Sen. Rand Paul sued the Obama administration on Tuesday claiming that federal banking laws for overseas accounts amount to a “financial surveillance program” that encourages Americans living abroad to give up their U.S. citizenship.
The Republican presidential hopeful and five U.S. citizens who reside overseas are challenging the Foreign Account Tax Compliance Act (FATCA), and a series of inter-governmental agreements negotiated by the U.S. Department of the Treasury.
In their complaint, filed in the Columbus, Ohio Federal Court, the plaintiffs contend that “FATCA was intended to address tax evasion by U.S. taxpayers who fail to report foreign assets located outside of the United States. But in practice it is a sweeping financial surveillance program of unprecedented scope that allows the Internal Revenue Service to peer into the financial affairs of any U.S. citizen with a foreign bank account.”
The law was passed in 2010 by a Democratic Congress to crack down on wealthy Americans dodging taxes by keeping their money in overseas accounts.