An unexpected development on the FATCA front. Congressman Bill Posey, a representative from the state of Florida and member of the House of Representatives Financial Services Committee, has sent a letter to the U.S. Treasury about the promises of reciprocity that Treasury is making to foreign governments as they try to negotiate agreements to implement FATCA worldwide.
For those just joining the conversation, FATCA (Foreign Account Tax Compliance Act) is a law that was voted in 2010 by the U.S. Congress as part of the HIRE Act. It requires foreign banks to report the account information of all U.S. persons (U.S. citizens and Green Card holders) all over the world to the American IRS and imposes draconian fines on foreign entities for non-compliance. The legislation is "extra-territorial" which means that the U.S. is expecting foreign governments to impose American law on their own people and banks.
"My concerns are compounded by Treasury's actions to implement the Foreign Account Tax Compliance Act (FATCA) by negotiating "Intergovernmental Agreements" (IGAs) with foreign nations that would require these countries to enforce FATCA requirements on their own financial institutions."
"I further note that the IGAs that are being entered into are not authorized, or even mentioned in FATCA. Despite the absence of any specific legislative authorization, these IGAs are not being submitted to the Senate as treaties or treaty amendments for its advice and consent..."
"I expect these broader questions to be more fully aired by the Financial Services Committee in its anticipated review of the administration's request for enhanced legislative authority. In the meantime, I believe a moratorium on FATCA enforcement and negotiation of additional IGAs is in order."