Seven people, including U.S. Republican candidate Rand Paul and a Jerusalem attorney, are suing the U.S. Treasury Department and Internal Revenue Service asserting that the Foreign Account Tax Compliance Act, of FATCA, is unconstitutional.
FATCA “imposes enormous economic costs on individuals and financial institutions,” according to the suit by the U.S. senator from Kentucky and six others, including the Jerusalem attorney and Republicans Aboard activist Marc Zell.
FACTA requires Americans living abroad to report bank accounts holding in excess of $50,000 along with their annual tax returns. FATCA also requires foreign banks to report any account held by a U.S. taxpayers.
The 2010 law aims to make it harder for Americans to hide assets overseas, but the suit claims it violates privacy rights. The suit, filed in federal court in Dayton, Ohio, Tuesday, seeks to strike down requirements for Americans to file reports on foreign accounts over $10,000.
Justice Department representatives weren’t avilable for comment, Bloomberg News reported
President Barack Obama signed the law in 2010, but the bilateral accords reached to enforce it didn’t get congressional approval and exceeded the president’s authority, the suit claims. He asked a judge to strike down the agreements with Israel as well as the Canadian, Czech and Swiss governments.
The lawsuit also targets the requirement that Americans abroad disclose accounts through a Report of Foreign Bank and Financial Accounts, or FBAR.
A study conducted by the Democrats Abroad and cited by Republican Overseas said those most affected were middle class, noting that 68% of checking accounts and 40.4% of savings accounts closed due to FATCA had balances of less than $10,000