erase-tax

Despite the Republicans unveiling a major overhaul of the U.S. tax code, the Foreign Account Tax Compliance Act, or FATCA, remains untouched—for now, at least.

Read: How U.S. tax reforms affect cross-border clients

Will that change? In a Nov. 17 press release, deVere CEO Nigel Green says FATCA “has been wreaking havoc with the global financial system outside the U.S.,” meaning it’s time for U.S. leaders to make good on their promise to call for a repeal. 

Green is co-leading a campaign effort to push for the repeal of the foreign tax act, along with former U.S. diplomat Jim Jatras. In a letter sent to Secretary of the Treasury Steve Mnuchin, the two argue that “FATCA is a textbook example of a badly conceived, badly written, and badly enforced law that doesn’t achieve its stated purpose.” They also say that even the IRS’ own Taxpayer Advocate Service has criticized the act. 

Green and Jatras condemn FATCA for its “indiscriminate invasion of privacy.” They also say it’s not “an effective mechanism for detecting offshore tax evasion and recovering revenues due. […] FATCA is a failure from that standpoint.”

Residency-based taxation

In their letter, the pair also say the Republicans should honour their pledge to reconsider the way in which U.S. citizens overseas are taxed. They say, “The United States is the only major country that taxes its citizens worldwide on the basis of citizenship, not residen[cy]. This creates a host of problems and inequities […].” As a result, they call for the adoption of a residency-based taxation system.

Even if that happens, Green and Jatras maintain that FATCA’s “larger toxic features” wouldn’t be solved, so that act must still be repealed as well.

For more on FATCA and recent tax news, read:

Clients may risk steep penalties if they don’t file U.S. tax forms (March 2017)

U.S. tax bill passes in house

Drop remaining tax proposals: Manitoba finance minister

Tax proposal summary: what’s in, what’s out

Evaluating the feds’ tax cheat crackdown

Originally published on Advisor.ca
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LESLIE MICHAEL KATONA, CPA, CGA

NOTHING WOULD MAKE MY US TAX CLIENTS LIVING IN CANADA HAPPIER, AND AS THEIR TAX ACCOUNTANT, ME TOO, IF FATCA WERE TO BE REPEALED AND THEY WERE TAXED BASED ON RESIDENCY!!! MAYBE IN MY LIFETIME. :-)

Friday, Nov 24, 2017 at 10:41 am Reply

Jesse Rooney

No, FATCA will not be repealed. The evidence is clear from the lack of any repeal in the current tax bill that Washington has no interest in repealing FATCA. Nigel Green’s constant calls for repeals are more to get free advertising for deVere than honest attempts at repeal.

Monday, Nov 20, 2017 at 10:11 am Reply

David Zimmerly

Just one more broken promise from the Republican’s 2016 campaign:

“The Foreign Account Tax Compliance Act (FATCA) and the Foreign Bank and Asset Reporting Requirements result in government’s warrantless seizure of personal financial information without reasonable suspicion or probable cause. Americans overseas should enjoy the same rights as Americans residing in the United States, whose private financial information is not subject to disclosure to the government except as to interest earned.

The requirement for all banks around the world to provide detailed information to the IRS about American account holders outside the United States has resulted in banks refusing service to them. Thus, FATCA not only allows “unreasonable search and seizures” but also threatens the ability of overseas Americans to lead normal lives. We call for its repeal and for a change to residency-based taxation for U.S. citizens overseas.”

Saturday, Nov 18, 2017 at 9:01 am Reply