In addition to Justice Martineau’s denial of injunctive relief and dismissal of the request for summary judgment in Hillis and Deegan v. The Attorney General of Canada, as discussed in our previous post, U.S. citizens residing in Canada received more disappointing news on September 29, 2015, when Judge Thomas M. Rose of the U.S. District Court for the Southern District of Ohio denied a motion for a preliminary injunction, which in part, looked to enjoin the U.S. Department of the Treasury and the Internal Revenue Service from enforcement of various provisions contained under the FATCA legislation.
Senator Rand Paul had joined six other plaintiffs in filing this lawsuit on July 14, 2015 , which, in part, challenged the validity of the FATCA related IGAs that the U.S. has signed with Canada, the Czech Republic, Israel and Switzerland.
In his judgment, Judge Rose concluded that Senator Rand Paul did not have standing in his challenge to the offshore financial account tax enforcement measures enacted in FATCA and was not likely to succeed on the merits in the case. He noted the plaintiffs’ contention that the “heightened reporting requirements” imposed by FATCA and the Canadian IGA violate the Fifth Amendment rights of “U.S. citizens living in a foreign country” and should therefore be enjoined.
In response to this assertion, Judge Rose concluded that:
None of the challenged provisions single out U.S. citizens living abroad. Instead, all Americans with specified foreign bank accounts or assets are subject to reporting requirements, no matter where they happen to live. The provisions Plaintiffs contend discriminate against ‘U.S. citizens living abroad’ actually apply to all U.S. taxpayers, no matter their residence. Plaintiffs argue that ‘[i]n practice, the increased reporting requirements for foreign financial accounts discriminate against U.S. citizens living abroad,’ … suggesting a claim of discrimination based on disparate impact. But it is well-settled that ‘mere disparate impact is insufficient to demonstrate an equal protection violation.’ Copeland v. Machulis, 57 F.3d 476, 481 (6th Cir. 1995); see also Washington v. Davis, 426 U.S. 229, 244-45 (1976).