US Court Dismisses Case Against FATCA Disclosures
The US District Court for the Southern District of Ohio has dismissed a case brought by Senator Rand Paul (R – Kentucky) and a group of individuals, who attempted to make several challenges to the Foreign Account Tax Compliance Act (FATCA) and the Report of Foreign Bank and Financial Accounts (FBAR).
The case, Mark Crawford, et al vs. United States Department of the Treasury, et al (No. 3:15-CV-00250), sought to stop the enforcement of both the intergovernmental agreements (IGAs) negotiated by the US Treasury Department and the Internal Revenue Service (IRS) with other foreign jurisdictions to enforce FATCA, and also the account reporting requirements of both FATCA and FBAR.
FATCA, enacted by the US Congress in 2010, requires all financial institutions (FIs) outside of the United States to submit regular information to the IRS on financial accounts held by US persons with a value of at least USD50,000. Otherwise, certain payments of US-sourced income face a 30 percent withholding tax.
An FBAR must be filed with the Financial Crimes Enforcement Network (FinCEN) by American taxpayers who have one or more bank or financial account located outside the United States, or signature authority over such accounts, whose aggregate value exceeds USD10,000 at any time.
In their introduction to the case, the plaintiffs stated that the FATCA and FBAR “laws and agreements impose unique and discriminatory burdens on US citizens living and working abroad,” and that “the challenged provisions are unconstitutional and the defendants [Treasury, IRS and FinCEN] should be enjoined from enforcing them.”
The plaintiffs called IGAs unconstitutional, as they had not been submitted to the US Senate for its advice, consent or approval, while they also “nullify the right of individuals to refuse to waive foreign privacy laws that would otherwise prohibit their banks from disclosing their account information to the IRS.”
More about this case can be found at Tax-News.com