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”!
Note, this is now in PopVox for ease of showing support and emailing legislators
Have updated with a link in main text
I’m going to try to write something on this. My bank guy has been in touch with their US counterparts and they think this will derail the IGAs. Maybe just wishful thinking, but it’s worth having a go at in a Canadian context.
But bear with me on this folks, it might take me a little while. I’ve been pretty quiet lately because I’m in the middle of a chemotherapy regime for my leukemia. Don’t worry, I ain’t dead yet, but I don’t have a whole lot of energy these days. I’ve been dealing with this for about 10 years but it suddenly got aggressive. Good news is the chemo is working.
I’ll keep you posted.
Seriously, I’ll be OK. My wife is planning a CLN party with friends for this July 4th.
Thank you for weighing in on this, even in the face of your current adversity!
Spread the word ye twits! 🙂
Well, I do wish for you an improving prognosis, and I will share a real Kiwi success story with you on the slopes of Mt Baker this summer, when you are feeling up for a hike on the Ptarmigan ridge trail, ok?
Best wishes for a swift recovery and please allow me to express my gratitude for everything you can and will continue to do for us.
And Just Me — it’s a deal. My doc thinks I’ll be in good enough shape to do some backpacking end of summer — but I’ve got to be careful for a couple of months here. Remind me to tell you about last summer’s “Hike from Hell” when we hit a full scale blizzard (late August) at the Notch on Jasper’s Skyline Trail — ended up hiking out 34 km and ran into a grizzly just before it got dark.
As you know, end of summer is a perfect time of year in this region. Snow gone off the trails and the flowers still out. Look forward to it. Will be in touch. I leave Sydney today on my way back to Seattle. Looks like an early warm summer there from the weather I have seen. Cheers, and get well!
Thanks for sharing with us the latest on your bank guy’s opinion regarding IGAs being derailed.
As well, thanks for sharing with us, some who consider you a real friend, the health challenges you are dealing with. You are fighting the good fight in all aspects of your life. I’m sure I speak for many when I say, we wish you the best in your current treatment!
Bravo Jim Jatras!
The boomerang effect of FATCA reciprocity is going to kill it before it leaves the womb.
Now we need to mobilize to sort out the citizenship-based taxation monstrosity for ex-pats. They are suffering more than you can imagine. Nobody renounces citizenship for the fun of it.
Here is a new one from Reuters:
“Senator’s attack on tax-dodge law gains some support”
I put up a comment here on a new “The Hill” article, as well as at Reuters. Reuters took a while to show up, but on the Hill it did instantly…
Join in the public debate. This is great! We have wanted more public discussion, and this repeal effort provides it. If we remain silent when comment opportunity arises, or just talk amongst ourselves her, well we contribute to our own demise.
So, if there are any lurkers out there, who have not ventured yet into the comment world of expressing your opinion, and you want to start, I would say, that “The Hill” is a good first effort. That publication gets read by the political class in DC who ultimately decide. As @blaze said.. If you think you are too small to make a difference, try sleeping with a mosquito!
Arrow, sorry to hear that you’re going through so much struggle, healthwise. Rootin’ for you to beat that leukemia. And that’s another thing that pisses me off greatly about FATCA is that while the USA is rooting out expat’s bank accounts to siphon what money they can get their grubby, greedy, misspending hands on, those of you who are undergoing health problems and need that money are getting robbed blind.
@Arrow, we’re all rooting for your recovery!!
Wished I could have given you 10 thumbs up for your comment @TheHill
@Roger Conklin has a good one too, just needs some paragraphy breaks 🙂 He should be sleeping now, instead of posting. Hope he is getting some rest..
Finally James has the best analogy about Reuters and Patrick Temple-West so called reporting…
Spread the hastag #KILLFATCA ye twitterites! 😉
I join with the others to wish you a speedy and comfortable recovery and to thank you for all that you do for us!
is there info yet as to specifically which parts of FATCA are up to be repealed?
Yes, specifically pages P.L. 111-147
Now you have to look up the original bill and see what those pages are. I haven’t yet done so..
It comes up as no text available within Library of Congress *via Govtrack(
Not sure exactly how this works but doesn’t look good, I love the factors that hurt the bill.
1% chance of getting past committee.
0% chance of being enacted.
Only 12% of Senate bills made it past committee and only 2% were enacted in 2011–2013. [show factors | methodology]
The following factors hurt this bill:
The bill was referred to Senate Finance.
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.
Introduced in the House and Senate as Foreign Account Tax Compliance Act of 2009 (S. 1934, H.R. 3933) by Max Baucus (D–Montana); Charles Rangel (D–NY-13) on October 27, 2009
Huff & Puff moderated away my first innocuous comment. Good work for a patriotic democrat working at 3:30 am in Worstington DC, or is it all handled by lackeys on Central European Time?
Here is the 2nd one
FATCA with-holds 30% of payments going to or from any bank which does not agree to report upon the people that live in that country but were born in USA, who have a checking account and mortgage at that bank.
@arrow. Good luck with your care and the challenges you face. Sounds like you are in capable hands. I am a physician and was head of two of Canada’s largest cancer care institutions. Let me know if you need any help with anything.
@AbusedExpat: yep, more of the same old Patrick Temple-West goodness. “Anti-tax advocates on Wednesday applauded an effort by Senator Rand Paul” (yep, the Credit Union National Association is just a bunch of “anti-tax advocates”). “The bill would also eliminate a FATCA requirement that U.S. citizens report certain offshore assets as part of their income tax filings” (leaving only pre-existing requirements that those same assets be reported on FBAR, Form 3520, Form 5471, Form 8858, and Form 8621). Et cetera ad nauseum.