Below is a letter received by a “US Person Abroad” from US Senator Dianne Feinstein in response to a letter urging her support for Senator Rand Paul’s bill to repeal the most burdensome provisions of FATCA.
As pointed out,
“Clearly Senator Feinstein is simply towing the Democratic Party line to support FATCA and the Administration’s enforcement actions. Quite disappointing to say the least.”
Thank you for contacting me to express your concerns about the impacts of the foreign tax provisions included in the “Hiring Incentives to Restore Employment (HIRE) Act” (P.L. 111-147). I appreciate the time you took to write and sincerely apologize for the delay in my response.
As you know, the HIRE Act included a number of provisions, known collectively as the “Foreign Account Tax Compliance Act (FATCA),” that were intended to combat tax evasion by Americans holding investments in offshore accounts. FATCA requires U.S. taxpayers with over $50,000 of assets in foreign accounts to report information on their tax returns that is currently included in a Foreign Bank and Financial Account Report (FBAR). FATCA also institutes a 30% withholding rate on payments to foreign financial institutions. The principal exemptions from the withholding tax apply to interest on bank deposits, portfolio interest, and capital gains.
I understand your concerns that these provisions could negatively impact global investment in the United States and encourage foreign investors to divest from U.S. securities and holdings. While I share your belief in the importance of continued global investment, I am also concerned about the serious problem of tax avoidance. The Internal Revenue Service (IRS) recently announced an agreement with the United Bank of Switzerland (UBS) to collect back taxes and penalties from thousands of UBS customers found guilty of tax evasion. The IRS estimates that the average tax collections per case to be over $200,000, with individual cases of over $20 million in back taxes and penalties. Tax evasion penalizes all honest and law-abiding citizens, and the agreement with UBS underscores the continued need to enforce tax compliance.
To date, legislation to repeal the FATCA tax provisions has not come before the Senate for a vote. However, please be assured that I have noted your strong opposition to these provisions and will be sure to keep your comments in mind should legislation come before the full Senate.
Once again, thank you for writing. If you have any additional questions or concerns, please do not hesitate to contact my Washington, D.C. office at (202) 224-3841, or visit my website at http://feinstein.senate.gov.
United States Senator
Seems Senator Feinstein and other congresspersons will ever label all ‘US Persons Abroad’ tax evaders.