updated 2:11 PM CET, Oct 31, 2023

ACA: 'TIGTA report on FATCA is further proof that Congressional hearings are needed now'

U.S. Capitol building, with ACA's Charles Bruce U.S. Capitol building, with ACA's Charles Bruce

A major new U.S. Treasury Inspector General for Tax Administration (TIGTA) report released last week, detailing what it says are a number of shortcomings in the way the IRS has overseen compliance with FATCA since it was introduced in 2010, is the latest in a growing body of evidence of the need for Congressional hearings to be held into some of the taxation and citizenship issues America's expats are currently struggling with.

So, at least, say campaigners and advocates for Americans resident outside of the U.S., who are urging such expats to call for such hearings to take place as soon as possible.

Charles Bruce, legal counsel for the Washington, D.C.-based American Citizens Abroad, admits it won’t be easy to get Washington lawmakers to prioritize such hearings at present, given such powerful distractions as the war in Ukraine, the ongoing Covid pandemic and its powerful effects on the U.S. economy, and the approaching mid-term elections.

But this is why it’s all the more important that as many expats as possible get involved in calling for such hearings, he stressed, in a recent interview with the American Expat Financial News Journal.

Particularly since the TIGTA findings suggest that the U.S. government may soon look to ramp up certain existing compliance strategies on the basis of data that is years out of date, and which is also based on ideas about tax evasion strategies that may also be dated, Bruce noted.

This means that not only may expats be about to undergo still further, or at the very least continued, disruption in their efforts to open and maintain overseas bank accounts, for example, he explained, but it also suggests that these well-intentioned efforts on the part of the U.S. tax authorities may be no more successful in generating tax revenue than its efforts of the past 12 years, which this new TIGTA report is calling inadequate.

ACA has been calling for such hearings for years, but has recently ramped up its insistence of the need for the government to stop putting them off, and hold them ASAP.

And with the release, expected later this week, by ACA of major new research into the American expat diaspora – which ACA’s sister organization, the American Citizens Abroad Global Foundation, commissioned (at significant, crowd-funded expense) last year from the District Economics Group (DEG) – the timing for a well-organized Ways & Means Committee hearing within the next month or two could hardly be better, Bruce points out.

Such hearings could also provide a much-needed but also-till-now-not-enabled chance for those calling on the U.S. to move to a residence-based tax regime from its current, and all-but-unique in the world, citizenship-based regime (CBT) to have their say, he and others say.

RBT is another area that ACA has been campaigning for years, and one that it says its latest research will provide fresh and compelling support for.

Bruce: Case for hearings lies
in their educational value

Bruce, who has been working in and around Capitol Hill for decades, says the soft power of hearings is their ability to educate all the parties affected by the issue in question – not just the members of Congress the hearings are aimed at, important though this clearly is as well.

“Yes, hearings are needed to educate Congress, but they also would educate Americans abroad, and the organizations advocating for them," he notes.

The standard of the testimony normally delivered in Congressional hearings is another reason for their value, Bruce argues. "Members of Congress, their staffs, professionals at the Joint Committee on Taxation and the Office of Tax Policy, these people aren't novices. They are very experienced and very smart. So we have to come with open hands and tell them what we see and show them what information we have.”

"It makes us more effective. It makes our efforts more realistic."

Such hearings necessarily would be held by the House Ways & Means Committee (as opposed to anywhere else in Washington) because it is the epicenter of the U.S. government's tax- and revenue-raising measures.

For this reason, ACA says it is not only urging its members and expats to pressure their Congressional representatives to get involved in calling for such hearings, but that they reach out directly as well to House Ways & Means Committee chairman Richard Neal (D – MA) "to personally make [such] hearings a priority."

Expected ‘billions’ never materialized

As the AXFNJ noted, last week's 37-page TIGTA report – apparently bearing as its title its overall conclusion ("Additional Actions Are Needed to Address Non-Filing and Non-Reporting Compliance Under the Foreign Account Tax Compliance Act" ) – essentially concludes that far from generating US$8.7 billion in tax revenues by the end of the government's 2020 financial year, and in spite of "nearly US$574 million of FATCA-related implementation and maintenance costs, the IRS has little to show for its FATCA efforts since 2010, beyond around US$14 million in revenue from penalties.

Of this report, Bruce says he thinks it made "great reading" and urged anyone with an interest in FATCA to "read the whole thing."

He added: "In this report, TIGTA is making six well-thought-out recommendations, which people should focus on."

The report may be viewed and downloaded by clicking here. 

ACA sign-up pages calling for hearings

The American Citizens Abroad's website's "Take Action" page, which may be viewed by clicking here, offers expats interested in urging Congress to hold hearings two easy options: One is entitled "Call on House Ways and Means Committee Chairman Richard Neal to hold hearings on Americans Abroad," while the other is a more general request, for the House Ways and Means Committee to hold hearings into "tax fairness for Americans abroad".  

To view these pages, click here: https://www.americansabroad.org/take-action/ .

Past Congressional hearings on expat issues

The last time Congressional hearings were held on the subject of issues affecting expatriate Americans specifically was probably a virtual Senate Finance Committee hearing held in March, 2021, on U.S. international tax policy. As reported, the ACA's testimony highlighted the fact that U.S. international tax policy "overwhelmingly" focuses on corporations and business entities, while ignoring "individuals, in particular American citizens residing outside the United States". 

In April 2017, the House Oversight and Government Reform Committee’s Government Operations Subcommittee held a hearing on the subject of the "Unintended Consequences of the Foreign Account Tax Compliance Act,” which featured testimony by Sen. Rand Paul (R – KY), who at that point had just introduced a bill aimed at repealing FATCA, which even by then he'd become known for being a critic of, having been party to a legal challenge over the legislation's constitutionality in 2015.

In May of 2021, a U.S. Senate subcommittee held a hearing that wasn't specifically focused on expat issues, but touched on them because expats are so often captured in the U.S. government's fishing nets aimed at wealthy Homeland tax evaders. A review of some of the comments of those who testified at that hearing may be viewed by clicking here.