Wednesday, September 30, 2015

Judge Denies Injunctive Relief for FATCA Implementation!

An Ohio federal judge said that Senator Rand Paul, R-Ky., and others do not have standing in a challenge to the offshore financial account tax enforcement measures enacted in the Foreign Account Tax Compliance Act and they were not likely to succeed on the merits in the case. The case is Crawford v. U.S. Dep't of Treasury, S.D. Ohio, No. 3:15-cv-00250, 9/29/15.

The U.S. District Judge Thomas M. Rose said in his September 29, 2015 order denying preliminary injunctive relief that the harms claimed by the plaintiffs are “remote and speculative harms, most of which would be caused by third parties, illusory, or self-inflicted.” He rejected Paul's assertion that he would suffer injury under his claim that the executive branch isn't adhering to the law.

Regarding Sen. Paul in particular, Judge Rose said the lawmaker had not been authorized to sue on behalf of the Senate and that his claims were barred by Raines v. Byrd, in which the U.S. Supreme Court held that members of Congress challenging a law lacked Article III standing.

“Paul has alleged no injury to himself as an individual, the institutional injury he alleges is wholly abstract and widely dispersed, and his attempt to litigate this dispute at this time and in this form is contrary to historical experience,” Judge Rose said.

The only member of the group who has standing is Daniel Kuettel, a citizen of Switzerland who renounced his U.S. citizenship, and only regarding two counts alleging the heightened reporting requirements of the law deny equal protection to Americans living abroad and that the penalty for failing to file a Foreign Bank Account Report is excessive, Judge Rose said. However, those assertions do not survive a facial challenge, he said.

The public interest is also best served by keeping the FATCA provisions in place, Judge Rose said.

Is This Your Idea of Dealing with 
Previously Undeclared Foreign Income?

Need Help With

  Your US Reporting Requirements?


 Contact the Tax Lawyers at
Marini & Associates, P.A.  

for a FREE Tax Consultation
Toll Free at 888-8TaxAid (888) 882-924

1 comment:

  1. Seven plaintiffs, which included Senator Rand Paul, moved for a preliminary injunction against the U.S. Government alleging that IGAs with 4 specific countries, specific provisions within FATCA and certain provisions of FBAR were unconstitutional. The plaintiffs’ alleged that the IGAs were not submitted to the Senate nor to the House of Representatives for approval, thus accusing the Treasury of “unilaterally negotiating’ the IGAs.

    The court concluded that Countries are free to undertake this type of lower level commitments without securing high-level legal agreements, statutes, or treaties.

    The Plaintiffs’ alleged discrimination against foreign accounts as the reporting for these accounts is greater than for domestic accounts. U.S. citizens who voluntarily live outside the U.S. should not have the same protection of privacy of their accounts as those who are forced to live outside the U.S., i.e. prisoners of war, those with a disease such as Ebola.

    The defendants sought to have the court rule against the seven plaintiffs because all seven failed to meet “the standard to sue” test. The court discussed that not one of the seven plaintiffs had standing based on the information provided. Plaintiff 1 had no bank accounts in any of the IGA countries under review.

    Plaintiff Rand Paul made his claim in his official capacity as a U.S. Senator but in fact he was not acting on behalf of the Senate. Plaintiff 3, a U.S. citizen living abroad, objected of discomfort with the reporting requirements; his wife, Plaintiff 4 and a non U.S. citizen, strongly objected to having her financial affairs being disclosed to the U.S. government. Plaintiffs 5 and 6 renounced their U.S. citizenship and lost standing to use U.S Courts. Plaintiff 7 is an attorney and dual citizen of the U.S. and Israel. He claimed that because of the FACTA requirements Israeli banks are unfair to him and that the FACTA rules impinge upon his attorney-client relationships. Defendants argued that attorney-client relationships belong to the clients who are not part of the preliminary injunction claim.

    The motion eventually failed, as reflected in this post.
    See Crawford v. Department of Treasury, S.D. Ohio No. 3:15-cv-00250.

    Robert Feinschreiber, Attorney
    Feinschreiber and Associates