Sanctions unlikely, lobbyist says
The leading advocate for repeal of the U.S. Foreign Accounts Tax Compliance Act has called “laughable” any attempt to sanction Washington – should it rescind FATCA – for noncompliance with copycat European tax laws.
Washington-based anti-FATCA tax-lawyer and lobbyist James Jatras said European efforts to pinpoint U.S. taxpayers through the Organization of Economic Co-operation and Development and the European Union were doomed to failure.
In the wake of 2010’s FATCA, the Paris-based OECD in 2013 legislated global efforts to track overseas residents through its “Common Reporting Standards,” while the EU passed the “Automatic Exchange of Information” – through its multilateral Mutual Administrative Assistance in Tax Matters. Washington acceded to both. Cayman acceded to Common Reporting Standards in 2017 and Automatic Exchange of Information n 2014.
“The CRS and assurances of reciprocity [in tax matters],” he said, “don’t mean ‘nuthin’’ to the U.S.,” Mr. Jatras said, citing the “sheer power” wielded globally by Washington.
“What happens if we kill FATCA and pull out? Who else is capable of threatening devastating sanctions for non-compliance? Nobody,” he said.
Declaring overseas revenue
The U.S. legislation requires nearly 9 million overseas U.S. citizens and a broad range of U.S.-affiliated individuals – including 6.000 in the Cayman Islands – and companies to declare their overseas accounts and income, paying taxes to Washington’s Internal Revenue Service.
The 2010 law also requires all “foreign financial institutions” – including banks, credit unions, insurance companies, investment and pension funds – to register all their U.S.-affiliated account holders or pay a 30 percent penalty on all U.S. transactions.
“Especially keep in mind that no one can threaten us [Washington] to comply,” Mr. Jatras said, calling the sanctions “illegal.”
“You’ll notice that despite years of begging and complaining, the U.S. simply is not going to reciprocate on FATCA or on any other international reporting scheme. How can the U.S. sanction any country or institution therein for not obeying a foreign law with no jurisdiction?”
Renewed FATCA repeal efforts
The reflections come as Mr. Jatras and lobbyists from the affiliated deVere Group renew FATCA repeal efforts in the wake of President Donald Trump’s November election. Previous attempts to rescind the Obama-era legislation failed for lack of support from the democratic administration.
As early as 2014 the Republican National Committee called for FATCA repeal. In 2016, the Republican Party enshrined the call in its election platform.
Last month, Mr. Jatras and deVere Group co-founder Nigel Green met members of Congress and two tax-activist groups seeking to shape a Trump tax-reform package, anticipated in July.
Further meetings, Mr. Jatras said, involved the House of Representatives Ways and Means Committee, the Senate Budget Committee, administration officials, Kentucky Republican Senator Rand Paul and North Carolina Republican Representative Mark Meadows.
Mr. Green vowed to submit to “key Congressional leadership” a letter from “numerous tax-reform groups,” led by lobbyists from Americans for Tax Reform.
In a March 3 editorial, the Wall Street Journal accused the IRS of treating “law-abiding Americans as criminals,” and said application of the tax law was “unsystematic, unjustified, and unsuccessful.”
FATCA’s “operative assumption,” the paper said, “appears to be that all such taxpayers should be suspected of fraudulent activity, unless proven otherwise.
“The time is ripe for Republicans to make good on their pledge and give FATCA the heave-ho,” the authors wrote.
‘U.S. tax haven’
“The U.S. is the biggest tax haven of all,” Mr. Jatras said, defying Europe to “do anything about it,” saying visiting European Union Parliamentarians were “begging the government of Delaware for corporate transparency.”
Delaware is among the least-regulated U.S. states regarding taxation and corporate filing, and a long-standing target of overseas criticism of U.S. efforts to restrict offshore tax havens.
“When are these people going to figure out that even if they got all this [tax] information – which they won’t get from the U.S., FATCA or no FATCA – it would do them little good tax-revenue wise?” Mr. Jatras asked.
Asked about the effect of FATCA repeal on Cayman’s Ministry of Financial Services and its Tax Authority, Director of the Department of International Tax Cooperation Duncan Nicol said, “The ministry cannot address actions taken by other governments.”
Source: Cayman Compass