Could Rand Paul be US Expat's Santa Claus by Sleighing FATCA?
Senator Rand Paul has submitted an amendment to the Tax Reform Bill to repeal FATCA
Dr Rand Paul, the US Senator for Kentucky, has submitted an amendment to the US Tax Reform Bill which would repeal the much maligned FATCA regulations.
FATCA, referring to the Foreign Account Tax Compliance Act, requires foreign financial institutions to report back to the US on the foreign assets held by US Citizens. Since the regulations were introduced in 2010, reports have emerged of financial institutions outside of the United States refusing US Citizens as clients because of the cost and complexity of complying with FATCA rulings. In 2012, the United Kingdom, France, Germany, Italy and Spain announced that they would comply with FATCA regulations, and as such a number of US Citizens residing in Europe have been subject to FATCA's rules.
American Citizens Abroad (ACA), the organization advocating in Washington on behalf of US Citizens living abroad, have regularly highlighted that one effect of FATCA has been a growing difficulty for Americans overseas to gain access to simple necessities such as bank accounts, credit cards, loans and other financial tools.
Discussing his amendment, Dr Rand Paul said "As we work to reduce the massive tax burden Washington has placed on the American people, we should also stand up for their Fourth Amendment right to privacy by rejecting the bulk collection of the financial information of Americans who live overseas".
Earlier suggestions by Congressman George Holding and Congressman Kevin Brady of moves towards an end to Citizenship based taxation have yet to lead to substanive changes, but a repeal of FATCA would be seen as an early Holiday gift for Americans living overseas who are struggling to find services which accept them as clients.
In the meantime, the recent announcement that American actress Meghan Markle is engaged to Prince Harry has also raised awareness in the UK of the financial complexities for US Citizens residing overseas. The Washington Post reported that the fairytale wedding could cause headaches for the UK Royal Family, subjecting closely guarded financial arrangements to IRS scrutiny. The Washington Post article also touches upon another familiar issue for the new Royal couple - that of US Citizenship renunciation - speculating that it could be most convenient for Ms Markle to renounce her US Citizenship to avoid such reporting.
These complexities are currently faced by all American citizens living abroad every day. The growing speculation and discussion of the issues is no doubt a step in the right direction, and Dr Paul's latest amendment could be the next step necessary in beginning to alleviate the every day stresses which have been affecting US Citizens abroad for years.
You can see Dr Paul's amendment below: