WASHINGTON, May 8: US Senator Rand Paul introduced a bill late on Tuesday that would repeal parts of a 2010 law designed to fight offshore tax evasion by Americans with assets hidden in foreign banks.
The Foreign Account Tax Compliance Act (FATCA) is being implemented worldwide through a series of agreements between the US government and other governments and foreign banks.
Paul, a Kentucky Republican with libertarian views, has been a critic of FATCA, saying it invades individuals’ privacy. His bill has little chance of winning approval in the Democratic-controlled Senate.
Starting next year under FATCA, foreign banks, investment funds and other financial institutions will have to tell the US Internal Revenue Service about Americans with accounts that are worth more than 50,000 dollars. Firms failing to comply could effectively be frozen out of US capital markets.
In a letter to other senators, Paul said his bill would repeal only provisions that undermine US privacy protections.
“The intent of this bill is not to disrupt legitimate tax enforcement,” said Paul, who is popular among conservative Tea Party Republicans and libertarians.
Seen as a possible presidential contender in 2016, Paul is the son of former Texas Republican Representative Ron Paul, who ran unsuccessfully for president three times.
Spokespersons for Senator Paul and for the US Treasury Department could not immediately be reached for comment.
Senator Paul has been under pressure recently from some multinational businesses to drop his opposition to tax treaties between the United States and other nations.
Citing privacy concerns about Americans’ tax data, Paul has single-handedly blocked Senate action on treaties with Hungary, Switzerland and Luxembourg. Other tax treaties or treaty updates may soon be added to the Senate’s queue for confirmation votes.
Paul has said he is concerned the treaties would give foreign governments too much access to US citizens’ tax information. No new tax treaties or treaty updates have been approved since 2010, when Paul was elected.
Paul recently declined to answer questions about the “hold” he has placed on the treaties. Under Senate rules, one senator can prevent a motion from reaching a vote on the Senate floor.
The United States has tax treaties with more than 60 countries. The agreements previously have routinely won Senate approval with little controversy and accomplished their main purpose of preventing double-taxation of income and profits.
Tax treaties have recently begun to play an increasing role in the FATCA effort. The US Treasury in 2012 began signing new tax pacts with countries as part of implementation of FATCA.
The United States and Switzerland, for instance, signed a FATCA agreement in February that would provide more information to US authorities about the financial interests of Americans in Switzerland. But the information exchange pact cannot go into force without Senate approval of the US-Swiss tax treaty.
(AGENCIES)
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