Rand Paul introduces bill to roll back parts of tax evasion law

Congress enacted FATCA in 2010 as part of broader legislation, and the Treasury Department spent the next couple of years working on regulations for the law – with final rules being issued early this year.

{mosads}The law requires foreign banks to share certain information on U.S. citizens with the IRS – with the failure to do so leaving those financial institutions open to a 30 percent penalty on income from the United States

Treasury has also signed agreements with more than a half dozen countries – including Switzerland, long known for being friendly to tax privacy – to help implement FATCA.

The banking industry, foreign governments and businesses, and U.S. citizens living abroad are among the critics who call the law burdensome. Supporters of the bill say that FATCA will help eat into the gap between what taxpayers owe and what they send to the government.

Paul, who has libertarian leanings that have led him to criticize the Patriot Act and the White House’s drone policies, says that those bilateral agreements give the IRS details about private citizens’ financial holdings without a warrant or a link to tax evasion.

The Kentucky Republican’s new bill, introduced Tuesday, would target FATCA’s withholding and information reporting requirements – or the “anti-privacy” provisions, as Paul’s release put it.

At the same time, Paul also continues to block Senate consideration of tax treaties with Hungary, Luxembourg and Switzerland over privacy concerns.

Those sorts of treaties, which business groups broadly back, have sailed through the chamber in the past. The treaty with Switzerland, observers say, will also help implement the FATCA agreement the U.S. and Switzerland have signed.

This post was updated at 4:30 p.m.