American expats are waiting with bated breath to see if President-elect Donald Trump will repeal the disliked Foreign Account Tax Compliance Act (FATCA).
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FATCA was the brainchild of outgoing President Barack Obama and introduced to help the Internal Revenue Service (IRS) track down suspected tax cheats with secret money and investments hidden in overseas banks.
Since the law was introduced in 2014, the IRS has grabbed $10 billion from nearly 100,000 US taxpayers.
Thousands of other taxpayers have rushed to file late tax returns or amend filings to avoid falling foul of fines and interest penalties.
However, expats led by the lobby group Republicans Abroad claim the law is unfair to expats and breaches the right to privacy given under the US constitution.
Banks reject US expat customers
The group has funded several court cases in the US, Canada and Israel aimed at disrupting FATCA enforcement, but lost each case.
As a Republican president now sits in The White House and following senate and congress elections which give the party a majority in both houses, the expectation is FATCA may be repealed.
Expats would cheer this move as the law has made them banking outcasts.
Many have told the courts that they have had bank accounts closed, loans and mortgages recalled and been denied the right to open accounts by foreign banks.
The banks argue they do not want US customers due to the costs of complying with FATCA.
Republican campaign against FATCA
The law demands that foreign financial institutions must file a report every year identifying their US customers who live in America and have accounts or investments worth more than $50,000 or who are expats with accounts or investments worth more than $200,000.
Non-compliance by banks leads to fines and a ban on operating in the US banking system.
Although Trump has not commented on his standing towards FATCA, the Republican platform calls for the repeal of the law and for the IRS to levy taxes based on residency.
“FATCA not only allows “unreasonable search and seizures” but also threatens the ability of overseas Americans to lead normal lives. We call for its repeal and for a change to residency-based taxation for US citizens overseas,2 says the platform.
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