[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]


   REVIEWING THE UNINTENDED CONSEQUENCES OF THE FOREIGN ACCOUNT TAX 
                             COMPLIANCE ACT

=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                         GOVERNMENT OPERATIONS

                                 OF THE

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 26, 2017

                               __________

                           Serial No. 115-45

                               __________

Printed for the use of the Committee on Oversight and Government Reform


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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                     Jason Chaffetz (UT), Chairman
John J. Duncan, Jr. (TN)             Elijah E. Cummings (MD), Ranking 
Darrell E. Issa (CA)                     Minority Member
Jim Jordan (OH)                      Carolyn B. Maloney (NY)
 Mark Sanford (SC)                   Eleanor Holmes Norton (DC)
Justin Amash (MI)                    Wm. Lacy Clay (MO)
Paul A. Gosar (AZ)                   Stephen F. Lynch (MA)
Scott DesJarlais (TN)                Jim Cooper (TN)
Trey Gowdy (SC)                      Gerald E. Connolly (VA)
Blake Farenthold (TX)                Robin L. Kelly (IL)
Virginia Foxx (NC)                   Brenda L. Lawrence (Ml)
Thomas Massie (KY)                   Bonnie Watson Coleman (NJ)
Mark Meadows (NC)                    Stacey E. Plaskett (VI)
Ron DeSantis (FL)                    Val Butler Demings (FL)
Dennis A. Ross (FL)                  Raja Krishnamoorthi (IL)
Mark Walker (NC)                     Jamie Raskin (MD)
Rod Blum (IA)                        Peter Welch (VT)
Jody B. Hice (GA)                    Matt Cartwright (PA)
Steve Russell (OK)                   Mark DeSaulnier (CA)
Glenn Grothman (WI)                  John P. Sarbanes (MD)
Will Hurd (TX)
Gary J. Palmer (AL)
James Comer (KY)
Paul Mitchell (MI)

                   Jonathan Skladany, Staff Director
                    William McKenna General Counsel
                      Jack Thorlin, Senior Counsel
                    Sharon Casey, Deputy Chief Clerk
                 David Rapallo, Minority Staff Director
                                 ------                                

                 Subcommittee on Government Operations

                 Mark Meadows, North Carolina, Chairman
Jody B. Hice, Georgia, Vice Chair    Gerald E. Connolly, Virginia, 
Jim Jordan, Ohio                         Ranking Minority Member
Mark Sanford, South Carolina         Carolyn B. Maloney, New York
Thomas Massie, Kentucky              Eleanor Holmes Norton, District of 
Ron DeSantis, Florida                    Columbia
Dennis A. Ross, Florida              Wm. Lacy Clay, Missouri
Rod Blum, Iowa                       Brenda L. Lawrence, Michigan
                                     Bonnie Watson Coleman, New Jersey
                           
                           
                           C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on April 26, 2017...................................     1

                               WITNESSES

The Hon. Rand Paul, Senator from Kentucky
    Oral Statement...............................................     1
Mr. James Bopp, Jr., Attorney, The Bopp Law Firm, PC
    Oral Statement...............................................     7
    Written Statement............................................    10
Mr. Mark Crawford, Director, AKSIONER International Security 
  Brokerage
    Oral Statement...............................................    38
    Written Statement............................................    40
Mr. Daniel Kuettel, (Former U.S. Citizen Living in Switzerland 
  who Renounced his U.S. Citizenship due to FATCA)
    Oral Statement...............................................    51
    Written Statement............................................    53
Ms. Elise Bean (Former Staff Director for Sen. Carl Levin (D-MI), 
  Senate Permanent Subcommittee on Investigations)
    Oral Statement...............................................    57
    Written Statement............................................    61

                                APPENDIX

Letter of April 25, 2017, from FACT Coalition submitted by Mr . 
  Connolly.......................................................    86
Letter of September 15, 2015, to the Treasury Department and IRS 
  submitted by Ms. Maloney.......................................    91
Taxpayer Advocate Service 2015 Report submitted by Ms. Maloney...    94
Response from Mr. Bopp to Questions for the Record...............   104
Response from Mr. Crawford to Questions for the Record...........   125
Response from Ms. Bean to Questions for the Record...............   129

 
              REVIEWING THE UNINTENDED CONSEQUENCES OF THE
                   FOREIGN ACCOUNT TAX COMPLIANCE ACT

                              ----------                              


                       Wednesday, April 26, 2017

                  House of Representatives,
             Subcommittee on Government Operations,
              Committee on Oversight and Government Reform,
                                                   Washington, D.C.
    The subcommittee met, pursuant to call, at 2:05 p.m., in 
Room 2154, Rayburn House Office Building, Hon. Mark Meadows 
[chairman of the subcommittee] presiding.
    Present: Representatives Meadows, Hice, Jordan, Ross, Blum, 
Connolly, Maloney, Norton, and Watson-Coleman.
    Mr. Meadows. The Subcommittee on Government Operations will 
come to order, and without objection, the chair is authorized 
to declare a recess at any time.
    Today's hearing is on the Foreign Account Tax Compliance 
Act, or FATCA. We will hear from our witnesses about FATCA's 
effect overseas and on our Treasury. However, our first 
witness, Senator Rand Paul, a friend, a patriot, truly someone 
who is willing to not only put his money where his mouth is but 
someone who has defended liberty and freedom each and every 
day, and you're certainly welcome.
    He has a briefing, as I understand it, at the White House 
coming up, so we're happy to have you testify first, Senator, 
and then the Ranking Member Connolly and I will give our 
statement.
    So in recognition of that, I'd like to recognize the 
Honorable Senator Rand Paul.

                       WITNESS STATEMENTS

                STATEMENT OF THE HON. RAND PAUL

    Senator Paul. Thank you, Chairman Meadows, and thank you 
for inviting me to this hearing on the Unintended Consequences 
of the Foreign Account Tax Compliance Act. And also for 
allowing the American people an opportunity to hear how FATCA 
undermines their privacy through the bulk collection of their 
foreign financial records.
    I oppose FATCA for two reasons. First, it violates our 
privacy rights, and second, I think the compliance cost 
actually exceed the revenue that it brings in.
    Regarding privacy, the Fourth Amendment prevents the 
government from seizing or searching a person's house or 
papers, including their financial records, unless the warrant 
shows individualized suspicion and probable cause. This 
protection was included in the Bill of Rights in response to 
general warrants that have been issued by the British.
    FATCA, I think, undermines the very heart of this privacy 
right. It forces foreign financial institutions to hand over 
U.S. citizens' personal financial records without a warrant, 
without a probable cause, and without naming them individually.
    FATCA also violates the Fourth Amendment by demanding all 
data on all Americans with overseas accounts. The demand is not 
individualized but collected rather in bulk without specifying 
a specific suspicion or cause.
    The government is using the heavy hand of the IRS to tell 
foreign financial institutions that they must hand over the 
records of all U.S. citizens, and if they dare to defy the 
government, they will be hit with a crippling tax penalty that 
no business could survive.
    This turns the Fourth Amendment on its head. It presumes 
that every American with money overseas is a criminal with no 
proof or even suspicion of criminal activity. You are guilty 
until proven innocent. These are not the principles on which 
our country was founded, and we should not stand for it.
    This is not just my concern. In January, the IRS' own 
taxpayer advocate raised the same concern in her annual report 
saying that FATCA's operative assumption appears to be that all 
such taxpayers should be suspected of fraudulent activity 
unless proven otherwise. Think about that. Guilty until proven 
innocent.
    No one should be deceived that the data being collected by 
the IRS is somehow harmless or benign. In addition to having to 
report the name, address, taxpayer identification number of 
each account holder, the government requires financial firms to 
report the account number, the account balance, the value at 
the end of the reporting period, and all the inflows and 
outflows of the account, basically everyone for whom you have 
had a financial transaction or written a check to.
    Comparable information is not required to be disclosed for 
those who have domestic accounts, so it's a double standard. 
You have one standard for Americans living overseas and another 
standard for Americans here.
    The government has no business asking for or knowing this 
information about its citizens and certainly not without a 
reason to believe that the person is doing something wrong.
    FATCA essentially gives the IRS all your overseas financial 
data without going through any court to decide if the 
government has a right to see your documents. FATCA seems to be 
also a solution in search of a problem.
    The taxpayer advocate finds also that a lack of 
comprehensive statistical data establishing the existence of 
widespread noncompliance or fraud by taxpayers with foreign 
accounts. They don't find evidence that there is excessive 
problems with people not paying their taxes. It's about the 
same rate as people domestically, so why would we be giving the 
government special powers, lower standards to look at our 
information?
    My biggest concern about FATCA is that it treats all 9 
million Americans living abroad as guilty until proven 
innocent. FATCA acts as if the Bill of Rights does not apply to 
citizens dealing with their U.S. Government, depending on where 
they live. After FATCA was passed, some foreign banks even 
began to refuse to do business with Americans, even canceling 
their accounts to avoid the red tape and possible draconian 
penalties.
    Individual Americans are not the only ones bearing the 
burden either, estimates of initial cost of compliance reach 
into the tens of billions of dollars globally. Ongoing 
compliance just for U.S. companies cost more than $160 million 
a year.
    In addition, FATCA has led to foreign countries seeking 
information on citizens residing in the United States. Indeed, 
over 60 countries now have signed reciprocal intergovernmental 
agreements called IGAs. The IGAs allow bilateral exchange of 
financial data, meaning that the U.S. will now spy on 
foreigners who have accounts in our country as well, and we 
will aid and abet foreign countries in invading their citizens' 
privacy as well
    Think about this. This may mean sending financial 
information to countries who are known as human rights abusers, 
such as Saudi Arabia, China, Tunisia. One can imagine the risk 
to a political dissident who comes to our country to escape 
tyranny, and then we find that we are going to be sending their 
information back to a tyrannical government, the tyrannical 
government they fled?
    These bilateral agreements, these IGAs, have not received 
any Senate certification, no vote, no vote in the House, no 
congressional authority at all. They are just done by the 
administration with no authority. Their constitutionality is 
currently being challenged in court, and I think you will hear 
from some of those involved in that challenge.
    My hope is that this hearing will shed some light on this 
abusive law and lead to a demand for action.
    Chairman Meadows, and I have sponsored a bill to correct 
this injustice and repeal FATCA. Congress should pass our bill 
this year and put an end to this madness.
    Thank you very much for letting me testify.
    Mr. Meadows. Thank you, Senator. And you're very 
complimentary in terms of my involvement, but it's basically 
been your leadership, Senator, that not only has highlighted 
this, but that continues to stand as a vigilant sentinel to 
protect our Fourth Amendment privacy, and I just want to say 
thank you.
    And it's an honor to have you articulate this. You brought 
this issue to light when no one was paying attention, and yet I 
found that universally you're being applauded for your 
protection of this constitutional right that our Founding 
Fathers so wisely enshrined.
    Senator Paul. This is a big, big deal to the 9 million 
Americans who live overseas, and you know, we are getting ready 
to come up on tax reform. While this may be a small issue to 
many other Americans, it's a big deal to them.
    My hope is that the bill we have worked on, maybe we could 
try to get it into the tax reform package because it's an 
issue, I think, that should bring right and left together 
because, you know, sometimes the right is more concerned with 
financial affairs and the left more concerned with privacy and 
with civil liberties, but really, I think right and left can 
come together to say, you know what, we should protect 
everybody's Fourth Amendment rights.
    Thank you for letting me testify.
    Mr. Meadows. Well thank you. I know you've got to go to the 
White House, so you're hereby dismissed.
    Thank you for your testimony. Your entire written testimony 
will be made part of the record. I thank the ranking member for 
allowing you to come in and testify early.
    The chair now recognizes himself for his opening statement. 
We are certainly pleased to hold this hearing to examine the 
Foreign Account Tax Compliance Act, also known as FATCA.
    FATCA requires foreign financial institutions to 
investigate their own accounts for suspected ties to the United 
States. Hear that again. Investigate their own accounts for 
suspected ties to the United States, and then report those 
accounts to the IRS for further investigation.
    Now, that doesn't sound crazy in its face, but as it turns 
out, FATCA is a failure at a number of different levels. By its 
drafter's own estimate, of whom we are going to hear expert 
testimony today and certainly the work that has been done in 
some of those investigative modes, is to be applauded. I've 
looked at the record, and so I look forward to seeing that.
    But even by those own estimates of the drafters, it was 
seeking to reduce tax evasion overseas and it only does that by 
less than 1 percent. The Senator mentioned this. You know, so 
less than 1 billion out of an estimated 100 billion in lost 
revenue overseas.
    Commissioner Koskinen who has testified before this 
committee a number of times has given sworn testimony regarding 
the high rate of return on investment for spending on the IRS 
with normal enforcement actives. In fact, his public statements 
indicate a return of up to $20 for every $1 that is invested on 
enforcement. So a $20 return in revenue for $1 invested in 
enforcement.
    By contrast, FATCA brings in well under, by any 
estimations, half of that amount on a per-dollar basis that is 
invested. So the IRS gets asked for about 200 million to 
implement FATCA in fiscal year 2017 budget. So by the 
commissioner's own estimates, not by mine, not by any think 
tank, but by the commissioner's own estimates in enforcement 
returns, just shifting the money from FATCA to the general 
enforcement areas would increase our tax revenues by over a 
billion dollars.
    And so if we're looking at proper allocation, and this is 
without spending one more penny on the overall budget for the 
IRS, it's just shifting it, and so when we look at that, that's 
a significant return.
    FATCA also unfairly and unilaterally burdens our biggest 
trading partners and strongest allies. I found out about this 
really by some of the people that we'll hear from today when I 
was in Israel and with some of the issue that they started 
referring to this thing called FATCA that I had no idea what it 
was. And so, you know, as a good politician I was saying, well, 
I'll get back to you on that. And so I went very quickly and 
googled it to figure out exactly what we were talking about, 
and so as I look at this, we are looking at unbelievable 
implications here.
    When we look at the compliance cost on foreign banks and on 
the international economy, we are looking at up to $200 million 
per bank to comply and potentially hundreds of billions of 
dollars overall.
    Other countries are understandably upset that we are 
hurting their economies and are doubly upset that we have not 
yet offered them access to our own taxpayer data. So we 
basically said you have to comply, and there was this 
reciprocal agreement, and we said: Well, you have to comply, 
but we're not going to comply. It was a double standard that we 
see, and so many of the foreign financial institutions have 
tried to avoid these FATCA compliance costs by refusing to take 
U.S. citizens.
    That's what highlighted it for me, and I said: You've got 
to be kidding me. They're saying, well, if you're a U.S. 
citizen, they don't want to touch you in some of these foreign 
financial institutions just because of the compliance cost. So 
expatriates have had to make the tragic choice between keeping 
their citizenship and preserving their financial stability.
    And to illustrate that point, I want to share a video that 
has been shared with the subcommittee to this committee, and so 
if we'd pause and maybe take a look at this video. It's 
approximately 3 minutes in length.
    [Video shown.]
    Mr. Meadows. Donna is not alone. FATCA has led to a number 
of U.S. expatriates renouncing their citizenship, and so 
hopefully today we'll hear from some of our witnesses on how we 
can address this particular issue in a meaningful way and 
hopefully return the accountability that we're all for to the 
proper balance of protecting our personal Fourth Amendment 
rights and yet still making sure that we hold our government 
accountable.
    And with that, I'd like to recognize the ranking member for 
his opening statement.
    Mr. Connolly. Thank you, Mr. Chairman, and thank you for 
having a hearing. And maybe there's a slightly different point 
of view about the issue while acknowledging there are problems 
with the act and with its implementation.
    The United States taxes the foreign income of its citizens, 
and we're not alone. Most countries with income taxes do the 
same. Citizens pay taxes on all the income they earn regardless 
of where they earned it.
    There are benefits to this system. Americans are the most 
productive in the world, and this system ensures that the 
wealthiest among us cannot avoid paying taxes simply by moving 
money abroad. It's quite simple. If you receive benefits by 
being an American, you should pay your fair share. And I say 
that, but no American ought to have to foreswear his or her 
citizenship in trying to comply with the law.
    We obviously are very sympathetic to the woman we just saw 
on that video. This tax system assumes everyone plays by the 
rules and pays their taxes according to the law. We know, 
unfortunately, in the past, not everyone did play the game 
fairly. While the law has, for decades, required us who are 
account holders to file reports with the Treasury Department, 
not everyone did.
    Extremely wealthy tax cheats, not the woman we just saw on 
that video, hired expensive lawyers who knew how to evade the 
system. Whistleblower leaks changed things. Congress learned of 
thousands of Americans who were willfully avoiding paying their 
taxes and overseas income without disclosing that information 
to the IRS. These weren't simply inadvertent mistakes. They 
were willful efforts to avoid taxes.
    Congress chose to take some action. That action came in the 
form of this act, FATCA, the Foreign Account Tax Compliance 
Act. Under that act, foreign financial institutions are 
required to disclose to the IRS the accounts of U.S. taxpayers. 
The Wall Street Journal reported that an IRS limited amnesty 
program, pursuant to this act, brought in $9.9 billion in 
taxes, interest, and penalties from 55,000 taxpayers who hadn't 
paid their taxes and income earned abroad.
    FATCA is an incremental step in terms of tax collection. 
U.S. companies and financial institutions already provide 
taxpayer information to the U.S. Government through 1099 forms, 
and taxpayers with assets abroad file with the IRS the same 
information FATCA collects. Now, that information is also 
coming from foreign financial institutions since many taxpayers 
previously had not been filing.
    Despite the new law, banks are still lending, and it is 
possible for Americans to get accounts. Citigroup, for example, 
operates in more than 160 countries and will give Americans 
abroad bank accounts and mortgages. Because of this act, 
international tax collection has changed. Countries around the 
world are adopting the Common Reporting Standard, which is 
based on FATCA.
    Under the Common Reporting Standard, countries collect 
identifying information from account holders. They then share 
that information with a foreign account holder's country of 
citizenship and receive information on the accounts of their 
own citizens. The information collected under the Common 
Reporting Standard is broader than that required by FATCA. 
Common Reporting Standard countries collect information on all 
account holders, not just U.S. citizens. With 100 such nations 
committing to implementing the standard by 2018, efforts to 
evade taxes are expected to diminish.
    I certainly don't mean to suggest there haven't been 
problems with FATCA. We just saw one. Although it's important, 
the law does not require anyone to give up their citizenship. 
The advice came, as I understand it, from a Swiss bank, but 
nonetheless, we have a victim here. Nobody ever should feel 
they have to give their U.S. citizenship.
    So there are kinks, clearly, to work out, and I think 
that's why this hearing can be very helpful, and we want to 
make sure that people like Ms. Nelson and Mr. Kuettel are 
protected.
    Repealing FATCA, however, entirely, would not restore their 
citizenship and could harm our government's ability to collect 
the taxes owed. We've had hearings in this committee about the 
fact that hundreds of billions of dollars, not overseas, but 
hundreds of billions of dollars go--are left on the table 
uncollected because the IRS doesn't have the staffing or 
resources or mechanisms, frankly, to collect taxes owed but not 
collected.
    And so, you know, as we wrestle with the fairness of this 
act and its implementation problems and certainly the 
injustice, individuals such as the one we just saw in that 
video have experienced, so we want to--we certainly want to 
address that, but we also want to make sure that the United 
States Government is being fair to all of its citizens by 
making sure everybody pays their fair share.
    So I look forward to the hearing. I look forward to hearing 
testimony from our witnesses, and with that, I yield back, Mr. 
Chairman.
    Mr. Meadows. I thank the gentleman for his thoughtful 
opening statement. We'll now go ahead and allow the witnesses, 
if you will make your way forward. I appreciate your 
flexibility with regards to allowing Senator Rand Paul to go 
first.
    And so we would love to welcome--and we're going to keep 
these introductions brief. I understand we may have votes 
coming up here 2:45 to 2:50 range, and so we're going to try to 
push a little bit quicker here, but I'll hold the record open 
for five legislative days for any member who would like to 
submit a written statement.
    So in recognizing our panel of witnesses, I'm pleased to 
welcome Mr. James Bopp, Jr., welcome; Mr. Mark Crawford, 
welcome; Mr. Daniel Kuettel, welcome; and Ms. Elise Bean, 
welcome to you all.
    Pursuant to committee rules, witnesses will be sworn in 
before they testify, so if you will please rise and raise your 
right hand.
    Do you solemnly swear or affirm that the testimony you're 
about to give will be the truth, the whole truth, and nothing 
but the truth?
    Thank you. You may be seated.
    Please let the record reflect that the witnesses all 
answered in the affirmative.
    In order to allow time for discussion, I'd ask that you 
limit your oral testimony to 5 minutes, but your entire written 
statement will be made part of the record.
    And so we'll now recognize you, Mr. Bopp, for 5 minutes. 
You need to hit your little button right there.

                  STATEMENT OF JAMES BOPP JR.

    Mr. Bopp. Thank you. Thank you, Chairman Meadows, and thank 
you for the opportunity to testify. In my oral presentation, I 
will summarize the key points of my written testimony.
    Republicans overseas, who which I serve as treasurer and 
general counsel, advocates for their rights and interests of 
overseas Americans. As this hearing will demonstrate, our 
overseas Americans are the victims of a draconian system of tax 
laws that disrupts their lives, deprives them of a living, and 
strips them of their basic Constitutional rights as U.S. 
citizens.
    At the heart of this is the fact that the United States is 
only one of two countries in the entire world that tax its 
citizens based upon their citizenship, not their residence. So 
the long arm of the IRS reaches out to the 9 million U.S. 
citizens overseas and taxes them.
    For the same reason that President Donald Trump has 
advocated for territorial taxation on corporations, U.S. 
citizens should also be taxed where they reside. The 2016 
Republican national platform calls for this.
    But it is worse than this. The Bank Secrecy Act resulted in 
the U.S. citizens being required to file a FBAR report which 
applies to U.S. citizens and requires them to report to the IRS 
for any account which they have in a foreign bank or foreign 
asset, and if it's--the value is greater than $10,000. Willful 
violation of this law results in a 50 percent penalty on the 
highest value of that account.
    On top of this, in 2010, the Democratic Congress passed 
FATCA, which requires more reporting of personal and 
confidential financial information by individuals and by 
foreign financial institutions.
    Individuals are required to file a FATCA report annually if 
they have $50,000 in foreign accounts or foreign assets, 
whether they are in the United States, living in the United 
States, or living abroad. That report includes the name, 
account balance, maximum value of the account, and there's a 
$10,000 penalty.
    In addition, foreign financial institutions have one of 
three choices. One is to report to the IRS on every single U.S. 
citizen account holder the account information, the value, and 
then the gross receipts and gross withdrawals of that account, 
or two, purge themselves of all U.S. account holders and 
certify that to the IRS, or three, suffer a penalty of 30 
percent of all transfers of all funds for all purposes from the 
United States to that bank.
    In addition, the Obama administration has negotiated 
illegal intergovernmental agreements which provide, in most 
cases, that the banks, instead of reporting to the IRS, report 
to the foreign government--require the foreign banks to report 
to the foreign government of information about U.S. citizens 
which is then reported by the government to the IRS.
    These agreements have not been approved and are 
unconstitutional. Thus, FATCA is a sweeping financial 
surveillance program of unprecedented scope that allows the IRS 
to peer into the financial affairs of any U.S. citizen with a 
foreign bank account.
    In so doing, FATCA has imposed enormous costs on individual 
Americans abroad. As this hearing will demonstrate and as the 
Democrats abroad found out in a survey of Americans overseas, 
these surveys' results show the intense impact FATCA is having 
on overseas Americans. Their financial accounts are being 
closed, their relationships with nonAmerican spouses are under 
strain, some Americans are being denied promotion or 
partnership in business because of FATCA reporting, and some 
are planning to--contemplating renunciation of their own U.S. 
citizenship.
    A decade ago, about 200 a year renounced. Now the number is 
up to 6,000 last year. These Americans are, in many ways, 
ordinary middle class Americans being affected in extraordinary 
ways.
    FATCA has also imposed an enormous financial cost on 
foreign financial institutions, and through the IGAs has 
converted foreign governments and foreign banks into IRS agents 
who are surveilling U.S. citizens and reporting to the IRS.
    FATCA has furthermore denied U.S. citizens basic 
constitutional rights, equal protection, due process, 14th 
Amendment protection against unlawful search and seizure, 8th 
Amendment protection against excessive fines. I am lead 
attorney in Crawford v. United States Department of Treasury 
that is making these claims.
    The bottom line about all of this is that the Americans 
abroad are U.S. citizens who should enjoy the individual right 
and freedom to reside overseas, if they choose, without 
penalty, and America benefits when they do. They are 
ambassadors for America who promote this country and its values 
and often are directly involved in promoting American business 
and products overseas.
    However, the U.S. Government has placed a scarlet letter on 
the forehead of every American, and it is stamped U.S.A., and 
as a result, they are treated as pariahs by foreign banks and 
employers. This is wrong, and it needs to stop.
    [Prepared statement of Mr. Bopp follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Meadows. Thank you, Mr. Bopp.
    Mr. Crawford, you are recognized for 5 minutes.


                   STATEMENT OF MARK CRAWFORD

    Mr. Crawford. Thank you very much for allowing me to be 
here today to share my firsthand experience regarding the 
consequences of FATCA from the perspective of an international 
businessman.
    My name is Mark Crawford. I'm an American citizen, and I do 
not hold any other citizenship, though at various times I've 
been a resident of the United Kingdom, Albania, Montenegro, and 
Greece. The politics that divide Americans at home don't often 
divide those of us broad. Most of the 9 million Americans 
living overseas are ordinary citizens who are living their 
lives, raising families, studying, and working. We're just 
Americans, and though we're often far from home, America is 
still our home, and the U.S. Constitution is still our 
Constitution.
    In my written submission, I outline more detail about my 
personal background, having lived and worked across three 
continents over a 25-year period as a teacher in China, a 
missionary in Albania, a graduate student in England, a venture 
capitalist in the Balkans, a banker in Montenegro and Serbia, 
and now an entrepreneur involved in finance, natural resources, 
and film production.
    I've employed hundreds of people and increased economic 
activity between the United States and its friends around the 
world. Throughout my work abroad, I've remained active 
assisting U.S. interests whenever called upon, regardless of 
which party controlled the Congress or the White House, 
including having worked for appointees of the Clinton 
administration, supported USAID financial inclusion projects, 
voluntarily chairing American Chamber of Commerce affiliates, 
advising leaders of several American allied governments, and 
more recently, volunteering to assist the Treasury Department 
in Kosovo.
    Having worked in finance throughout the world, I returned 
to Albania in 2010 to pursue a business opportunity, and I ran 
into the consequences of FATCA. In smaller developing markets, 
there often isn't enough volume to support standalone financial 
products, so it's important for such markets to leverage off 
larger ones. Albania's domestic capital market is still 
developing, and in order to connect Albania to international 
capital markets, I founded an Albanian introductory brokerage 
firm that would work with Saxo Bank in Denmark offering basic 
brokerage services to Albanian residents.
    When I sent the first 10 applications to Saxo Bank, they 
responded approving only nine. I reached out to Saxo Bank to 
see who was rejected, and they responded to say that I was 
rejected. I owned the company. I was told that though I was an 
Albanian resident at that time, I was rejected solely because I 
was an American citizen, because of fears because of the FATCA 
law.
    I realize that due to FATCA, I could not serve U.S. persons 
in my Albanian brokerage firm because of the carry-on impact of 
the Saxo decision. The introductory brokerage vision that I had 
was alive, but the idea of working with Americans and American 
persons was dead.
    I'm the pro bono chairman of the American Chamber of 
Commerce in Albania, and I work closely with our U.S. Embassy 
there in a private sector capacity trying to promote American 
business. A brokerage firm owned by myself that markets itself 
as an American led by the American Chamber chairman that does 
not accept American citizens is a logical anomaly to most in 
Albania, and understandably so.
    The introductory brokerage products became sidelined, and 
Saxo Bank eventually grew so unhappy with me that they dropped 
my firm altogether. The obstacle to my brokerage business 
created by FATCA was a deal breaker.
    Proposals to address the unintended consequences of FATCA 
had been considered by both parties and candidates on both 
sides of the aisle in the most recent presidential election. 
And recognizing the problems of FATCA, some have suggested 
implementing a safe harbor exception that would help Americans 
solely within the country of their residency.
    Such a safe harbor exception would not have solved the 
negative impact that FATCA had on my situation. I have never 
been a resident of Denmark, thus an exception would not have 
alleviated Saxo Bank's relationship with me or other potential 
clients that I was bringing through my introductory brokerage 
firm from Albania.
    In conclusion, my experience is that the American 
entrepreneurial mentality sets our culture apart. Americans do 
not restrict their investments based on their personal 
residency; rather, they pursue opportunity according to the 
markets. Access to international financial services is critical 
for all such projects, and FATCA's impact has already harmed 
some of my businesses, and if left unrepealed, will risk 
others.
    It is ironic that after spending much of my career helping 
advance U.S. interests by expanding financial inclusion through 
FATCA, the United States has inadvertently restricted inclusion 
for its own citizens. The fact that an increasing number of 
banks and financial institutions reject working with United 
States citizens, outright harms our interests.
    It is my belief that the best way to improve the current 
situation is not to make the situation more complex by creating 
carveouts or safe harbor exceptions or other partial fixes; 
therefore, I do support a full repeal of FATCA, and I look 
forward to your comments and questions in the future.
    [Prepared statement of Mr. Crawford follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Meadows. Thank you, Mr. Crawford.
    Mr. Kuettel, you are recognized for 5 minutes.


                  STATEMENT OF DANIEL KUETTEL

    Mr. Kuettel. Thank you, Mr. Chairman, for allowing me to 
speak on the negative consequences of FATCA. I'm here-- my name 
is Daniel Kuettel. I live in Switzerland, and I'm here to tell 
you why FATCA forced me to renounce U.S. citizenship.
    As you see here, I brought my Army--U.S. Army jacket. I 
served in the Army. I served in the Army Reserves, and then I 
got married in the Philippines, asked my wife to come join me 
in America, but that was during the Dot-Com crisis. I lost my 
job, couldn't find work, I sent my resume around the Nation but 
had no luck, so I took my chances in Europe.
    I did not leave the U.S. to evade taxes. I paid my taxes. I 
enjoyed paying taxes. I'm an economic refugee. I don't have a 
lot of money. I'm not wealthy. In Switzerland, we saved up to 
be able to finance a small condo, and then in 2012, I needed to 
investigate refinancing that condo. In Switzerland, every few 
years, you have to refinance. But when I went to a bank to ask 
them if they would allow me to refinance my mortgage, when they 
heard that I was a U.S. citizen, they denied it.
    I went to another bank, I was denied again, and another. I 
called them. I was denied, rejected, rejected. It was horrible, 
terrible. I mean, if you've ever lived anything like this, this 
type of discrimination is unacceptable.
    I was worried that I would not be able to refinance my 
home, and so I called HUD, I called the VA, but they told me 
that they only support--they only help Americans reside in 
America. They don't help expats.
    I called the Department of Justice to inquire why this law 
prohibiting national origin discrimination is not being 
applied, and they referred me to some statute that I could 
never find which was supposed to state that also the law only 
applies to U.S. residents.
    So I had to renounce, and it was a difficult decision to 
make. I went to a small village in Switzerland that I went to 
the first time that I came to Switzerland at the age of 10 
where I was able to gather the strength to renounce. And 
afterwards, I was able to refinance my mortgage.
    But today I'm here because I'm having a problem again 
because of FATCA and that is with my children. My daughter is 
still a U.S. citizen. My son, on the other hand, he's not a 
U.S. citizen. So my son, he can have a bank account with any 
bank in Switzerland. My daughter, about 310 out of 320 banks 
rejected her, and this is going to become a problem later on 
when she's 16.
    In Switzerland, it's a common practice to get an 
apprenticeship where she would go to work, earn money, she'll 
need a bank account. But having a bank account means she'll 
have to file FBAR, she'll have to be subject to FATCA, and I 
mean, assuming that she even can get a bank account.
    And this is just a problem which rolls over. She's going 
have to relive what I relived, go through what I went through. 
She's going have to decide if she wants to have U.S. 
citizenship or she wants to have a normal life in Switzerland 
with a normal bank account.
    Thank you, Mr. Chairman.
    [Prepared statement of Mr. Kuettel follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Meadows. Thank you for your testimony.
    Thank you for your service to our country.
    And you are in a minority. You're the only witness, I 
think, that I've ever heard who says they enjoy paying taxes.
    So--but Ms. Bean, you're recognized.
    And before I recognize you, I want to just say that this 
hearing, where it's highlighting some of the difficulties with 
FATCA, I want to recognize, as I did in my opening statement, 
the great work that you did with UBS in the investigation, and 
so nothing in this is meant to be disparaging of the 
consequences of what I believe are unintended consequences of 
really your fine work, and so I recognize you for 5 minutes.
    Mr. Connolly. Mr. Chairman.
    Mr. Meadows. Yes.
    Mr. Connolly. Could I just ask a unanimous consent request 
before we hear from Ms. Bean. I meant to do this in my opening 
statement. I have a statement from the FACT Coalition opposing 
H.R. 2054, I'd ask be entered in the record.
    Mr. Meadows. Without objection.
    Mr. Connolly. And I would also comment on the Chairman's 
comment to Mr. Kuettel. Actually there are only two kinds of 
people who oppose taxes, men and women.
    Mr. Meadows. We'll now recognize Ms. Bean for 5 minutes.

                    STATEMENT OF ELISE BEAN

    Ms. Bean. Well, thank you, Chairman Meadows, Ranking Member 
Connolly, and the members of the subcommittee for inviting me 
here today to present another view of FATCA.
    I was asked to testify because for many years I worked for 
Senator Carl Levin on the Senate Permanent Subcommittee on 
Investigations, and we held a number of hearings looking at how 
foreign banks were helping U.S. clients hide assets and evade 
U.S. taxes.
    To give you a couple of examples. We had a gentleman named 
John Mathewson who testified in front of us. He set up a bank 
in the Cayman Islands called, ``Guardian Bank & Trust,'' had 
about 2,000 clients, $150 million in assets, and he said, in 
his opinion, virtually all of his clients were engaged in tax 
evasion. He said a standard practice to handle them was he 
would set up a shell company in the Cayman Islands, open up an 
account in the name of the shell company, the client would 
supply the money, and then he would give the client a credit 
card in the name of the shell company, and he would advise him 
to sign it illegibly on the back. That way they could use the 
credit card in the United States to withdraw funds from their 
Cayman account without anybody linking their name to their 
shell company.
    We looked at two banks in Switzerland, UBS, the largest 
bank in Switzerland and the second largest, Credit Suisse. UBS 
was shown that they had 52,000 undeclared accounts, meaning 
accounts opened by U.S. clients that had never been disclosed 
to the IRS with about $18 billion in assets.
    They were sending Swiss bankers to U.S. soil. It wasn't a 
case of us going there, but sending their Swiss bankers here to 
yachting races, art shows, tennis tournaments, quietly handing 
around their business card and trying to convince people to put 
their money abroad. They were very successful. They had tens of 
thousands of clients through those methods. They eventually 
pleaded guilty. They paid a fine of $780 million, and they 
eventually disclosed about 4,500 names to the U.S. but 4,500 is 
nowhere close to the 52,000 undeclared clients.
    Credit Suisse had, at their peak, about 22,000 undeclared 
accounts with about $10 billion in assets. They too pleaded 
guilty. They paid a fine of about $2.6 billion. But guess what, 
they never disclosed any of those 22,000 accounts to the U.S. 
The U.S. had to find those people on their own, and they 
haven't found very many of them.
    We did identify two clients. One told us about an occasion 
where his Credit Suisse banker met him at a luxury hotel here 
in the U.S. over breakfast, slipped him a Sports Illustrated 
magazine, and in between the pages was his bank statement so he 
could know what was going on in his Swiss account. That's how 
they did business.
    Another gentleman told us about how he went to the bank's 
headquarters in Zurich. He was ushered into an elevator with no 
buttons. It was remotely controlled. He was taken up to a floor 
and shown to a room with all white walls. The whole point being 
how the bank was so secret, and they actually told him they did 
not file the forms that required disclosure of his account to 
the IRS.
    In short, our investigations--and by the way, we also 
looked at a bank in Liechtenstein, and there we were able to 
get very detailed records on about 150 U.S. clients who had 
accounts there, and we gave examples at our hearing just to 
give you one, a Florida contractor in a construction business 
set up four Liechtenstein foundations, opened up accounts in 
the name of those foundations, and stashed about $49 million in 
those accounts that had not been disclosed to the U.S. until a 
whistleblower turned over the documents to the agency.
    In short, our investigation showed that opening up offshore 
bank accounts for U.S. clients was big business, billions of 
dollars, tens of thousands of clients. Additional evidence of 
the scope of the problem is the IRS Offshore Voluntary 
Disclosure Program. The latest statement from the IRS says that 
they have now had word from 100,000 Americans, 100,000 
Americans who admitted to having an undeclared offshore 
account. In order to get right with the government, they have 
now, as Mr. Connolly said earlier, paid a total of about $9.9 
billion to satisfy the back taxes that they owed.
    That's the backdrop for FATCA. That's why FATCA was enacted 
on a bipartisan basis. The first thing to understand about 
FATCA is it does not impose a tax on anyone here or abroad. It 
does not impose a tax. It is simply a transparency measure, and 
it matches what every American citizen has been doing for 
decades. All of us get 1099s that are turned into the IRS about 
all domestic bank accounts. All of us do. It simply institutes 
the same program so that an American living here who opens up a 
U.S. bank account is treated the same way as an American living 
here or abroad opens up a foreign bank account.
    Recent research has shown that FATCA and other offshore 
account disclosure programs are working. Preliminary results 
from the 2017 study says that since 2009, the number of 
individuals reporting offshore accounts to the IRS has 
increased by 19 percent, and they have disclosed additional 
account assets of over $75 billion. It's starting to work. We 
are starting to change and end these offshore abuses.
    Now, how has FATCA helped? Well, first of all, it leveled 
the playing field between Americans who open accounts here and 
Americans who open accounts abroad. It treats them the same 
way. It also leveled the playing field between U.S. banks and 
foreign banks. U.S. banks no longer see their wealthiest best 
clients leaving the U.S. bank and going to a foreign bank 
because they can open up a secret account. U.S. banks first. 
This restored a level playing field between U.S. banks and 
foreign banks.
    At the same time, everybody is correct that FATCA did not 
have a smooth implementation. It had a very rough beginning. 
There were a lot of banks that were furious at this U.S. attack 
on your secrecy and on their business model to open up these 
accounts, particularly in Switzerland.
    We went after UBS, Credit Suisse. We had a program to go 
after another 100 banks. Switzerland is very unhappy with the 
U.S., but you know what, those banks have adapted. Those banks 
have said that they will comply with FATCA. And in fact, today, 
7 years later, there are over 274,000 foreign financial 
institutions have signed up to FATCA and agreed to comply with 
it.
    In addition, 100 countries have adopted a similar FATCA 
program under the leadership of the OECD to do the exact same 
thing that we're doing. So disclosing foreign account 
information is becoming the global norm. So while it was a very 
rough beginning, people were very angry, particularly in 
Switzerland, that's not the case 7 years later today. Now many 
banks are agreed to comply with FATCA.
    Now, we've heard today about how some American citizens are 
saying that FATCA is forcing them or leading them to give up 
their citizenship, but I have to also point out that that's 
affecting a very small number of people.
    In 2015, about 4,300 people gave up their citizenship. That 
same year, we got new citizens of 730,000, people willing to 
pay U.S. taxes. And when you compare that 4,300 figure to the 9 
million Americans living abroad, you're talking about a rate of 
less than one-tenth of 1 percent.
    To conclude, I wanted to say that repealing FATCA today 
would be a mistake. It would hurt honest taxpayers who have to 
disclose their account information on a bulk basis every year 
to the IRS. That's what honest taxpayers do. Whether you're 
honest or not, that's how banks treat your bank accounts here 
in the U.S. But it would hurt honest taxpayers here living in 
the United States to allow people who have the wherewithal to 
go abroad to not play by the same rules.
    It would encourage Americans to move more of their money 
offshore to get some of that secrecy. It would disadvantage 
U.S. banks who would again have to compete against foreign bank 
secrecy. It would also waste all of the investments made by 
those foreign banks to comply with FATCA. They have all done 
it. They are complying.
    We began disclosures in 2015. All of that money would be 
wasted. And finally, it would return us to an era where it was 
much easier to have an offshore account hide your assets and 
evade your taxes. So that's why I think repealing FATCA would 
be a tragic mistake.
    Thank you.
    [Prepared statement of Ms. Bean follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Meadows. Thank you, Ms. Bean.
    The chair recognizes himself for a series of questions.
    So Ms. Bean, let me go--because you made some very profound 
statements there that I'm not sure you want to carry them out. 
Are you suggesting that the whole reason to do this is that 
U.S. banks want us to do it?
    Ms. Bean. Well, it's my understanding that when FATCA 
passed the first time around, the point----
    Mr. Meadows. I'm just asking for your sworn testimony. Are 
you suggesting that U.S. banks are really supportive of this 
law?
    Ms. Bean. Yes, I think banks do not want to compete against 
foreign banks that----
    Mr. Meadows. So if I get the banking institutions to say 
that they don't have a problem with us repealing that, you 
would change your opinion?
    Ms. Bean. Well, many of those banking institutions have 
foreign banks as members.
    Mr. Meadows. No, I know that.
    Ms. Bean. So that's the opinion----
    Mr. Meadows. That's what I'm saying. So at this point, if 
they changed their position, would you change yours?
    Ms. Bean. I think U.S. banks do not want to compete against 
foreign banks that can take their wealthiest clients----
    Mr. Meadows. That's not the question I asked.
    Ms. Bean. --and separate accounts.
    Mr. Meadows. That not what I--I said if they changed it, 
would you change your opinion?
    Ms. Bean. If they, you mean if U.S. banks?
    Mr. Meadows. Yes.
    Ms. Bean. Not their trade associations, which have foreign 
banks in them. But if you could get U.S. banks alone to say we 
don't want FATCA anymore, they'd still have to comply, by the 
way, with all of the other----
    Mr. Meadows. Well, they're about to have to comply. You 
see, we haven't forced them to comply on this side, you know, 
and----
    Ms. Bean. They do comply----
    Mr. Meadows. In a different way. We do not require them to 
comply with foreign entities at this particular point. So if 
France----
    Ms. Bean. Yes, we do.
    Mr. Meadows. We're not forcing them to do that unless 
there's a reciprocal agreement. I've looked at it, Ms. Bean, 
and so we can argue the point, so let me go to one other side 
of this.
    So you're saying it's the investment that we made, even if 
it's bad policy, we shouldn't go the other direction because we 
made a substantial investment and everybody is getting used to 
it. Is that your testimony?
    Ms. Bean. It is. Foreign banks----
    Mr. Meadows. All right.
    Ms. Bean. By the way, these aren't U.S. banks, but these 
are foreign banks----
    Mr. Meadows. Okay. I've got 5 minutes, so yes or no answers 
are the best for me, but you can explain. That's fine.
    So GAO did a study in 2013, and they suggested that really 
it's the voluntary disclosure that has most of this. It's not 
the IRS coming in. It's the voluntary disclosure that comes up 
with this.
    In fact, they said, in that study, 80 percent--now these 
are of the high income people. So the lower income people like 
Mr. Kuettel would not be actually in this study, but they said 
80 percent of the high income individuals, the income that we 
recovered actually came from fees and--penalties and fees, not 
actually income tax. Does that strike you as surprising?
    So of the 800 million that we actually got last year, 80 
percent of that were fees and penalties. It wasn't really 
taxes.
