An agreement that has resulted in hundreds of thousands of Canadian banking records being sent to the U.S. Internal Revenue Service could violate the U.S. constitution, a congressional subcommittee heard Wednesday.
Testifying before a subcommittee of the House Committee on Oversight and Government Reform, Senator Rand Paul said the intergovernmental agreements (IGAs) negotiated by the U.S. with various countries after it adopted the Foreign Account Tax Compliance Act (FATCA) did not get the proper authorization.
The controversial legislation, adopted by the U.S. in 2010, requires financial institutions outside the U.S. to report to the Internal Revenue Service on bank and financial accounts held by those subject to U.S. tax law.
While it was designed to ferret out offshore tax cheats, thousands of Canadian residents who have dual citizenship or various connections to the U.S. have also been subject to FATCA.
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