WASHINGTON (3/18/14)--The Foreign Account Tax Compliance Act (FATCA) "treats Americans living overseas unfairly," Sen. Rob Portman (R-Ohio) wrote in a letter sent on behalf of the National Republican Senatorial Committee last week.
The letter was sent to Republicans Overseas Action Inc., a group that bills itself as a 501(C)(4) organization that has been formed "for the purpose of educating the public worldwide on why FATCA violates U.S. citizens' and foreign passport-holding U.S. residents' constitutional protections."
The practical effect of FATCA is to "make it impossible for Americans living abroad to open a bank account since foreign banks have no desire to become the eyes of the American government," Portman said. He added he is glad the Republican National Committee has added FATCA opposition to its issues platform for upcoming elections.
FATCA is designed to create a tax information reporting and withholding system for certain payments that are made to foreign financial institutions (FFIs) and other entities. Some provisions would apply to U.S. credit unions that make international payments. U.S. credit unions would also be required to identify and withhold on so-called "pass-through payments" to FFIs involving transfers of U.S.-sourced investment or interest income to an FFI that has not yet been subject to taxation.
Opposition to FATCA continues to grow in the U.S., and Rep. Bill Posey (R-Fla.) last year introduced H.R. 2299, which would repeal the Internal Revenue Service's recent expansion of U.S. credit union and bank reporting rules with respect to interest on deposits paid to nonresident aliens.
CUNA and the World Council of Credit Unions have supported the Posey repeal bill, saying in a joint letter to Posey that the legislation "would be instrumental in eliminating an unnecessary and unduly burdensome rule for credit unions." (See resource link.)