Continued Block On US Tax Treaty Approvals

By Editorial 12 May, 2014

Rand Paul (R – Kentucky), in a May 7 letter to United States Senate Majority Leader Harry Reid (D – Nevada), confirmed that he will continue to block the passage of five tax treaties that are presently awaiting a move to the Senate floor.

The passage of tax treaties through Congress has been blocked since 2011, largely through the efforts of Paul, who also introduced a bill last year to repeal swathes of the Foreign Account Tax Compliance Act (FATCA). Paul has cited privacy concerns surrounding the exchange of US taxpayer information within both the tax treaties and under FATCA.

In his letter to Reid, Paul again cites his view that the five agreements – with Switzerland, Luxembourg, Hungary, Chile and the Organization for Economic Cooperation and Development – would flout the privacy rights of US individuals and US expats.

Previous treaties, he wrote, "were more focused on information specific to suspicions of tax fraud, while requiring that serious allegations of wrongdoing were grounded in evidence. It appears these treaties may end up being the tool that implements FATCA," which requires foreign financial institutions to "send the Internal Revenue Service (IRS) the private records of overseas American bank account holders – no questions asked, and no reasonable suspicion, due process, or court order required."

While reiterating that he does not "condone tax cheats," he continued that he cannot "support a law that punishes every American in pursuit of a few tax cheats, … (and he will) object to any unanimous consent request, motion, or waiver of any rule in relation to these treaties or any related measure."

Although there was no immediate reaction from the Government to Paul's letter, Treasury Deputy Assistant Secretary (International Tax Affairs) Robert Stack had, earlier this year, tried to give reassurance that "one of the critical principles under today's existing international standards for information exchange upon request is that the country receiving information must ensure that exchanged information is kept confidential and only used for legitimate tax administration purposes."

Tags: Individuals | Expatriates | Compliance | Foreign Account Tax Compliance Act (FATCA) | Tax | Tax Compliance | Chile | Hungary | FATCA | Law | Organisation For Economic Co-operation And Development (OECD) | Luxembourg | Internal Revenue Service (IRS) | Tax Authority | Agreements | Switzerland | United States | Compliance | Expats | Tax |


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