Reviewing the Unintended Consequences of the Foreign Account Tax Compliance Act

PURPOSE:

• To examine the effects of the Foreign Account Tax Compliance Act (FATCA) on the U.S. and international economy, as well as potential legislative remedies.

BACKGROUND:

• Signed into law in 2010, FATCA requires non-U.S. financial institutions to report assets and identities of U.S. citizens with non-U.S. financial accounts to the Internal Revenue Service.
• As a result, many foreign banks have stopped serving U.S. citizens, and record numbers of Americans have renounced their citizenship.
• Senator Rand Paul (R-KY) and five expatriates filed a lawsuit claiming FATCA constitutes an unconstitutional breach of privacy, as well as an illegal treaty