Two University of Michigan law professors describe FATCA well. In the Introduction to FATCA American Legal Imperialism, the authors compare the background FATCA to the plot line of a new thriller.
Then, still in the intro, Bruce W. Bean and Abbey L. Wright begin telling the realities:
FATCA has engendered a maelstrom of comment and criticism…One of the most egregious examples of U.S. legal imperialism-the extraterritorial application of federal legislation.
They address Ginny and Gwen’s lawsuit being crowd funded by ADCS, but warn Canadian banks would report directly to IRS if Ginny and Gwen win the lawsuit. They fail to mention that Canadian banks could not do that without violating Canadian laws if Ginny and Gwen succeed in their challenge.
Professors Bean and Wright point out that customers of FFIs who have no U.S. Connection whatsovever must complete IRS Form W-8 BEN (page 24). They write:
Wait! “Under penalties of perjury,” those without any U.S. connection whatsoever must prove they are not U.S. persons? Does this take extraterritoriality to a new level? Was Congress so crazy that it not only imposed significant obligations on tens of thousands of FFIs but it also requires perhaps hundreds of millions of their customers to prove they are not subject to U.S. tax rules?”
(Dear Professors: Answers to your questions are: Yep. Yep. Yep.)
They cover reactions to FATCA, accidental Americans, declining U.S. dollar, and the fact “FATCA has gone where no U.S. law has gone before.”
Despite all that, the authors report FATCA has resulted mainly in “submission.” They conclude FATCA is here to stay and is creating “the emergence of copycat initiatives.”
All of this is even more reason why we must continue to fight and to help Ginny and Gwen win their lawsuit.