Sunday, August 20, 2017

Sixth Circuit Rejects Frontal Assault on FATCA, IGAs and FBAR Requirements (8/20/17)

The Sixth Circuit on Friday rejected a frontal assault on FATCA, Intergovernmental Agreements and FBAR requirements.  Crawford v. United States Dept. of Treasury, ___ F.3d ___, 2017 U.S. App. LEXIS 15648 (6th Cir. 2017), here.  All but one of the plaintiffs were various U.S. taxpayers who claimed, in effect, the real potential for injury by having their foreign account information shared with the U.S. Government or being forced to share it by FBARs.  One of the plaintiffs was Senator Rand Paul, in his official capacity as member of the United States Senate, who likes to strut to gum up governmental works.  The issue was a legal concept called standing.  They failed the standing requirement.

The Court summarized the standing concept as (case citations omitted):
Federal courts have constitutional authority to decide only "cases" and "controversies." U.S. Const. art. III § 2. The requirement of standing is "rooted in the traditional understanding of a case or controversy."  To bring suit, Plaintiffs must have "alleged such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues" before the court.  
The "irreducible constitutional minimum" of standing is that for each claim, each plaintiff must allege an actual or imminent injury that is traceable to the defendant and redressable by the court. 
That at least is the starting point for the court's more nuanced analysis.

Bottom line, the Court concludes as follows:
FATCA imposes far-reaching reporting obligations on individuals and financial institutions, which, like many government regulations, undoubtedly exact monetary and other costs of compliance. The IGAs, to be sure, are part of an unprecedented scheme of international tax enforcement. And the FBAR Willfulness Penalty, if it were to be imposed, is admittedly steep: it could theoretically bring a $100,000 fine for failure to report a foreign account with a balance of $10,000.01. 
None of these considerations, however, help these Plaintiffs at this time to clear the initial jurisdictional hurdle of standing. 
Accordingly, we AFFIRM the judgment of the district court, and we DENY as moot Defendants' motion to strike.

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