When you drop a large rock into a pool of calm water, ripples appear and spread and eventually they will touch the entire surface of that pond, drastically changing its appearance. And the FATCA rock was a very big one indeed.

Recognizing that there is a substantial amount of money stored overseas that has gone unreported – and that will continue to go unreported if the government doesn’t put teeth into its thinly veiled attempt to nudge taxpayers into “disclosing [their] foreign accounts or else” – Congress passed FATCA. FATCA, which stands for Foreign Account Tax Compliance Act, is the cornerstone of the U.S. government’s effort to combat tax evasion abroad.

Many expected President Trump’s sweeping tax reform to repeal or amend this insidious law. But much to the chagrin of U.S expats, President Trump did not so much as harm a hair on FATCA’s head, leaving it completely untouched. A recent decision by the Supreme Court of the United States confirms that FATCA is not going anywhere any time soon.

Last month, a legal challenge mounted against FATCA was stopped dead in its tracks when the Supreme Court of the United States refused to review the Sixth Circuit Court’s decision affirming a federal district court’s ruling dismissing the case brought against FATCA.

A Brief History of the Case

In Crawford, et al, v. Department of the Treasury, et al (CA 6, 08/18/2017), Kentucky Senator and 2016 Republican Presidential hopeful Rand Paul, in partnership with Republicans Overseas and five others, headed to court to stop the vile Foreign Account Tax Compliance Act crackdown. The lawsuit was a first-of-its kind affair, in that no other Presidential hopeful had sued the IRS in the midst of a campaign. To say that it took courage (or perhaps what some may label, chutzpah) for Rand Paul to sue the government that he wanted to lead, is a complete understatement.

The lawsuit was filed in federal district court in Ohio. Before dismissing the lawsuit as a spoof, the arguments raised indeed had merit. First, Senator Paul argued that so-called “Inter-Governmental Agreements” circumvented his Constitutional rights. The Obama Administration labeled FATCA accords with foreign powers as IGAs – a clever term that the Democrat-controlled Congress basically invented ex nihlio in 2010. Up until then, the Obama Administration had negotiated and finalized over 100 FATCA treaties, without a sliver of participation from the Senate.

Republicans abhorred these things because they required foreign banks to gather and share financial information about Americans who lived and/or worked abroad; the data would be private if these individuals worked and lived on American soil. As a result, a mind-numbing number of U.S. expats had somewhat reluctantly renounced their citizenship.

Furthermore, the lawsuit maintained that the high penalties, as well as the rather arbitrary nature of these penalties, along with mandatory withholding and a few other provisions violated the excessive fines clause of the Eighth Amendment.

With respect to the other plaintiffs, they argued that FATCA had effectively denied them access to banking and financial services in foreign countries, because these institutions didn’t want to mess with expats and their political baggage. Expats have been complaining about this issue for years.

Predictably, the suit was also somewhat politically motivated. “Republicans Overseas” is the brainchild of longtime conservative activist Solomon Yue. Mr. Yue strenuously denied that the suit was all about votes. Instead, he boldly proclaimed that, “The best way to defend 8.7 million overseas Americans’ right to privacy and constitutional protections is to cripple the IRS, FATCA and enforcement tools through legal action on constitutional grounds all the way to the U.S.Supreme Court.”

Unfortunately for Rand Paul and the other plaintiffs, the Ohio federal court dismissed the case for lack of standing. However, the plaintiffs appealed the lower court’s ruling to the Sixth Circuit Court of Appeals.

Appeal to the Supreme Court of the United States

In affirming the lower court’s ruling, the Sixth Circuit Court of Appeals cited numerous different grounds for its decision.

For example, it found that Senator Paul’s alleged harm due to being denied the right to vote on the FATCA rules did not amount to a sufficient injury for purposes of establishing “standing” before the court (i.e., standing under the law is the legal right of a plaintiff to bring a lawsuit to court — a veritable passport of sorts to get into the ivory tower courthouse and have the case heard). Because the plaintiffs were unable to demonstrate sufficient connection to and harm from FATCA, the Ohio federal court dismissed the case for lack of standing and the Sixth Circuit Court of Appeals affirmed the lower court’s decision.

The petitioners made one last attempt to eradicate FATCA via the U.S. judicial system by appealing the case to the Supreme Court of the United Staes. On April 2, 2018, the Supreme Court of the United States dealt the plaintiff a fatal blow by refusing to review the decision of the Sixth Circuit Court of Appeals. Getting down to brass tacks, this means that the decision dismissing the lawsuit against FATCA is now official.

While some members of Congress and activist citizens continue to wage war against FATCA, the harsh reality of the situation is that FATCA remains the law of the land for now and for the foreseeable future.