WASHINGTON May 8 Anti-tax advocates on
Wednesday applauded an effort by Senator Rand Paul to roll back
important sections of a U.S. law designed to fight tax evasion
by Americans with assets stored overseas.
In a move tax experts said would effectively gut the Foreign
Account Tax Compliance Act (FATCA), Paul has proposed stripping
FATCA of key enforcement and information reporting requirements.
Though the Kentucky Republican's bill has little chance of
winning approval in the Democratic-controlled Senate, it was
greeted with enthusiasm by opponents of the controversial law.
"Unsuccessful tax systems attempt to force other countries
to become their tax collectors," anti-tax activist Grover
Norquist said. "That's what FATCA is, and it should be
The Credit Union National Association, a lobbying group for
thousands of U.S. credit unions, expressed support for Paul,
saying FATCA will pose heavy compliance costs on credit unions.
The conservative National Taxpayers Union said FATCA's
international reach will add burdens for businesses and
individuals in the United States. "Senator Paul deserves a round
of applause," the group said in a statement.
Starting in 2014 under FATCA, foreign banks, investment
funds and other financial institutions will have to tell the
U.S. Internal Revenue Service about Americans with accounts that
are worth more than $50,000.
Foreign firms failing to comply could effectively be frozen
out of U.S. capital markets. Under Paul's bill, this penalty
would be scrapped.
"Basically what this does is wipe (FATCA) off the books,"
said Alan Granwell, a former U.S. Treasury official now with law
firm DLA Piper, of the Paul legislation.
The bill would also eliminate a FATCA requirement that U.S.
citizens report certain offshore assets as part of their income
"FATCA violates important privacy protections, disregards
the sovereign laws of other nations and will cost the U.S.
economy hundreds of billions of dollars in compliance costs,"
Paul said in a statement on Wednesday.
Popular with Tea Party supporters and libertarians, Paul is
seen in some circles a possible presidential contender in 2016.
The U.S. Treasury and the IRS are already implementing FATCA
ahead of next year's start date. Paul's bill will not affect the
IRS's implementation, said Mary Burke Baker, a former
congressional staffer and now a lobbyist for major corporations.
Members of Congress will be hard pressed to support Paul's
bill and "say they support something that's going to inhibit the
U.S. ability to identify U.S. offshore tax evasion," Baker said.
(Reporting by Patrick Temple-West; Editing by Kevin Drawbaugh
and David Brunnstrom)