    Ms. Bean. When people don't pay their taxes and they're 
caught by the IRS, they do impose penalties.
    Mr. Meadows. Listen, this isn't my first rodeo. I get that. 
What I'm saying is does that surprise you that 80 percent of 
the money we have coming in is actually fees and penalties? 
It's not tax avoidance. It's a penalty or a fee that goes with 
that. So the number we're collecting, the vast majority of it 
is just a fee and a penalty for voluntary disclosure. Does that 
surprise you?
    Ms. Bean. It did not surprise me, but it also includes 
interest, I believe, not just penalties but also interest.
    Mr. Meadows. Well, when we look at this, when we look at--
--
    Ms. Bean. I think it's the biggest part of it.
    Mr. Meadows. It was 80 percent. I mean, I've got the study 
right here. I'll be glad to share it with you. It's 80 percent 
would basically come from penalties and fees, quote.
    And so when we look at that, you know, then what you're 
doing is you're taking this number down, and so we're investing 
200 million to try to go over, and we're assuming that they're 
not doing legal activity. I think most people actually agree 
with Mr. Kuettel. They may not be happy about their paying 
taxes, but they agree that it is their civic duty to do so.
    Ms. Bean. I would agree with that.
    Mr. Meadows. And so when we see that, we're making an 
assumption that activity is illegal, just like Senator Rand 
Paul was taking about. So what you're saying is that it's okay 
for us to go in and get details on their private accounts and 
making sure that we understand that in case there is illegal 
activity. Is that your premise today?
    Ms. Bean. I don't like getting a 1099 on my bank account. 
I'm an honest customer.
    Mr. Meadows. That's not what I asked. Is it your sworn 
testimony----
    Ms. Bean. Like I would here with a 1099----
    Mr. Meadows. --that it's okay for us to go look at the 
private individual account with the suspicion that there may be 
illegal activity, and that's okay?
    Ms. Bean. I treat all Americans the same. 1099s or 1042s, I 
treat them all the same.
    Mr. Meadows. Ms. Bean, you're--this isn't your first rodeo 
either. You're not answering my question.
    Is it your sworn testimony that it's okay to go into the 
private individual accounts under the suspicion that there may 
be illegal activity and look at that as FATCA does?
    Ms. Bean. As FATCA and American law does, yes, I think that 
is appropriate.
    Mr. Meadows. All right. So let's look at it a little bit 
differently.
    So I am assuming you are a law abiding citizen. Would it be 
okay, under that same premise then, for me to go look at all 
your emails and all your private correspondence which some 
would argue is not as intimate as your financial details, would 
it be okay for me to go in there looking for suspicious 
activity? Would you think that that would be appropriate?
    Ms. Bean. No.
    Mr. Meadows. Okay. I agree with you, and so what we've 
done----
    Ms. Bean. And the difference is that one is about paying 
taxes----
    Mr. Meadows. What we've done----
    Ms. Bean. The other one is about private communications. 
There's a difference there. All of us----
    Mr. Meadows. Listen, my son is graduating from law school. 
His specialty is Fourth Amendment. So I mean, we've had these 
arguments at the dinner table, and so when we look at that, I 
understand the difference. But as we start to see this, Ms. 
Bean, here's what I'm saying.
    We're investing money, which forces a compliance nature 
that is making people where they can't bank or where actually 
being a U.S. citizen is a detriment internationally for any 
financial, whether you're in a single household or whether 
you're a financial corporation. Do you think that that was the 
intended purpose of this bill?
    Ms. Bean. The Supreme Court.
    Mr. Meadows. Was that the intended purpose of the bill, yes 
or no?
    Ms. Bean. Was the intended purpose to denigrate Americans? 
Absolutely not.
    Mr. Meadows. All right. Thank you.
    I'll recognize the ranking member.
    Mr. Connolly. Thank you. I do want to, you know, want to 
caution about only looking at extremes. So we can ask about 
intrusion into Americans' financial information as if all of it 
is extreme.
    So I'll pose the opposite question to you, Ms. Bean, would 
it be okay if we completely repealed FATCA, and while we're at 
it, say that anybody is free, as an American citizen, to have a 
secret bank account in Switzerland and should never have to 
report on it and should never have to pay taxes on it unless 
they feel like it? What's wrong with that?
    Ms. Bean. Well, what's wrong with that is we have tens of 
thousands of people who are cheating on their taxes and----
    Mr. Connolly. Correct. Right.
    FATCA didn't just come out of, you know, busybodies who 
love putting their nose in people's private business and there 
was no problem to solve and it was just another perverse 
liberal thing to do in Congress, right?
    Ms. Bean. Correct.
    Mr. Connolly. I mean, there was actually a problem 
identified, which was rather substantial tax evasion in the 
billions of dollars. Hard-working Americans pay their fair 
taxes, and none of us like to see anyone cheating, right?
    Ms. Bean. Correct.
    Mr. Connolly. Okay. Now, here's my question. Having said 
all of that, the testimony we've heard from your three 
colleagues at the table would suggest that sometimes, though, 
we've gone too far, that maybe the intention was good, but it's 
disrupting people's lives. We've had testimony from two 
Americans that they had to renounce their citizenship because a 
bank in Switzerland told them they had to, if I got the 
testimony right. And surely you would agree that's not an 
intended consequence of FATCA?
    Ms. Bean. No, it's not.
    Mr. Connolly. You said something about the rollout, you 
admitted, was rocky. So is the implementation still rocky? Are 
there still unintended consequences that maybe Congress needs 
to address or someone implementing needs to address?
    Ms. Bean. FATCA still is not--it's far from a perfect law. 
There are things that could be improved.
    Mr. Connolly. Nothing is a perfect law. I hate that 
expression. I mean, that implies something could be perfect. 
Nothing is perfect. I wish there were, but there is not. So we 
will put that aside.
    So it has problems in its implementation still?
    Ms. Bean. Yes.
    Mr. Connolly. Okay.
    And listening to the testimony of the three gentlemen to 
your left--left? Right?
    Ms. Bean. My right.
    Mr. Connolly. Right. Sorry.
    Do they have a point? I mean, do you recognize what you're 
hearing here as a fair critique, maybe not a comprehensive 
critique? You and I would stipulate that the purpose of FATCA 
is a good one, and it has done some good, clearly, in promoting 
an international standard and in collecting taxes that 
otherwise would have been foregone. But, in doing that, either 
in the zeal or in the reach, it's hurt people unintentionally. 
That's really what we're hearing here. And I'm concerned about 
that as a Member of Congress.
    I don't want to see fellow citizens hurt. I want to see tax 
cheats brought in. I want to see everyone pay their fair taxes. 
And maybe not everybody up here shares that philosophy. I do. 
But I don't want to be hurting people in the process who are 
innocent victims of a well-intentioned piece of legislation 
that's overly broad or is badly implemented. And that's what 
I'm asking you to comment on.
    Ms. Bean. I really think their concern is misplaced.
    Mr. Connolly. Whose?
    Ms. Bean. The people to my right.
    Mr. Connolly. Okay.
    Ms. Bean. I think what they're concerned about is, in some 
cases, it's unfair to tax them because they don't live in the 
United States.
    Mr. Connolly. Can I just say--I've seen this--Mr. Chairman, 
if I can interrupt one second?
    I would ask everybody to forbear civility and acceptance. 
This is not a hearing where you're shaking your head because 
you don't like what somebody says. We're going to hear 
everybody, and we're going to try to be fair. But you're not 
free to be commenting through body language on whether you 
approve or disprove of somebody's right to express themselves. 
You know, if you're at the table, you get to express yourself. 
If you're not, please be forbearing and polite.
    Ms. Bean?
    Ms. Bean. I was just going to point out that, even if FATCA 
were completely repealed, you'd still have all of the same 
problems about people saying ``we're getting taxed when we 
shouldn't be'' or ``getting taxed too much'' or ``the process 
for renouncing citizenship is too complicated or too 
expensive.'' All of those things would still be true because 
FATCA itself does not impose any tax, and it does not, of 
course, require anybody to renounce their citizenship.
    I think Switzerland was a particularly tough place to be, 
that the banks there were particularly upset because FATCA was 
aimed, in part, at Swiss bank secrecy. I think that a lot of 
those Swiss banks now have changed their practice. UBS and 
Credit Suisse now agree to open up accounts for American 
citizens and report them to the IRS, and a lot of other Swiss 
banks----
    Mr. Connolly. Thank you. Unfortunately, votes have been 
called.
    Mr. Chairman, I would like, if it's all right, to have Mr. 
Bopp just comment on that, if he would like to. I'd like to 
hear the other point of view.
    Mr. Meadows. Yeah. Very quickly.
    Mr. Connolly. Very quickly.
    Mr. Meadows. We've got a couple minutes left, and we're 
going to need to recess and reconvene. So very quickly.
    Mr. Bopp. Thank you. I would just make a couple of points. 
First, this is not an unusual or rare problem that is affecting 
Americans overseas. The Democrats Abroad survey of Americans 
overseas found that 65 percent of married Americans overseas 
have lost bank accounts because of FATCA.
    Secondly, this does not level the playing field. U.S. banks 
have to file, you know, 1099s regarding interest income. Under 
FATCA, foreign banks have to not only identify income but also 
gains and losses, et cetera, also gross receipts, gross 
withdrawals, account information, value--no taxpayer in the 
United States reports that information to the IRS.
    And, finally, regarding the penalty point that you made, 
the $9.7 billion that she's talking about of taxes, interest, 
and penalties, most of those penalties we know anecdotally were 
not because these people needed to pay any taxes and failed to 
do it, but because they failed to file this form, this one 
lousy form that generates a 50-percent penalty of the highest 
value in the account. If you do it in the second year, fail to 
file your form, you're now at a hundred percent. That's the 
penalty. And, you know, that is something this committee should 
force the IRS to explain to the American people about how FATCA 
is working.
    Mr. Meadows. All right. We're going to reconvene probably, 
for planning purposes, no sooner than 3:35. So you can go get 
coffee, do whatever you want. And so this committee stands in 
recess.
    [Recess.]
    Mr. Meadows. The chair recognizes the gentleman from 
Georgia, Mr. Hice, for 5 minutes.
    Mr. Hice. Thank you, Mr. Chairman.
    Ms. Bean, I want to pick up with you, if we can continue 
here.
    Any idea how much revenue is lost to offshore tax evasion 
each year?
    Ms. Bean. Estimates have been between $100- and $150 
billion per year is lost to offshore tax evasion.
    Mr. Hice. All right. Between $100- and $150 billion. And 
you're satisfied with that estimate?
    Ms. Bean. Yes.
    Mr. Hice. Okay.
    And how much revenue is brought in because of FATCA?
    Ms. Bean. I don't know. It's such a new law. They just 
started the reporting in 2015. I don't know if they have any 
statistics yet.
    Mr. Hice. Okay. The Joint Committee on Taxation estimated 
$870 million. Are you familiar with that estimate?
    Ms. Bean. That is being brought in per year?
