U.S. Credit Unions Endorse Sen. Rand Paul’s Bill to Repeal FATCA, Spotlight Multi-Billion Dollar, Unauthorized Mandates on American Industry
CUNA U.S. industry threatened by “extraterritorial diktats of a European FATCA and other FATCA-inspired foreign laws”
James George Jatras for RepealFATCA.com
May 8, 2013
Following yesterday’s introduction of a bill (S. 887) by Senator Rand Paul (Republican, Kentucky) to repeal burdensome mandates and privacy violations under the “Foreign Account Tax Compliance Act” (FATCA), the powerful Credit Union National Association has declared its support.
In a letter dated today, May 8, Bill Cheney, CUNA’s President & CEO, writes to Senator Paul:
“On behalf of the Credit Union National Association (CUNA), I am writing to express support for S. 887, which would repeal the Foreign Account Tax Compliance Act (FATCA) so that regulatory relief will be provided to U.S. credit unions and other financial institutions. CUNA is the largest credit union advocacy association in the United States, representing nearly 90 percent of America’s 7,000 state and federally chartered credit unions and their 96 million members.
“We share your concern that FATCA, if left in place, will impose billions of dollars of compliance costs on U.S. credit unions and banks annually. We are also concerned that FATCA and FATCA-related intergovernmental agreements with foreign nations undermine the constitutional privacy rights of U.S. credit union members and bank customers.
“The FATCA statute passed by Congress in 2010 made no references to U.S. credit unions and banks yet U.S. financial institutions will be required to bear a large proportion of FATCA’s compliance burdens. U.S. credit unions and banks will be required to comply both with the ‘withholding agent’ provisions of the Internal Revenue Service’s FATCA regulations and the IRS’s FATCA-related non-resident alien Form 1099-INT reporting rules promulgated by Rev. Proc. 2012-24 in April 2012. In addition, the Administration has requested in its FY 2014 Budget authority to impose additional non-resident alien reporting requirements on U.S. credit unions and banks to help facilitate FATCA intergovernmental agreement negotiations.
“CUNA is also concerned that the European Union is considering adopting a ‘European FATCA’ which would regulate U.S. credit unions and banks in the same manner that the United States’ FATCA purports to regulate credit unions and banks in the European Union. Unless Congress repeals FATCA, we think that it is only a matter of time before the extraterritorial diktats of a European FATCA and other FATCA-inspired foreign laws become additional compliance burdens on U.S. financial institutions.
“On behalf of America’s credit unions and their 96 million members, we appreciate your leadership on this issue, and look forward to working with you on this matter.”
The CUNA letter reinforces the earlier call for FATCA’s repeal by Michael S. Edwards, Vice President and Chief Counsel, World Council of Credit Unions (WOCCU). (CUNA is WOCCU’s member organization for the United States. In addition, WOCCU represents some 60 national jurisdictions around the world that have credit unions, such as Credit Union Central of Canada, Australia’s ABACUS, the Irish League of Credit Unions, the Caribbean Confederation of Credit Unions, and so forth.)
Of special note is the CUNA letter’s reference to the Administration’s request “in its FY 2014 Budget authority to impose additional non-resident alien reporting requirements on U.S. credit unions and banks to help facilitate FATCA intergovernmental agreement negotiations.”
This spotlights the looming threat that FATCA compliance costs – which under FATCA as enacted would fall almost entirely on foreign financial institutions (FFIs) – would boomerang to hit the United States under the U.S. Treasury Department’s policy of negotiating “intergovernmental agreements” (IGAs) with non-U.S. governments to enforce FATCA on themselves, in exchange for imposing FATCA-like mandates domestically in the United States.
