Buried in H.R. 1295 (the so-called "fast track trade bill") is Section 603, which provides for NSA-style sweeping up of all financial information of all citizens and US residents. It sets the stage for that information to be shared with all countries around the world. If enacted, this would infringe on the privacy of all US citizens, and particularly those living outside the United States.
Republicans Overseas issued the following letter opposing the language and requesting that the House of Representatives remove Section 603, which was inserted only days before passage in the Senate, before passing the act. Otherwise there will no longer be any privacy of financial information and US citizen's most private information will be at risk of intentional disclosure by not only the IRS but by foreign governments around the world.
June 9, 2015
Speaker John Boehner
Majority Leader Kevin McCarthy
House of Representatives
Re: Section 603 of Senate-passed Version of H.R. 1295 (“Trade Preferences Extension Act”)
Dear Speaker Boehner and Majority Leader McCarthy,
As described in a letter in opposition to Sec. 603 from the financial industry, the Senate language would “change current law to require banks, credit unions, and broker/dealers to report to the Internal Revenue Service and our customers on all interest bearing as well as non-interest bearing accounts [emphasis added].”
Even more dangerously, it would do so by what appears to be a new statutory grant of regulatory authority to the Treasury Department:
"SEC. 6049A. RETURNS REGARDING NON-INTEREST BEARING DEPOSITS.
(a) Requirement Of Reporting.—Every person who holds a reportable deposit during any calendar year shall make a return according to the forms or regulations prescribed by the Secretary, setting forth the name and address of the person for whom such deposit was held."
This grant of authority to the Treasury Department and the IRS is not necessary for enforcement of income tax, infringes the privacy of all Americans in their financial information and opens up the door to the provision of all financial information of Americans to overseas governments under the reciprocal provisions of the Foreign Account Tax Compliance Act (“FATCA”) as well as the OECD Transparency Initiative in discussion among the United States and other members of the OECD.
1. Section 603 Not Necessary
The grant of authority to provide for the mass-collection of information on all financial accounts of all Americans is not necessary because income from such accounts is already required to be provided by all banks and brokerages in 1099s and related forms. The Senate version of Section 603 specifically requires reports on non-interest bearing accounts to be reported which will therefore provide for the unnecessary collection of private financial information that has no relation to the income tax requirements managed by the Treasury Department and the IRS.
2. Section 603 is an Unconstitutional Invasion of Privacy
The goal of locating and prosecute tax evaders is a very important goal and is a goal we at Republicans Overseas completely agree with. All citizens should pay all taxes which they owe. As the United States does not have a wealth tax, however, requiring reporting of all financial information is an unconstitutional invasion of citizen’s privacy because there is no justifiable government interest in the detailed financial asset levels of American citizens absent probable cause of tax evasion. Clearly, however, requiring all Americans to disclose all of their financial assets to the IRS could be very beneficial to catching tax evasion- just like allowing the warrantless search of everyone’s home could be very beneficial to catching other criminals. But that is not how America works and is not consistent with the protections of the Constitution.
3. Section 603 Provides the Route for Sharing of American Citizen’s Private Financial Information with Foreign Governments
Most of the Intergovernmental Agreements (IGA) entered into to implement FATCA provide for reciprocal sharing of financial information between the United States and the foreign country (including China) with which the IGA has been entered into. Under FATCA, private financial information of Americans residing (or maintaining accounts) outside of America will be provided by the foreign government or the financial institutions to the IRS. The IGAs generally provide that the Treasury will also provide reciprocal information to the foreign governments on residents in the United States that have ties to the various foreign countries (including dual citizens and residents). As a result, the gathering of the additional financial information on all US citizens and residents under Section 603 will then trigger the requirement under FATCA and IGAs to provide this private financial information to all relevant foreign governments (including where relevant, China). In addition, the OECD is in the process of developing a global transparency initiative which will further formalize wide-spread sharing of private financial information amongst the OECD. Thus, not only will Section 603 result in the Treasury Department and IRS being provided with the private, confidential financial information on all Americans and residents it will also result in that information being shared with foreign governments all around the world. All Americans and residents will thus be at risk of the intentional and accidental disclosure of their most private information by the IRS as well as the governments of countries not friendly to the United States.
We urge you to ensure that the Senate-passed language of H.R. 1295 is not passed under suspension; that Sec. 603 is removed from any relevant bills before Floor consideration; and that the House insist on dropping Sec. 603 in conference.
REPUBLICANS OVERSEAS, INC.