    Mr. Hice. [Nonverbal response.]
    Ms. Bean. I wasn't familiar, but okay.
    Mr. Hice. Okay. Based on that, assuming that the Joint 
Committee on Taxation is accurate, at least in the ballpark, it 
is very poor math. We've got a loss of $100- to $150 billion. 
We're only bringing in 870 million. And that's just part of the 
problem. I mean, we're spending--figures have been going out 
today--$200 billion spent on this. The estimates on that range 
from a little less than that. The $200 billion is kind of a 
middle-of-the-road estimate. I've seen as high as a trillion, 
as low as $8 billion. But the middle-of-the-road guess, $200 
billion. And besides all that--I mean, I listen to these 
witnesses and read their testimonies and the harm that has been 
caused individuals around the world and the harm that has come 
about to some of our allies. You even mentioned yourself how--
you know, you said that, in your opinion, things are changing. 
But many of our allies have been hurt because of this. 
Obviously, it's not a very efficient use of IRS resources.
    And, quite frankly, I have questions as to just whether or 
not this thing is even constitutional or not. There are 
tremendous constitutional questions that come up with this. The 
fact that Americans living overseas are forced to provide 
financial information that would normally require a warrant is 
just amazing to me. There's obviously an issue at least with 
the Fourth Amendment there.
    We have heightened reporting requirements to treat 
Americans living overseas more harshly than those living here. 
And that, obviously, is a Fifth Amendment concern. You just 
wonder even how constitutional this thing is at its very 
foundation. And then the fact that this was instituted without 
congressional authority--President Obama--the agreements were 
made. I mean, you've got a separation-of-powers issue.
    I guess my point is, over and over and over, there's just 
questions on this thing as to even how effectively it's 
working. If we're bringing in $870 million but the cost is some 
$200 billion, it doesn't take a whole lot of math to figure out 
this is not a very efficient thing. And you add to it the harm 
that's being caused and the constitutional issues that are 
being raised, it appears to me that, although this may have 
been implemented with good intentions, as has been mentioned 
here today, there's enough information that's come forth here 
about FATCA that, frankly, I find this thing not only to be 
disastrous as a law but dangerous, potentially, 
constitutionally. And it just seems to me in every way this 
ought to be repealed; if not, majorly modified. Just a quick 
yes/no, would y'all agree or disagree that this needs to be 
either repealed or modified?
    Mr. Bopp?
    Mr. Bopp. I definitely agree it needs to be repealed. We 
have thought about fixes, alleged fixes, being proposed by 
various people. The problem is it leaves all the essential 
elements of the FATCA regime in place. The burdens on most 
individuals, the burdens on financial institutions, don't 
change in any of the proposals that we are aware of. And the 
constitutional issues remain.
    And we just should not be treating people that are U.S. 
citizens, because they're residing abroad, stripping them of 
their rights as if they are second class citizens.
    Mr. Hice. Okay.
    My time has expired.
    Mr. Crawford, Mr. Kuettel, yes or no, repeal or modify?
    Mr. Crawford. Yes. I support a repeal.
    Mr. Kuettel. Yes. I support repeal.
    Ms. Bean. No, I don't. And just so you know, the courts 
that have looked at these types of issues have upheld----
    Mr. Hice. Nor do you believe it should be modified? You 
like it just as it is?
    Ms. Bean. I think there's some modifications that would be 
appropriate.
    Mr. Hice. Okay.
    Thank you, Mr. Chairman.
    Mr. Meadows. I thank the gentleman.
    The chair recognizes the gentlewoman from New York, Mrs. 
Maloney, for 5 minutes.
    Mrs. Maloney. Thank you, Mr. Chairman.
    I want to thank you very, very much for your focus on this 
issue. It's an extremely important one as we move into more of 
a global world with many Americans living abroad.
    And, of course, I thank Ranking Member Connolly.
    And thank you to all of the witnesses who have come from 
all of the corners of the globe to testify about the future of 
this important law.
    I represent a district that has many Americans that live 
abroad that have expressed the concerns of Mrs. Nelson, 
although I have never had a first family who came over on the 
first ships testify to me. But many people have told me the 
excruciating experience of renouncing their American 
citizenship and their inability to open up bank accounts or 
being forced off the bank account of their spouse.
    But, likewise, I'm very sympathetic to the points that Ms. 
Bean has raised about the need to crack down on terrorism 
financing, drug financing, human trafficking financing, and 
just plain crooks. But I do think that we could reach some type 
of agreement in going forward.
    I personally do not think FATCA should be abolished. But 
certainly the reporting procedures should not subject ordinary 
Americans, in my opinion, to the same scrutiny as criminal tax 
evaders, money launderers. And coming from New York, which is 
constantly a terrorist target, the extreme concern that law 
enforcement has in New York, and I'd say around the country, of 
terrorism financing.
    I've been particularly interested in this issue for some 
time now as co-chair and founder of the Americans Abroad 
Caucus. I have heard reports from constituents overseas 
detailing how FATCA's expensive and risky reporting 
requirements have had a negative impact on access to banking 
services for Americans living abroad.
    FATCA was passed to fight overseas tax havens and make sure 
that American money could not be hidden from tax obligations, 
which is something I strongly support, and I'm sure most 
Members do as well. It does this by requiring foreign financial 
institutions to disclose certain information to IRS about 
American-held accounts or the institution will be subject to a 
30-percent withholding tax on all of its income from U.S. 
sources.
    Unfortunately, in order to minimize their exposure to FATCA 
reporting requirements and avoid any withholding fees and 
potential penalties, some foreign financial institutions have 
decided to simply close accounts for U.S. citizens or refuse to 
open new ones for them or have asked them to get off the 
account of their spouse. As a result, many law-abiding American 
citizens living overseas have lost access to everyday financial 
tools, such as mortgages, bank accounts, insurance policies, 
and pension funds, all of which are critical services in a 
modern economy, regardless of your place of residence.
    Now, I believe it is essential that the Treasury Department 
has the tools it needs to fight overseas tax havens and make 
sure that any American money around the world remains compliant 
with the U.S. Tax Code, but the current FATCA reporting 
procedures subject ordinary Americans to the same scrutiny as 
criminal tax evaders. It's gotten so bad that some Americans 
have resorted to renouncing their American citizenship in 
response, and that's unacceptable. Whether it's 1 or 2 or 
2,000, we should not live in a world where people feel they 
have to renounce their citizenship in order to comply with, 
basically, transparency laws.
    Recognizing the consequences that the reporting 
requirements have had on Americans living abroad, the IRS 
Taxpayer Advocate Service 2015 annual midyear report to 
Congress recommended that the IRS exclude from FATCA reporting 
financial accounts maintained by a financial institution in the 
country in which the U.S. citizen is a bona fide resident.
    And I have here a letter that about 20 Members of Congress 
joined me in signing and sent to Treasury and IRS supporting 
this idea, this narrow, narrow exemption for American 
taxpayers.
    The report details how this proposal would mitigate 
concerns about unintended consequences raised by overseas 
Americans, reduce the reporting burden on FFIs, and allow the 
IRS to focus its enforcement efforts on identifying and 
addressing willful attempts at tax evasion or money laundering 
or money hiding through foreign accounts. The IRS would retain 
access to foreign financial account information as citizens 
would still be required to submit the report of foreign bank 
and financial accounts. Additionally, the Financial Crimes 
Enforcement Network, or FinCEN, the query system ensures IRS 
employees direct access to FBAR data.
    The Treasury Department has not yet implemented this 
recommendation, and I wrote this letter on September 15th of 
2015, which I'd like to submit to the record.
    Mr. Chairman?
    Mr. Meadows. Without objection.
    Mrs. Maloney. --to the IRS and Treasury Departments, urging 
adoption of this reform, but still nothing has happened.
    So today I--as we hold this hearing, they haven't taken 
any--been taken to institute a policy to alleviate the burden 
on overseas Americans as a result of FATCA. That is why, last 
night, I introduced the Overseas Americans Financial Access 
Act, which would implement the recommendation and exempt 
Americans from FATCA reporting if their accounts are held in 
the same country where they are bona fide residents. It is a 
narrowly tailored change that could drastically improve the 
financial conditions for Americans living abroad.
    I hope my colleagues will join me in this good-faith effort 
to make FATCA more effective in its intention and yet less 
burdensome on law-abiding Americans living and working abroad.
    And I request permission to place in this record, I think, 
an excellent document that was prepared by the Foreign Account 
Reporting on the issue and ways it could be improved, which 
included the recommendation that I legislated last night. And I 
have the bill here. And I'd also like to put that in the 
record.
    I feel that this narrowly tailored approach would relieve 
the burden on American residents, members of--Americans, yet 
keep the benefit of cracking down on terrorism financing, drug 
financing, human trafficking financing and just plain criminal 
behavior.
    My time is long over--expired. I thank the gracious 
chairman for allowing me this time to speak, and I look forward 
to a second round where I can participate in asking questions.
    Thank you.
    Mr. Meadows. I thank the gentlewoman.
    Her two unanimous consents, without objection, so ordered.
    Mr. Meadows. And the chair recognizes the gentlewoman from 
the District of Columbia, my good friend Eleanor Holmes Norton.
    Ms. Norton. Let me thank you, Mr. Chairman, for this really 
interesting and important and revealing hearing.
    I was pleased to hear my good friend Mrs. Maloney take a 
stab at how we could, in fact, go at the probable unintended 
consequences of going after bad guys and getting good guys 
while at the same time not opening the gates altogether to the 
bad guy.
    Indeed, I was a little surprised to hear some of your 
responses to the question that was asked by my colleague on the 
other side whether repeal or modification was appropriate. Let 
me remind you what it takes in this Congress and what it took 
in the Congress that passed this to get legislation through to 
recoup taxes or to tax anyone.
    The evidence was overwhelming of human trafficking, of drug 
smuggling, of tax cheats, so overwhelming, that, in a Congress 
which is not known as passing a lot of bills and in a Congress 
which has cut the IRS more than it has cut any other part of 
the government, this legislation, FATCA, was passed. So I have 
to ask you, when you say you would like repeal, do you really 
mean you want no law on the books that went after the bad guys 
so that we could make sure that the good guys weren't, in fact, 
caught? I'm going to ask you to think about that, because this 
