed to a law that some call “overzealous.”
The heart of the conflict, the burden on U.S. citizens
living abroad, comes about because of the U.S.’s unique extraterritorial
taxation system. Unlike all other
developed nations, the U.S. taxes its citizens living in foreign
countries. One legitimate concern is
that these Americans will find it harder to find a local bank willing to deal
with them because of the increased regulatory burdens imposed by FATCA.
Undeterred, the U.S. government is forging ahead and
recently signed an intergovernmental agreement with Canada to facilitate
the sharing of bank account information.
This is the 22nd such agreement.
You can see the RNC resolution here
and an article about their vote over at Reuters. Bloomberg BNA has an article
on the U.S.-Canadian agreement.
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