Republicans Launch Bid To Repeal FATCA

President Barak Obama’s opponents in the Republican Party are ready to call for the scrapping of Foreign Account Tax Compliance Act (FATCA).

The party’s national committee is set to back a call to stop the controversial tax law in a move that is widely seen as a tactic to gather financial support from anti-FATCA campaigners.

FATCA was introduced after the US Treasury investigators revealed Swiss banks were aiding US taxpayers to shelter their money and assets offshore rather than pay tax on the proceeds in America.

The US Treasury is currently agreeing tax information sharing treaties with dozens of countries in the run up to FATCA reporting starting from July 1.

Under the law, an estimated 700,000 foreign financial institutions are registering as FATCA-compliant through an online portal.

Luring overseas donations

The Republican action is widely regarded in the US as a strategy to enlist financial support from financial institutions and US taxpayers who stand to lose from having their financial affairs exposed to the Internal Revenue Service (IRS).

“I see FATCA just like Obama’s healthcare laws,” said Solomon Yue, the leader of the Republican FATCA repeal campaign. “It will attract American overseas donors to give money to the party.”

Around 6 million US taxpayers are expats, and the Republicans want to tap into their resources to fund opposition against Obama.

A Treasury spokesman said: “FATCA is gaining momentum and international support as we work with partners around the world to fight offshore tax evasion.”

Despite the opposition to FATCA, at best the Republican action is a cynical ploy to raise support for the party in upcoming mid-term elections and is unlikely to result in a repeal of the law.

Backing for Obama

A recent court challenge by the bankers in Florida – a strong Republican state – to stop FATCA was unceremoniously consigned into oblivion by a judge.

Obama and FATCA not only have strong home backing for FATCA, but China and Russia have indicated they will sign up to the tax pact. Britain, France, Japan, Spain and Italy are among the 20 or so nations who have already inked agreements and another 30 or so nations are negotiating FATCA treaties with the US.

The FATCA tax network will apply to all US citizens with overseas bank accounts and investments with a balance of $50,000 or more.

The law demands they report income or gains on their annual tax returns – and requires foreign financial institutions with US clients to report the details of their financial affairs to the IRS each year.

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