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 Enacted in 2010 and set to go into effect in July, FATCA will
require foreign banks to disclose to the U.S. government information
about Americans' accounts worth $50,000 or more.
In a reciprocal information-sharing effort, the Internal Revenue
Service also wrote rules requiring U.S. banks to disclose
information about U.S. accounts held by many foreigners that earn at
least $10 of interest per year.
In a lawsuit filed in April 2013, the Florida Bankers Association
and Texas Bankers Association challenged those rules aimed at U.S.
banks as burdensome and an obstacle to foreign investment in the
United States.
The information provided by the U.S. banks to the IRS would be made
available to about 70 foreign governments as part of a global regime
of information-sharing meant to combat the hiding of assets from tax
authorities.
RNC WANTS FATCA REPEALED
FATCA's success depends in part on reciprocal information sharing by
U.S. banks. Legal experts have said that the bankers' associations'
lawsuit, if successful, could undermine the government's ability to
negotiate FATCA implementation agreements with other countries.
In a win for the U.S. government, Judge James Boasberg of the U.S.
District Court for the District Columbia last month dismissed the
banking groups' lawsuit, finding that the rules would impose
"minimal burden" on the banks and their customers.
In a court filing on Tuesday, the bankers' associations said they
were appealing to the District of Columbia Court of Appeals.
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Lawyers for the associations, the Treasury Department and IRS could
not immediately be reached for comment.
In a statement, the bankers' groups said the rules are a "sweeping
change" in the way the government treats individuals wanting to
invest in the United States.
The rules have already resulted in the outflow of $500 million from
the Texas banking system, Eric Sandberg, president of the Texas
Bankers Association, said in the statement.
FATCA has come under heavy attack from libertarians and
congressional Republicans, who have criticized it as government
overreach and an invasion of financial privacy.
The Republican National Committee last month called for its repeal,
saying it would create a costly layer of bureaucracy, cause capital
flight and hurt the U.S. economy.
(Reporting by Dena Aubin; editing by
Kevin Drawbaugh and Stephen Powell)
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