US Court Dismisses Case Against FATCA Disclosures 

fatca

The US District Court for the Southern District of Ohio has dismissed a case brought by Senator Rand Paul (R – Kentucky) and a group of individuals, who attempted to make several challenges to the Foreign Account Tax Compliance Act (FATCA) and the Report of Foreign Bank and Financial Accounts (FBAR).

The case, Mark Crawford, et al vs. United States Department of the Treasury, et al (No. 3:15-CV-00250), sought to stop the enforcement of both the intergovernmental agreements (IGAs) negotiated by the US Treasury Department and the Internal Revenue Service (IRS) with other foreign jurisdictions to enforce FATCA, and also the account reporting requirements of both FATCA and FBAR.

FATCA, enacted by the US Congress in 2010, requires all financial institutions (FIs) outside of the United States to submit regular information to the IRS on financial accounts held by US persons with a value of at least USD50,000. Otherwise, certain payments of US-sourced income face a 30 percent withholding tax.

An FBAR must be filed with the Financial Crimes Enforcement Network (FinCEN) by American taxpayers who have one or more bank or financial account located outside the United States, or signature authority over such accounts, whose aggregate value exceeds USD10,000 at any time.

In their introduction to the case, the plaintiffs stated that the FATCA and FBAR “laws and agreements impose unique and discriminatory burdens on US citizens living and working abroad,” and that “the challenged provisions are unconstitutional and the defendants [Treasury, IRS and FinCEN] should be enjoined from enforcing them.”

The plaintiffs called IGAs unconstitutional, as they had not been submitted to the US Senate for its advice, consent or approval, while they also “nullify the right of individuals to refuse to waive foreign privacy laws that would otherwise prohibit their banks from disclosing their account information to the IRS.”

Furthermore, it was noted that the FATCA and FBAR reporting requirements “require US citizens living abroad to report more detailed information about their local bank accounts than US citizens living in the United States.”

Finally, it was claimed that the 30 percent “tax” imposed by FATCA on payments to foreign FIs when they “choose not to help the IRS pry into the bank accounts of their US customers … is not a tax at all but rather a penalty designed to accomplish indirectly through financial coercion what the US government cannot mandate directly through regulation.”

However, the court decided that all of the plaintiffs lacked standing to sue in various ways. In particular, they had failed to establish that they had suffered an injury caused directly by the Treasury, IRS or FinCEN.

“No individual plaintiff has suffered an invasion of a legally protected interest, which is concrete and particularized, and actual or imminent, not conjectural or hypothetical,” the court stated. “Moreover, no alleged injury is fairly traceable to the actions of the defendants, but rather, the actions of an independent third party. Finally, there are no allegations that it is likely that the alleged injury will be redressed by a favorable decision.”

The court therefore granted the defendants’ motion to dismiss the case, and none of the substantive matters in the case were deliberated.

Source: Tax-News

One Response to US Court Dismisses Case Against FATCA Disclosures

  1. JC Double Taxed

    FATCA and FBAR are part of the virtual US Financial Berlin Wall – built to keep US persons in by punishing harshly those who dare to imagine they have the liberty to pursue happiness in a land other than the United States. There are 8.7 million such US persons living overseas, many for decades and many with tenuous ties to the US.

    The situation of US persons tax resident abroad:

    Double Taxation (county of residence + US tax via tax treaty gaps)

    Without Representation (would never have agreed to it all)

    Without US Government Services (that US resident US persons may receive)

    Without a Care By The US Government For One’s Well Being (only about stick and compliance)

    With Unfathomable Compliance (obligation to overlay the 74,000+ page US tax code on top of the tax code of one’s country of residence – with inevitable tax treaty gaps through which double taxation flows through).

    With Excessive Compliance Cost (see above – it all requires highly specialized assistance and can’t be done with TurboTax, and you don’t use that because of the potentially bankrupting penalties (that US residents do not face for their everyday accounts in the US if not done right).

    With Excessive Compliance Penalties (The U.S. tax rules punish accounts and investments that are foreign to the USA. The compliance penalties for not reporting accounts right could be bankrupting even if no US taxes are owed)

    Is all UnAmerican!

    Any US persons living overseas caught up in this must visit the message boards of The Isaac Brock Society and Facebook Citizenship Based Taxation and American Expatriates Groups; and consider donating to the Canadian FATCA IGA lawsuit and contribute to citizenshiptaxation.ca .

    US citizenship should be about the greatest liberty in the world. Yet the truth is US persons living overseas are tremendously disadvantaged by the US government compared to nationals from all other OECD countries. The US should join the OECD and adopt Residence Based Taxation.

     

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