Law Office of Charles W. Cope, PLLC | Senator Paul Continues to Block Senate Hearings to Approve New Tax Treaties<br >  
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  • Senator Paul Continues to Block Senate Hearings to Approve New Tax Treaties
     
    May 2014
    Senator Rand Paul (Republican, Kentucky), in a letter dated May 7, 2014, to Senate Majority Leader Harry Reid (Democrat, Nevada), stated his opposition to five treaties or protocols approved by the Senate Foreign Relations Committee last year. His letter states that he will object to any unanimous consent request, motion or waiver of any rule in relation to these treaties or any related measure. Senator Paul’s opposition to the treaties makes it difficult for these treaties to be approved by the full Senate, because most Senate business is conducted by unanimous consent of the members.
     
    The U.S. Constitution requires all U.S. treaties to be approved by the Senate. The U.S. Treasury has negotiated a number of income tax treaties and protocols recently.  Although the Senate Foreign Relations Committee has approved these treaties and protocols, they have not been approved by the full Senate because of Senator Paul’s opposition.
     
    Although Senator Paul’s opposition to recent tax treaties was known, the reasons for his opposition had not been articulated publicly and in detail before.  In his letter, Senator Paul complains that “these new bulk collection treaties demand Americans’ records under a vague standard that allows the government to access personal financial information that ‘may be relevant’ through information exchanges between the U.S. and foreign governments – a standard extended to other governments, as well. This new, much lower ambiguous threshold allows a government to access bank records for hardly any reason at all. It also appears that these treaties may end up being the tool that implements a domestic law known as the foreign accounts tax compliance act, or FATCA.”  
     
    The Senate Foreign Relations Committee tested Senator Paul’s resolve on May 22 in a motion to vote to approve the pending protocol to the Switzerland-USA Income Tax Convention relating to exchange of information. It was reported that Senator Paul objected and the protocol remains in the Foreign Relations Committee.[1]  At this time, how the Senate leadership will address Senator Paul’s concerns in order to move these treaties forward is not clear.
     
    [1] 101 DTR G-2 (May 23, 20140