(NOTE: These IGAs are purely Treasury’s invention and are not authorized under FATCA or any other statute! See: McGill University law professor Allison Christians, “The Dubious Legal Pedigree of IGAs (and Why It Matters), February 11, 2013)”
Under one version of the IGA the Treasury Department has made the following promise purporting to commit the United States (here, from the IGA with the United Kingdom):
Reciprocity. The Government of the United States acknowledges the need to achieve equivalent levels of reciprocal automatic information exchange with the United Kingdom. The Government of the United States is committed to further improve transparency and enhance the exchange relationship with the United Kingdom by pursuing the adoption of regulations and advocating and supporting relevant legislation to achieve such equivalent levels of reciprocal automatic exchange. [emphasis added]
This promise, made under legally questionable authority at best, goes far, far beyond the commitment (made elsewhere in the IGA) that U.S. domestic banks would report on non-resident aliens’ interest income – a “commitment” already called into question by a federal lawsuit by Texas and Florida banks and the opposition of key members of the House Committee on Ways and Means, notably Oversight Committee Chairman Charles W. Boustany Jr., M.D. (Republican, Louisiana) and Congressman David G. Reichert (Republican, Washington).
Rather, it would subject U.S. banks, credit unions, insurance companies, pension funds, mutual funds, and other types of financial institutions to the far more invasive and burdensome reporting mandates FATCA imposes on FFIs. Moreover, while under FATCA an FFIs would have to supply information only with respect to citizens of one country (Americans), Treasury has promised to impose on U.S. institutions a requirement to report on residents of dozens of countries – with these massive costs passed on to American consumers and taxpayers.
Buried deep in the Administration’s Budget (See: Analytical Perspectives to the Fiscal Year 2014 Budget, page 202), the requested authority would permit the Treasury Department to issue extensive and unprecedented regulations on U.S. financial institutions:
Provide for reciprocal reporting of information in connection with the implementation of the Foreign Account Tax Compliance Act (FATCA). — In many cases, foreign law would prevent foreign financial institutions from complying with the FATCA provisions of the Hiring Incentives to Restore Employment Act of 2010 by reporting to the IRS information about U.S. accounts. Such legal impediments can be addressed through intergovernmental agreements under which the foreign government agrees to provide the information required by FATCA to the IRS.
Requiring U.S. financial institutions to report similar information to the IRS with respect to nonresident accounts would facilitate such intergovernmental cooperation by enabling the IRS to reciprocate in appropriate circumstances by exchanging similar information with cooperative foreign governments to support their efforts to address tax evasion by their residents.
The proposal would provide the Secretary of the Treasury with authority to prescribe regulations that would require reporting of information with respect to nonresident alien individuals, entities that are not U.S. persons, and certain U.S. entities held in substantial part by non-U.S. owners, including information regarding account balances and payments made with respect to accounts held by such persons and entities.
One reading of this language is enough to predict that the request is Dead On Arrival on Capitol Hill. This means in turn: no U.S. reciprocity on “information exchange” under the IGAs. FATCA is exposed as an unworkable and destructive law, not a legitimate tax enforcement tool. It must be repealed.
CUNA, WOCCU, and the credit union community should be commended for flagging the FATCA threat and for their support for Senator Paul. American and non-U.S. firms that stand to lose millions of dollars each complying with FATCA, as well as all Americans concerned about constitutional government, respect for privacy, and the integrity of the U.S. economy, need to help push S. 887 through.
FATCA repeal needs to be part of any tax reform deal between Congress and the Obama Administration.
You can help – contact us at RepealFATCA.com and find out how!
Vote your Support for S. 887 and email to your legislators all at the same time at PopVox
James George Jatras
Visit www.RepealFATCA.com for more information on “the worst law most Americans have never heard of”!
@statelessman & all
“I guess the reason govtrack system doesn’t think it will pass out of committee is because the chair determines if a bill will move past the committee stage and Chairman is the co-sponsor of FATCA.”
Would it be worth our while to try and make a direct appeal to Bauchus to change direction on FATCA? After all, he surely did not intend for FATCA to have any boomerang effect on US financial institutions when it was passed. That part was an afterthought of Treasury’s creation.
Thanks for being one of the few publishing journalists who understand the importance of this issue. Your contributions to public debate are essential!
Wish you the very best in dealing with your health challenges. To paraphrase Faulkner, may you not just endure, but also prevail.
As for IGA’s: what sane country would push ahead with FATCA partnership now that the US has a fight on their own bench!
I love this; ….”The CUNA letter said Congress did not appear to have U.S. credit unions nor banks in mind when it developed the FATCA provisions in 2010….”
