FATCA: A Surge of Seizure Fever


Monday July 7th, 2014   •   Posted by K. Lloyd Billingsley at 7:08am PDT   •  

BW-IRS-Logo_200As we recently noted, Americans are still paying a heavy price for mistakes by the Internal Revenue Service. These include a “Seizure Fever” campaign that rewarded IRS employees based on how much money they had confiscated. The IRS also handed out billions in improper payments and fraudulent tax returns, paid millions in bonuses to IRS employees who were under disciplinary action, and targeted groups that advance the cause of lower taxes and limited government. All this, and more, would seem to be grounds to cut back a powerful agency that is clearly out of control. The response is more mission creep.

As Richard Rubin explains, “the Internal Revenue Service is about to get an unprecedented look at bank accounts and investments U.S. citizens hold abroad, through a law that is making it harder to hide assets from the tax collector.” The new law is the Foreign Account Tax Compliance Act (FATCA), which supposedly addresses “the inability of federal tax authorities to obtain clear information about financial accounts that U.S. citizens have outside the country.” This is important for American taxpayers, Rubin explains, “because unlike many other countries, it taxes citizens on their worldwide income regardless of where they actually live.”

FATCA allows the IRS to grab data from more than 77,000 financial institutions and 80 governments. Failure to report Americans’ accounts of more than $50,000 will slap the financial institution with a tax penalty of 30 percent. Nigel Green, founder of an institution with 80,000 expatriate clients, told MainStreet that FATCA brands Americans overseas as “financial pariahs” and that “FATCA’s costly and onerous regulations mean Americans are now typically deemed more trouble than they are worth.” And branding American businesses in international markets with “leprosy-like status” could hurt their global competitiveness and the U.S. economy.

So whatever the consequences, seizure fever is back on a wider scale than ever before. On the other hand, it never really left and was never restricted to big corporations. For more than 70 years the IRS has been getting workers’ money before the workers themselves, courtesy of paycheck withholding. The government’s needs remain number one. Workers aren’t even number two.




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