is the kind of modification that is going to take bipartisan 
support. And you just heard a Member offer at least one version 
of modification.
    But if you come to the Congress of the United States, who 
passed a law like this after being overwhelmed by evidence, and 
say, ``The only thing we want is a wide open gate and ask you 
to throw all of that away,'' then you're not really helping us. 
So I'm asking you whether you would consider the notion of 
modifications that would in fact help us deal with what moved 
all of us during your testimony.
    Mr. Bopp? Let me hear all down the line on that.
    Mr. Bopp. Thank you.
    And, of course, we have considered the possibility of 
changes such as proposed and other proposals. And the problem 
is, is we do not find that they will be effective in relieving 
the burdens----
    Ms. Norton. All right. Mr. Bopp, my time is----
    Mr. Bopp. And I can tell you why.
    Ms. Norton. You know, you may not have seen any yet, but 
you see what you give us, an all-or-nothing kind of resolution. 
And that, of course, it tells us, who don't do much in the 
first place, nothing.
    I just want to ask in the--I would--maybe the chairman 
would grant me some time as well, because I want to see whether 
any of you would be open to modification going back to where we 
were. The fact that you haven't seen one----
    Mr. Meadows. The chair will give----
    Ms. Norton. --doesn't mean that there isn't one in 
existence. And there haven't been hearings like this; doesn't 
mean that working with people couldn't help us.
    But I do have to ask Ms. Bean about this--what looks like 
the rest of the country moving toward us with this common 
reporting standard. Does that, in fact, share much of what 
we've been talking about in FATCA, Ms. Bean, this common 
reporting standard, this OECD effort to collect and share 
information about foreign-held accounts?
    Ms. Bean. It's modeled on FATCA. It's very similar to it. 
It's not identical. But, yes, and over a hundred countries have 
now signed up to that system.
    Ms. Norton. So, if anything, it looks like the rest of the 
world is moving toward FATCA because of hearings which opened 
this matter up, in fact, found. So could they work together to 
stop the kind of tax evasion we've been talking about, the 
common reporting standard and FATCA, Ms. Bean?
    Ms. Bean. That's the hope, that with most banks around the 
world starting to report account information to governments, 
that this whole problem of secret bank accounts that, as you 
said, are used not only by tax evaders but terrorists, 
criminals, sex traffickers, drug lords, that whole problem 
would be much more manageable because of the transparency.
    Ms. Norton. Would the information of U.S. account holders 
still be collected if Congress repeals FATCA but the common 
reporting standard continued in existence?
    Ms. Bean. I don't know the answer to that. I believe it 
would be. But I'd have to look at it in more detail.
    Ms. Norton. I wish you would get that answer back to our 
chairman.
    I have to tell all of you sitting at the table: I was a 
tenured professor of law before I came to Congress. And, 
essentially, I taught one of the--in addition to the hard level 
of court courses I taught, one was negotiations. So I came kind 
of with the frame of mind is every--lawyers can be most helpful 
if they understand that we live in a world where each side 
can't get what he wants but can, in fact, be satisfied. And 
it's that kind of problem-solving approach I've tried to bring 
to the Congress as well. So I must tell you: When somebody 
tells me to take back a piece of legislation that could have 
passed only if we were deluged with information that made it 
irresistible, if you tell me that that is the only answer, I 
have to tell my friends at the table that you're asking for the 
status quo. And I would ask you to work with Mrs. Maloney, with 
me, with the chairman, to find a way out of this dilemma so 
that, in trying to help the good guys--and you represent them--
we do not go back to opening the gate to all the bad guys we 
were after in the first place.
    I thank the chairman for his indulgence.
    Mr. Meadows. I thank the gentlewoman.
    I would like to make note that the chair did give the 
additional 2 minutes to the gentlewoman from D.C.
    Ms. Norton. That's why I love him so much.
    Mr. Meadows. We're going to go ahead--since the gentlewoman 
from New York wanted a second round, we're going to go ahead 
and do a brief second round. So I'm going to recognize myself 
for a series of questions.
    But let me clear up, I guess, some testimony. I've got 
sworn testimony that Ms. Bean says that we're not asking 
financial institutions abroad to do anything that the United 
States banks do.
    And, Mr. Bopp, your sworn testimony seemed to be at odds 
with Ms. Bean.
    So help me clear up--Mr. Bopp, I think you said that more 
than just a 1099, they are required to have all kinds of other 
information.
    I want to give you a chance to correct the record if you're 
not correct in your sworn testimony.
    Mr. Bopp. The 1099 that American banks are required to send 
in to the IRS and to the taxpayer, of course, reports the 
interest income on the account. It does not report gross 
receipts. It does not record gross withdrawals. It does not 
report the value of the account. These are things that FATCA 
requires foreign banks to provide to the IRS. So----
    Mr. Meadows. All right. So you're saying that foreign banks 
have to do that and U.S. banks don't?
    Mr. Bopp. [Nonverbal response.]
    Mr. Meadows. Okay. I think we'll get a different opinion 
here, but, Ms. Bean, go ahead. Are you saying that his 
testimony is not correct?
    Ms. Bean. Mr. Bopp is correct. There's additional 
information under FATCA from foreign banks than there is in the 
U.S. banks.
    Mr. Meadows. Why is that?
    Ms. Bean. I think that's just the way the law was written.
    Mr. Meadows. Do you not see that as problematic?
    Ms. Bean. Well, I think one reason is that U.S. banks are 
subject to subpoena from U.S. law enforcement in a way that 
foreign banks aren't. So U.S. law enforcement, if they wanted 
to, could get the information----
    Mr. Meadows. Oh. Whoa. Whoa. Whoa. So you're saying FATCA--
FATCA's intent, from someone who should know--FATCA's intent 
was to allow a way to access information without a subpoena? Is 
that what you just said?
    Ms. Bean. Yes. Just like 1099s. There's no subpoena for a 
1099.
    Mr. Meadows. Right. But you're saying that, because we did 
FATCA, we're going to have our constitutional protections 
violated because of a law? Is that your sworn testimony here 
today?
    Ms. Bean. The courts have said it is not unconstitutional. 
The Supreme Court----
    Mr. Meadows. But you're saying they're getting around a 
subpoena, is you're saying they're subject to a subpoena, and 
somebody else is not subject to a subpoena.
    Ms. Bean. I think you were asking me, why would FATCA 
require more information----
    Mr. Meadows. No. I was asking you if it was different. 
Because your sworn testimony from my first round of questions 
is you said that we weren't asking them to do anything that a 
U.S. bank was asked to do. That was your sworn testimony. And I 
can get them to read back the transcript. But I assume that 
you're saying now you want to change that to say that, yes, we 
are asking foreign banks to do something that a U.S. bank 
doesn't have to do. Is that correct?
    Ms. Bean. What I meant in my testimony is that we're 
requiring foreign banks to file a form on all accounts opened 
by U.S. clients. And we have U.S. banks that have to file a 
form on all accounts opened at U.S. banks.
    But Mr. Bopp is correct. There are a couple additional 
items of information primarily----
    Mr. Meadows. So you would be okay with waiving those couple 
additional items and amending the law, because obviously 
that's--we're not treating people the same in the United States 
as we do abroad?
    Ms. Bean. I would not because from a foreign bank, U.S. law 
enforcement cannot----
    Mr. Meadows. Well, I'm going to go back to what the 
gentlewoman from the District of Columbia says. You can't have 
it the other way either. I mean, they may not be able to get 
full repeal, but you can't keep the full law and sit here and 
negotiate in good faith and assume that everything with FATCA 
is correct.
    Ms. Bean. In fact, the rest of the world has noticed the 
same difference----
    Mr. Meadows. They're being forced to notice the world 
because of what we're doing----
    Ms. Bean. --press the U.S. to provide that additional 
information----
    Mr. Meadows. Would you not agree with that? They're being 
forced to do it because of what we're doing from our law and 
forcing them to do it?
    Ms. Bean. We are forcing them through the 30 percent----
    Mr. Meadows. And do you not see that some of these sides 
effects that we've had expert testimony from Mr. Kuettel and 
Mr. Crawford, that those side effects of our forcing financial 
institutions to do it are having repercussions that were not 
intended in the original law?
    Ms. Bean. My entire adult life I've had to file a 1099 on 
every bank account I've ever opened.
    Mr. Meadows. So you would be okay----
    Ms. Bean. I'm okay with that.
    Mr. Meadows. All right. So let's go there. And maybe that's 
a reasonable compromise. We repeal FATCA and that we require 
foreign institutions to have to file a 1099 to the IRS on 
interest income. Would you be okay with that?
    Ms. Bean. I'd prefer the 1099 to be expanded to what FATCA 
requires.
    Mr. Meadows. Therein is a deeper problem. But we won't go 
there.
    Ms. Bean, we're not going to ever agree on that.
    Ms. Bean. Okay.
    Mr. Meadows. So let's go ahead with this.
    Are you okay, yes or no, with us just repealing back and 
saying that a foreign account has to do a 1099 on interest 
income as a U.S. Bank would do, as Mr. Bopp, and that's all 
they have to do? Are you okay with that?
    Ms. Bean. No. No, I'm not.
    Mr. Meadows. You know, I find it challenging that--because 
apparently--so what are the problems that you see with FATCA, 
Ms. Bean?
    Ms. Bean. Well, one of the--there are a number of problems. 
One of the problems is----
    Mr. Meadows. How many problems would you say there are with 
FATCA?
    Ms. Bean. Well, I haven't counted them up. But let me give 
you two of them.
    Mr. Meadows. Okay.
    Ms. Bean. One is that, when the IRS started to penalize 
people for violating the law, their penalties--they had a range 
of penalties they could do--they were very unreasonable in the 
penalties they applied.
    Mr. Meadows. So what would a reasonable penalty be?
    Ms. Bean. Well, one of the things that the IRS did at the 
insistence of the Taxpayer Advocate is they came up with a 
system that, if you had an inadvertent violation of the law----
    Mr. Meadows. Inadvertent by who? Now, I will sometimes tell 
my wife that I forgot to take the trash out inadvertently. Is 
that--I mean, inadvertent by whose standard?
    Ms. Bean. I think they require a certificate from the 
taxpayer. And if the taxpayer will certify that they--it was 
inadvertent; they didn't realize that they were violating the 
law----
    Mr. Meadows. I would think that that would happen 100 
percent of the time, wouldn't you?
    Ms. Bean. How about that. And then they're qualified for 
much lower penalties. So that's the system that's been set up.
    Mr. Meadows. So what should the penalty be, Ms. Bean?
    Ms. Bean. That's a very complicated question.
    Mr. Meadows. But you're an expert witness. You are here at 
the request of the minority as an expert witness. I would 
assume you have an opinion on that since you were involved in 
part of this. What would be an appropriate penalty?
    Ms. Bean. Well, I'll give you an example. There was a 
gentleman that they found a bank in Israel. He had hidden $21 
