With every new presidential administration, there are likely to be changes in federal tax policy. Some of these changes can radically impact the way that Michigan taxpayers will file their taxes and report on earnings.
One such possible measure involves repeal of the Foreign Account Tax Compliance Act (FATCA). Rep. Mark Meadows and Senator Paul Rand introduced this proposal. FATCA governs the reporting of offshore assets and accounts. Apparently, the purpose of this FATCA repeal bill would be to place limitations on what requires disclosure.
Most importantly, the new proposal would impact the following provision from FATCA:
- The required disclosure by foreign financial institutions regarding U.S. taxpayer assets and account holdings.
The authors of this proposal argue that such a requirement in FATCA violates the privacy rights of U.S. citizens. According to Senator Paul, "FATCA disregards the Fourth Amendment and privacy rights by requiring the bulk collection of innocent Americans' financial records. It discourages foreign investment and prevents Americans from accessing the financial system overseas. It is time to repeal this job- and privacy-killing law."
We still need to wait on whether such changes will actually take place. Modification of rules regarding any tax regulation is not unusual. The IRS processes millions of tax filings every year, and creates rules for handling these filings along with exceptions to such rules.
Unfortunately, this makes it incredibly difficult for individual taxpayers to understand what their rights and responsibilities are concerning paying taxes. For this reason, it's important to have available an experienced tax attorney to provide guidance regarding current rule changes and your legal options.