…””FATCA and FATCA-related intergovernmental agreements with foreign nations undermine the constitutional privacy rights of U.S. credit union members and bank customers,” the CUNA letter added.”…
@Arrow, best wishes to you. May you soon be back to enjoying hikes – with Just Me – sans grizzly and sans snowstorms. Thank you for all your work.
Joe (and everyone at IBS).
Thanks for that support, I appreciate it. I am in very good hands. You won’t hear any complaints from me about our oft-maligned health care system (not that I don’t understand it has some serious issues to resolve) — I wouldn’t be here now without it.
I love the support you’re receiving from the Isaac Brock community!
I agree — your words ring true of the Canadian health care system (with shortcomings) VERSUS the alternative we would be in had we remained in the USA. I would have been a single mom on welfare had I remained in the States, with pre-existing conditions in my family and no or unaffordable health insurance.
Stay strong / be well. Positive attitude like yours goes a long way in the challenge you are dealing with!!
Credit Union Insight: “Will Congress Repeal FATCA Before It Takes Effect?”
Good article from the American Banker on how credit unions start to push back as well.
Alison Christians and James Jatras are mentioned.
…and I also posted that article http://isaacbrocksociety.ca/2013/05/23/eu-parliament-hearing-on-fatca-may-28th/comment-page-1/#comment-353660, so those following three threads should read that good commentary.
Just an aside, unrelated, but just listening to a story on KUOW, that the truck driver and the company that hit our I-5 bridge and brought it down (stranding me in Bellingham) was a Canadian. Maybe he was a dual citizen pissed off and getting even! LOL
Yikes, stranding you in Bellingham. I can only imagine the backups now on I-5 and how are they re-routing traffic. My mom and dad (Bremerton) have passed away so I don’t make that I-5 journey anymore. A Canadian you say?!? Now that’s a story we should build upon.
Yup. I don’t know if that is nationally reported yet, but is was on the local news! It amused me.
Alberta, to be specific. On the local BC news this morning.
Don’t you know all the terrorists come from Canada?
Off topic, but here’s one: http://news.yahoo.com/part-washington-state-freeway-span-collapses-river-dispatcher-030202767.html and Calgary: http://globalnews.ca/news/586732/washington-state-bridge-collapse-caused-by-truck-hitting-span/
Thnks… and back on subject.. 🙂
I just walked down the street to a local Credit Union, to return a letter that was mis sent to my mother’s address. Just for the fun of it, I thought I would throw out the FATCA acronym to a local officer and ask his opinion of it, and CUNA’s stand in favor of Rand Paul’s repeal effort.
Any guess what the answer was? A blank stare. Had never heard of it. 🙂
A blank stare — what is this crazy person talking about?
@Calgary411, Just Me
Back off subject. Here is the story of “The Bridge the Canadians Took Out” on NPR…
queue the twilight zone music. 🙂
Still off subject,
“The Bridge The Canadians Took Out” — foreign relations trash talk?
There’ll be a lot of back and forth on this one. Was this the first hit the bridge took in 58 years? I wouldn’t want to travel I-5 along over-sized loads and can’t imagine the now additional I-5 commuting problems the bridge outage will cause. There are many over-sized loads coming from the States to Fort McMurray and now from Edmonton, AB area to the States for US fracked oil drilling needs. Better routing? Better regulation?
Over and out.
Great. Thanks, bubblebustin.
Foreign relations trash talk? LOL I thought you would like that headline…
I saw one on Twitter almost immediately after it happened saying, “GOP Responsible for Bridge Collapse on I-5 In WA! ” Geez… everything is soo partisan these days. I am sure it was the Dems that were responsible for the tornado in Oklahoma too!
An update… Just out…
via @CUNA : Call for #FATCA Repeal Could Gain Momentum http://bit.ly/1d0SCgp About time the @RepubAbroad @RepubAbroadHK are waking up
FATCA has “inadvertently ensnared every United States citizen living overseas due to its overzealous invasion of privacy and punitive taxation and enforcement.”
There can be no denial that FATCA is causing great harm to US persons living abroad. In the great debate whether it was done intentionally or not, it’s probably better that lawmakers admit to incompetence rather than outright malice in the destruction they’ve caused, wouldn’t you think?
I’ve sent this link of positive news on:
The problem of course is, they won’t admit to anything!