Using a Sledgehammer to Crack a Nut: Why FATCA Will Not Stand

32 Pages Posted: 10 Apr 2013

See all articles by Frederic Behrens

Frederic Behrens

University of Wisconsin - Madison - Wisconsin Law Review

Date Written: April 9, 2013


The Foreign Account Tax Compliance Act (FATCA) became law in 2010 and is an important development in combatting income tax evasion. Under FATCA, American individual and corporate taxpayers must provide comprehensive information to the Internal Revenue Service (IRS) regarding foreign bank accounts. In addition, a more controversial part of FATCA requires foreign banks to report directly to the IRS certain information about financial accounts held by American taxpayers.

These drastic changes in American tax policy are alarming to the international financial community. International banks are forced to implement expensive compliance programs to satisfy the information reporting requirements. An increasing number of foreign financial institutions will no longer want any involvement with American citizens or investments. Furthermore, Americans living abroad might be forced to denounce their American citizenship in order to gain access to insurance and basic banking options.

In response to the unilateral imposition of FATCA, foreign governments and banks may lobby for its repeal. This Comment examines factors in the global movement to repeal FATCA and suggests several workable solutions that would be agreeable to the United States and foreign nations. Specifically, this Comment suggests how investment income withholding and increased IRS enforcement actions are a better solution to prevent income tax evasion.

Keywords: FATCA, tax, IRS, FBAR, offshore, foreign banks, FATCA repeal, withholding tax, tax policy, tax evasion, OVDI

Suggested Citation

Behrens, Frederic, Using a Sledgehammer to Crack a Nut: Why FATCA Will Not Stand (April 9, 2013). Wisconsin Law Review, Vol. 2013, No. 1, pp. 205-236, Available at SSRN:

Frederic Behrens (Contact Author)

University of Wisconsin - Madison - Wisconsin Law Review ( email )

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