Treasury Lacks Authority to Enforce FATCA Reciprocity
Foreign governments might be excused for finding this all very confusing. After all, many were promised by the Treasury Department that the U.S. would give what it receives. In reality, the obligations specified under the IGAs only commit the U.S. to “pursuing the adoption of regulations and advocating and supporting relevant legislation to achieve such equivalent levels of reciprocal automatic information exchange.” This is a convoluted way of saying that the Treasury Department really, really wants to provide reciprocal information, and it’ll even ask nicely for actual Congressional authority to do so.
That’s right, the Treasury Department – the only U.S. body involved in authorizing, negotiating or signing IGAs – has no authority to provide reciprocal information. And since the agreements are not being submitted to the Senate for its advice and consent as constitutionally required for ratification of treaties, they haven’t true force of law within the United States. Although Treasury prefers not to advertise its need for additional authority, it’s been implicitly acknowledged by inclusions of provisions asking such authority in the administration’s budget requests, as well as by officials speaking behind closed doors.
But there are large nations that do care about reciprocation, and their cooperation is essential for FATCA to work. Should they tire of broken promises and hypocrisy from the U.S., they may demand renegotiation and once again throw viability of the entire system into question. The question remaining will be whether any soul searching about American fiscal imperialism is sparked should the entire enterprise blow up in their collective faces.
FATCA clearly isn’t about stopping tax evasion or collecting revenue, as the numbers show. It’s all about setting up the architecture to the ultimate goal of establishing a global tax. See here for more.