million in those accounts, never been reported to the IRS. The 
IRS then ended up hitting him with a fine of $8.3 million for 
the many years that he hid those accounts, and he went through 
a lot of machinations to hide them from IRS agents.
    Mr. Meadows. But that's criminal. That's criminal.
    I mean--so here's what we're talking about, is when we are 
looking at that, if, indeed, he went through all kinds of 
issues--I mean, we've got laws that say we have to disclose 
those accounts. I know, every year, my accountant would ask 
that. But what you're saying is, is that--so a big penalty, if 
he's got a lot of money, is okay; but a big penalty, if they 
don't have a lot of money, is not okay? Is that what you're 
saying? I'm trying to figure out what--I'm trying to answer the 
question for you since you don't seem like you want to answer 
the question. What's an appropriate penalty?
    Ms. Bean. Well, the penalties currently are gauged to how 
much money is in the account. So that's one thing they do take 
into account. And another thing they take into account is 
whether it was inadvertent or not.
    Mr. Meadows. So are you going to answer the question or 
not? What's the appropriate penalty?
    Ms. Bean. Sometimes the appropriate penalty is zero.
    Mr. Meadows. All right.
    Ms. Bean. If you didn't know you were violating the law, 
the penalty could be zero.
    Mr. Meadows. All right. So you're okay if we say you didn't 
know that you were violating the law, that the penalty would be 
zero?
    Ms. Bean. In some cases, yes.
    Mr. Meadows. Okay. We're not getting much of anywhere.
    What would be the other example? So penalties being 
outrageous is one. What's the other problem? You said there was 
two.
    Ms. Bean. The other one I would mention is that we've had 
the FBAR for many years where people have to identify their 
foreign accounts.
    Mr. Meadows. Right.
    Ms. Bean. But now, under FATCA, we created another form 
that seems to be very duplicative of the first form.
    Mr. Meadows. Right.
    Ms. Bean. And I'm not sure that we need that second form. 
And as people have said, there are a lot of trips and traps to 
complying with FATCA, and that seems to me to be one of them, 
to have that extra form.
    Mr. Meadows. All right. So let me understand. Your best 
recommendation on improving FATCA is we get rid of one form, 
and we may adjust the penalty. Those are your two best attempts 
at trying to fix FATCA?
    Ms. Bean. Yes. Because, as I say, I've lived my life under 
that regime.
    Mr. Meadows. All right. So, if you've lived your life under 
that regime, knowing that there is a return, knowing that the 
IRS, that the gentlewoman from the District of Columbia talked 
about, knowing that there are financial resources, knowing that 
Commissioner Koskinen says that he can get a 20-percent return 
sometimes--or even let's take conservative, under sworn 
testimony, he said an 8-to-1 return, wouldn't we be better off 
taking the $71 million that we spent last year and using it for 
some other type of enforcement that provided a better return? 
Because aren't we only getting 1 percent of what--your sworn 
testimony said there's $100 billion out there. We're only 
collecting 1 percent of those taxes. And, actually, it's not 
even that. It's taxes and fees and penalties and interest. So 
we're spending all this money to address 1 percent of the 
problem.
    Ms. Bean. Well, $150 billion includes all of the corporate 
tax avoidance. So that's a whole different issue. But when 
you're looking at individuals, the numbers that are usually 
used are $35- to $70 billion a year just for individuals. I'd 
been asked earlier about offshore tax avoidance and evasion 
altogether. But for individuals, it's $35- to $70 billion.
    Mr. Meadows. All right. I'm way beyond my time. So here's 
what I would ask you to do, each one of you to do, is come up 
with three recommendations. Your two that you gave me under 
sworn testimony don't count. I need three recommendations on 
what you would do with FATCA.
    I need you to look at--in the spirit of trying to find--if 
we do not fully repeal, what are the three most onerous 
situations that affect gentlemen like Mr. Crawford and 
gentlemen like Mr. Kuettel? What are those areas? Are all of 
you willing to either give me your recommendations back to the 
committee to do that?
    Okay. Thank you.
    I recognize the gentlewoman from New York, Mrs. Maloney.
    Mrs. Maloney. I thank the gentleman for his concern and 
trying to get an answer. But, to me, it's not a monetary thing. 
It really is human life because terrorism financing has become 
a way of life in this world.
    Mr. Meadows. Well, will the gentlewoman yield for one point 
of----
    Mrs. Maloney. No. I have a phone call with Justice Ginsburg 
in about 5 minutes. So I can't yield right now. Excuse me, 
Mr.--I just have to ask one question, and that's it.
    Listen, so--I disrupted my train of thought.
    So, just recently, this month, Chairman Hensarling of the 
Financial Services Committee created a whole new committee on 
terrorism financing because it's such a huge issue.
    Bombs went off in my district several months ago. The 
police caught the guy. But the question is, where did he get 
his money from? So cracking down on terrorism financing is a 
real concern.
    And I would say, why are people hiding money? A lot of 
times it's not just to save on taxes. It's because they're 
selling guns. They're selling human bodies, or they're involved 
in drugs or all kinds of things that basically hurt people.
    So I'm trying to--and I join you with your question--find a 
solution--and I look forward to working with you on it--that 
allows us in law enforcement to go after the bad guys but 
protects people like Mr. Kuettel. So my question is to Mr. 
Kuettel, would the exemption that was really put forward by the 
Taxpayer Advocate Service that basically recommended that the 
IRS exclude from FATCA reporting financial accounts maintained 
by a financial institution in the country in which the U.S. 
Citizen is a bona fide resident--that would have taken care of 
Mrs. Nelson's situation, which she explained so clearly. But as 
a bona fide citizen of Switzerland, this particular change 
would have excluded you from this burden. Is that correct? 
Pardon me?
    Mr. Kuettel. I fear not.
    Mrs. Maloney. Why not? Because you're a bona fide citizen 
in a country, you would no longer have to do the FATCA. That's 
what this recommendation says.
    Mr. Kuettel. From my experience, the damage of FATCA has 
already been done. The banks are already terrified of America. 
If you just exclude local residents from FATCA, they still have 
the reporting requirements for the taxation. When I take my 
daughter here to a bank, practically any bank, the first 
question is, ``Are you taxed by America?'' They don't ask, 
``Are you reportable by America?'' They ask, ``Are you taxed,'' 
meaning she's a tax threat.
    Mrs. Maloney. That's the current law now. But if the law 
changed so that, if you're a bona fide citizen, you could just 
say back to them, ``I am a bona fide resident of this country, 
therefore''--or you could get a form from our government that 
says, therefore, if you're going to a financial institution in 
your country--I would like to get legal counsel to look at it, 
because I believe you would be exempt under these types of 
recommendations.
    In any event, something needs to be done on it. And I thank 
the chairman for his attention to it and his personal 
involvement in it and absolutely all of the panelists.
    But I do believe cracking down on terrorism financing, 
which is one of the major reasons of this, is a critically 
important concern, unfortunately, in the world now.
    So thank you, and I yield back. And I thank you. And I'm 
sorry I couldn't yield, but--I'm in trouble right now.
    Mr. Meadows. That's all right. I've got a very long memory. 
So that's--we'll go from there. I thank the gentlewoman for--I 
understand. A Supreme Court Justice or a Member of Congress 
from North Carolina: I would have made the same choice you did.
    So it's--I thank the gentlewoman for her interest.
    So let me--in the interest of clarity, let's talk about 
what this is and what it is not. This is really not about the 
terrorist organizations that go and deal with that. I have a 
little bit of expertise there. The Hezbollah sanctioning bill 
was a bill that I actually started in the first Congress. I 
understand the aspects. It is now law. It is affecting behavior 
because we're going after money for terrorists. But we use 
totally different vehicles than this particular vehicle. And so 
to suggest that they're one and the same would not be accurate.
    I mean, and when you look at central bank activity and the 
moving of funds and all of that, it is a very different issue. 
It's very complex, but it's very different. I have real 
problems with us treating citizens of the United States who 
happen to live abroad differently than citizens of the United 
States that happen to live in the contiguous 48 or whether it's 
Puerto Rico or anywhere else. When we start to look at this, it 
is critically important that we understand the constitutional 
foundations of who we are as a Nation. And in the interest of 
everything that we know, we can go after all kinds of things 
where we start violating the civil liberties of individuals in 
the interest of compliance.
    And that's why we have--our Founding Fathers set it up. 
That's why we have a Fourth Amendment. And we've got other 
areas where the Fourth Amendment is being challenged.
    And so, Ms. Bean, I would ask you to have an open mind and 
try to figure out those areas where the side effects and the 
testimonies that we've heard from these individuals and others, 
thousands of others, are being affected. So I'd ask you to keep 
an open mind and look at that.
    Mr. Bopp, I'd ask you to look at it from a different 
perspective. Assuming that we can't get enough bipartisan 
support--which I believe we can--but if we can't get enough 
bipartisan support to repeal this and actually replace it with 
something else--and I hate to use the words ``repeal and 
replace'' in the context of anything these days--but as I look 
at this, if we can look at repealing and replacing it with 
something, I would ask you to take the thoughtful suggestions 
here.
    Here is my closing remark. Senator Rand Paul recognized an 
issue that was brought to him not only from his concern for 
freedom-loving individuals and the Constitution, but it was 
something that was highlighted over and over again. And if you 
travel abroad, we have U.S. citizens who love the United 
States, who truly--some of them are more patriotic than some 
who live in my State of North Carolina. And yet they're being 
forced with a decision of, do they renounce the country they 
love so that they can continue to transact even a normal bank 
account? And that's a choice that we shouldn't be forcing 
people to make.
    I think there are ways that we can figure this out and 
tailor this so that we truly go after those who have a problem 
with tax not only avoidance but criminal activity. We know 
that, indeed, it is our obligation to pay taxes, and to avoid 
that in an improper manner is certainly not anything that a 
Republican or a Democrat would condone.
    And so it is in that spirit that I would ask you to report 
back your three recommendations. Get as many--we won't limit it 
to three, but if you don't give me three, you'll hear from us. 
How about that? Is that a deal?
    Mr. Meadows. I want to thank all of you for the discussion 
and, truly, for your testimony. It's been very illuminating.
    If there's no further business before the committee, the 
committee stands adjourned.
    [Whereupon, at 4:27 p.m., the subcommittee was adjourned.]


                                APPENDIX

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