United States

Circuit court rejects Senator Rand Paul's challenge to FATCA

TAX ALERT  | 

 In a recent decision, see Crawford v. Dep’t of Treasury, the Sixth Circuit Court of Appeals denied Senator Rand Paul’s appeal of a lower court decision denying his challenge to the validity the Foreign Account Tax Compliance Act (FATCA). Affirming the District Court’s judgement, the Sixth Circuit agreed that Senator Paul and the other account holders did not meet the requirements to challenge certain provisions of FATCA in federal court.

Previously, Senator Paul and several foreign account holders sought to block the enforcement of FATCA, as well as the enforcement of certain intergovernmental agreements (IGAs) and the requirement to file a Foreign Bank Account Report (FBAR). Specifically, Senator Paul challenged the IGAs on the theory that he had been denied his constitutional right as a member of the U.S. Senate to vote against the FATCA IGAs. Judge Danny J. Boggs, in writing for a panel of the Sixth Circuit, stated that Senator Paul’s remedy was to seek the repeal of, or an amendment to FATCA.

This decision means that the FATCA statute and the elaborate information reporting system that it spawned will stay in place, at least for now. More importantly, the decision could have an impact on the status of a number of other tax treaties on which Senator Paul has placed a hold. While this loss does not change the status of the bilateral tax treaties Senator Paul is blocking, it could be a sign that the Senator’s position on these treaties may change, potentially freeing up the road to their ultimate passage.

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