Swiss banks have indicated that they will, at this point, furnish requested information to U.S. officials.
The one silver lining to FATCA is that those with less than $50,000 of currency or assets in their accounts will be spared the IRS's fishing net (the
original threshold had been $10,000). But that sum is only theoretical, because Americans who hold $10,000 or more in a foreign bank account already have
to report their assets under existing regulations.
Meanwhile, FATCA's disclosure requirements will not just be limited to banks. Germany's insurance industry lobbying group (GDV) sent a 12-page letter to
the U.S. Treasury this May, outlining what it called vague language and unclear guidelines in FATCA.
According to the GDV's reading of the act, life insurance products, foreign retirement pension accounts, and reinsurance contracts (rarely sold among
individuals), could also be subject to FATCA's tax rules.
Douglas McFadyen, a tax partner at Shearman & Sterling LLP in New York, thinks FATCA costs a lot for banks to comply with but fails in its goal of
eradicating tax evasion. What's more, it makes the U.S. a less competitive place to do business.
"FATCA is another stop on the road to making the U.S. a less attractive destination for foreign capital, and U.S. capital markets less and less
competitive," McFadyen noted in a telephone interview. "The U.S. government still thinks we're living in the 1960s, which is when these offshore tax
avoidance regimes first came into being. At that time, New York was the only functioning capital market in the world. But that's not the world we live in
today. The U.S. government no longer has the ability to dictate tax policy to the rest of the world. People can go to Tokyo, Hong Kong, London. They don't
have to deal with the headache of doing business in the U.S."
Yet FATCA's most troubling legacy might be its impact on highly skilled Americans living and working aboard.
The measure is creating tax headaches for companies that give corporate officials with green cards or U.S. passports signature authority over their
But at least here, some companies have devised a quick and easy solution: they've stopped hiring Americans.
A bi-partisan coalition called the Americans Resident Abroad Working Group found that some foreign firms are excluding U.S. citizens from consideration for
senior executive posts for which they need to have signature authority.
"More generally," their report said, "Americans are disadvantaged in competing for jobs in multinational companies if they are covered by expatriate
packages because their double exposure to income tax makes them more expensive."
The report quoted one employee of a global American company who said U.S. expat headcount had been "been significantly reduced in recent years due to
increasing cost and administrative burden."