Is FATCA untouchable? SCOTUS turns downs tax-law case.

On Behalf of | Apr 11, 2018 | Fraud

There are scores of federal agencies across the country, with most of them not garnering any particularly strong reactions from Americans who contemplate them.

Here’s an exception, with the acronym alone having the power to induce spiked pulse rates in legions of people across the country: IRS.

The Internal Revenue Service has a commanding voice, for the simple reason that failure to adhere to its dictates can yield some truly nasty consequences.

A prime example of that is illustrated through FATCA, the Foreign Account Tax Compliance Act that was enacted as federal law back in 2010. That legislation was ostensibly drafted with the primary purpose of catching and punishing tax cheats who hide untaxed wealth in offshore accounts.

Arguably, there is more to FATCA than that narrowly stated purpose. Legions of affected individuals and families, as well as American businesses with overseas holdings, contend that the law has consistently targeted citizens/filers in unfair and even unlawful ways. Naysayers say that FATCA is unconstitutional for its invasions on privacy and the seemingly untampered discretion and power it confers on the IRS to interfere with American life. Many filers find its exactions unduly intrusive and complex. They maintain that FATCA scrutiny leads to selective and unbalanced results.

And, thus, FATCA has been challenged in the courts. A group of disgruntled expatriates (led principally by U.S. Sen Rand Paul (R-KY) recently sought to test the legislation by petitioning for U.S. Supreme Court review of a lower federal decision denying plaintiffs a right to sue in a FATCA matter.

Tellingly, the country’s highest court declined to hear the matter.

“We regroup and fight again,” stated one claimant, who referred to “FATCA tyranny” in the wake of the court’s decision.

FATCA has been routinely criticized for overreach and arguably unlawful application since its inception, including in the U.S. Congress, where unsuccessful attempts have been made to repeal it. The legislation’s perceived unfairness and lack of constitutional grounding will likely continue to be challenged by plaintiff groups in the future.

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