FACTA Reform Needed to End Tax Burden on Americans Living Abroad

Mexico - Democrats Abroad has condemned Republican Presidential candidate Rand Paul's attempt to reverse, rather than reform, laws aimed at cracking down on tax evaders.

Senator Paul is leading a legal challenge to the Foreign Account Tax Compliance Act (FATCA) filed by the Bopp Law Firm - the lawyers who spearheaded the overturning of McCain-Feingold campaign finance reform via the Citizens United case.

According to research conducted by Democrats Abroad and submitted to the Senate Finance Committee, one in six Americans abroad reported being affected by FATCA with the closure of an account in a foreign bank or brokerage house.

The legal effort led by the Republican Presidential candidate will likely take years to make its way through the courts, and won't alleviate the current and real hardships for Americans abroad in the form of closed bank accounts and refused mortgage applications.

Democrats Abroad is calling on Treasury and the IRS to establish a "safe harbor" from FATCA reporting for accounts of law-abiding Americans living abroad via the establishment of a Same Country Safe Harbor provision, in which:

• no American living legally abroad would have to file a FATCA report on accounts held in his or her country of legal residence; and

• no foreign financial institutions would have to file FATCA reports on the accounts of US-tax compliant Americans residing legally in the same country.

Democrats Abroad is backing bi-partisan efforts to reform FATCA through the efforts of the co-chairs of the Congressional Americans Abroad Caucus. Representative Carolyn Maloney (D-NY) and Representative Mick Mulvaney (R-SC) are asking members of Congress to co-sign a letter addressed to Treasury Secretary Jacob Lew and IRS Commissioner John Koskinen calling for FATCA reforms.

Katie Solon, Chair of Democrats Abroad, said:

"Legal efforts by Senator Paul to roll back legislation aimed at ending tax evasion are as unnecessary as they are unsurprising. Instead of working with Democrats to quickly reform this legislation and help American families living abroad avoid having their bank accounts closed, Senator Paul is backing a return to the days when sheltering tax cheats meant huge profits.
Senator Paul's attempts to gut FATCA, led by the 'Citizens United' legal team which unleashed millions of dollars of unregulated corporate campaign donations into American elections, will not deliver the urgent and critical changes to the law that are needed by Americans living abroad. Efforts to overturn this legislation through years-long legal action, successful or not, will result in more families losing their bank accounts and having their mortgage applications refused by banks.
Repealing the law would take time, is likely not possible, and would take the teeth out of the fight against illegal tax avoidance. Banks can afford to wait for a legal challenge - but the majority of middle class American families living overseas cannot.
Laws aimed at ending tax evasion are absolutely right and necessary, but the legislation as it currently stands inadvertently harms the majority of Americans living overseas. A solution that would benefit all Americans immediately, at home and abroad, would be one that modernizes the rules with a 'Safe Harbor' from FATCA reporting for Americans abroad - eliminating the need for individuals and their banks to file reports on accounts held in their country of residence.
Democrats Abroad supports the bi-partisan effort launched last week by the co-chairs of the Congressional Americans Abroad Caucus to reform the law. Updating FATCA to reflect the needs of the growing number of Americans living and working abroad would immediately end the unnecessary burdens and penalties faced by those who pay their fair share of taxes and require foreign bank accounts and mortgages to pay their bills, receive their pension and own their own home."

For more information, contact Mike Heffron, Deputy Director of Communications - Press for Democrats Abroad, at press(at)democratsabroad.org, or on +61 478 086 315 (GMT+10)

With country committees and local chapters in over 80 countries around the world, Democrats Abroad is the official Democratic Party organization for the millions of Americans living outside the United States. It works to advance the principles of the Party by spreading the Democratic message to US voters abroad and encouraging them to vote for Democratic candidates.