There are a number of inaccuracies in your piece.
“This isn’t new; FATCA has only consolidated the rule that has been in place since the passage of the PATRIOT Act (Title III)”
The reporting of foreign accounts has absolutely NOTHING to do with the Patriot Act. The Bank Secrecy Act of 1970, is the source statute. In addition, as this was intended to apply to Homelanders, those living abroad with foreign accounts were completely unaware of this. When the IRS chose to ignore that these were legitimate accounts, required to live in one’s country, the largest renunciation movement in the history of the United States was launched (2009 onward). By penalizing those abroad who tried to come forward (rather than those Homelanders who DO use foreign accounts to evade tax), the United States has alienated its best ambassadors. It should be added that the U.S. performed NO due diligence in notifying those living outside the country, of this requirement. This is reprehensible.
“You further go on to slander the FATCA by claiming it hurts our relationship with other nations — which is also entirely untrue”
Are you living inside the U.S.? Are you following closely the reaction of other people to this? As more and more people renounce, new lawsuits begin to be funded and so on, you would see that the disruption caused in other countries will further erode the perception of the U.S. and what it has done.
“I would like a source on “non-American relatives”
Many of the 8 million Americans living abroad are married to “aliens.” Many of the accounts of the US Person are actually funded by the “alien” spouse and the name of the US Person is there to protect the family in the unfortunate death of the “alien.” The United States refuses to even look at these accounts as only 50% owned by the US Person. This matters a great deal in situations where there are FBAR penalties applied. They are doubled because of the extra 50% and do a horrible injustice to the family. Again, this is not a reasonable step on the part of the U.S. The large majority of these people will not owe ANY annual income tax.
“explicitly calls for closer scrutiny on accounts that have these indicia”
Yes, the indicia point that the intention of Congress was to target Homelanders. For foreign banks/ governments to apply this to their own citizens (and to incur all the costs) is nothing short of obscene.
“There is no “encroachment” on the “privacy” of average foreign citizens — “
That is completely erroneous. It is against the privacy laws of other countries for financial institutions to release personal information of clients. These governments had to pass laws to break their own laws. And whether one likes it or not, the U.S. needs to understand that the country of residence has the right to deal with its citizens without the interference of another country. That is, dual citizens living outside the U.S. should not be considered U.S. citizens “first” unless they are living in the Homeland. Regardless of citizenship-based taxation.
“This isn’t a US thing, it’s an international cooperation thing.”
No sir. One would not call it cooperation. The US threatened a 30% withholding on any unreported US accounts. No country could allow their banks to do this as massive lawsuits would follow as privacy laws were broken. To tell your trading partners and allies that this is the consequence for not “cooperating” makes it entirely a “U.S. thing.” The OECD’s Common Reporting Standard/Automatic Exchange of Information is NOT equivalent to FATCA for two reasons. First, the agreements between countries affect residents and the countries determine the terms. With FATCA, not only does the US only determine the terms, they require the other nations to pay all of the costs. Secondly, the reporting requirements under OECD involve complete reciprocity and makes sense due to the worldwide practice of residence-based taxation. Under FATCA, not only does the other nation receive far, far less information of any value, it will not even receive THAT information because the U.S. claims it cannot release the information for the same reason the other countries had to change their laws. And the U.S. will not sign the OECD treaty. The OECD was forced to add a clause indicating the US was in compliance when they have done nothing. Honestly, you simply cannot make this stuff up.
FATCA is nothing short of gross imperialism, the scope of which has never been seen before. There is nothing in it to benefit anyone else and eventually, there will be a price to pay for it. Count on it.