Free Site Registration


U.S. in Talks with 50+ Nations on FATCA Tax Enforcement

Washington, D.C. (November 9, 2012)

By Michael Cohn

The Treasury Department said it is engaging with more than 50 countries and jurisdictions across the globe to improve international tax compliance and implement the information reporting and withholding tax provisions in the Foreign Account Tax Compliance Act.

FATCA, which was included as part of the HIRE Act of 2010, requires foreign financial institutions to report on the accounts of U.S. taxpayers to the IRS. As part of the effort to enforce FATCA, the U.S. has been signing information-sharing agreements with other countries allowing U.S. financial institutions to share account information with other countries about their own citizens as well.

So far, the U.S. has announced it negotiated model agreements with five other countries: the United Kingdom, France, Germany, Italy and Spain, and signed a deal with the United Kingdom. The announcement Thursday from the Treasury Department that it is “engaging” with more than 50 jurisdictions would potentially open such exchanges more than tenfold, even without formal agreements in place.

FATCA has provoked controversy, particularly among foreign banks and hedge funds, as well as U.S. expatriates and dual citizens, and the Treasury Department and the IRS have been delaying some of its provisions (see FATCA Delay Offers Some Breathing Room).

Enacted by Congress in 2010, the FATCA provisions target noncompliance by U.S. taxpayers using foreign accounts. The Treasury Department’s engagement with this broad coalition of foreign governments to efficiently and effectively implement FATCA marks an important milestone in establishing a common intergovernmental approach to combating tax evasion.

“Global cooperation is critical to implementing FATCA in a way that is targeted and efficient,” said Treasury Assistant Secretary for Tax Policy Mark Mazur in a statement. “By working cooperatively with foreign governments and financial institutions, we are intensifying our ability to combat tax evasion while minimizing burdens on financial institutions.”

This summer, Treasury published a model intergovernmental agreement for implementing FATCA and announced the development of a second model agreement. These models serve as the basis for concluding bilateral agreements with interested jurisdictions.

The Treasury Department has already concluded a bilateral agreement with the United Kingdom (see U.S Treasury Signs Bilateral Agreement with U.K.). Additional jurisdictions with which the Treasury is in the process of finalizing an intergovernmental agreement and with which Treasury hopes to conclude negotiations by the end of the year include France, Germany, Italy, Spain, Japan, Switzerland, Canada, Denmark, Finland, Guernsey, Ireland, Isle of Man, Jersey, Mexico, the Netherlands and Norway.

Jurisdictions with which the Treasury said it is actively engaged in a dialogue towards concluding an intergovernmental agreement include Argentina, Australia, Belgium, the Cayman Islands, Cyprus, Estonia, Hungary, Israel, Korea, Liechtenstein, Malaysia, Malta, New Zealand, the Slovak Republic, Singapore, and Sweden. The Treasury said it expects to be able to conclude negotiations with several of these jurisdictions by year’s end.

The jurisdictions with which Treasury is working to explore options for intergovernmental engagement include Bermuda, Brazil, the British Virgin Islands, Chile, the Czech Republic, Gibraltar, India, Lebanon, Luxembourg, Romania, Russia, Seychelles, Sint Maarten (Netherlands side of St. Martin), Slovenia and South Africa.

The Treasury Department said it plans to continue its outreach to interested jurisdictions that wish to consider an intergovernmental approach to implementing FATCA, including participation in a meeting hosted by the Qatar Central Bank in early December to provide information about FATCA and the intergovernmental agreements to invited senior government officials and financial institutions in the Gulf Cooperation Council.

The Treasury Department and the IRS plan to finalize the regulations implementing FATCA in the near term. Updates and further information on FATCA can be found on the Treasury FATCA page at http://www.treasury.gov/resource-center/tax-policy/treaties/Pages/FATCA.aspx.

2 Comments

Thanks Michael. I saw that press release, that the bureaucrats in Treasury, pump out to create the impression that the FATCA Freight train is rolling along and no one dare oppose them! This is definitely a FATCA Fiasco in the making, but few in the American media know about.

Citizenship taxation, and FATCA and FBAR penalties certainly does give the International Revenue Service a powerful tool to extract wealth earned in other countries. That is why I continue to be amazed at how many governments (47 now) seem willing to join in the IGAs.

They are perfectly willing to throw their residents and dual citizens under the bus to bail out their Financial Industry to have FATCA peace with the U.S.

Either they don't get it, or they think that the faux reciprocity that they will receive will offset the cost to their treasury.

I think they are in for a surprise, if Congress every grows a pair and stops the domestic version of FATCA, or DATCA which is the leverage tool the IRS is using to force compliance. It is causing Capital flight out of American Banks, and there has to be some lobby pressure happening right now to reverse it.

Some in Congress, like Congressman Reichert are raising pointed questions to the IRS about what it is up to. Surely in the new Congress, there will be more of that, even though in the recent political campaign there was no discussion of FATCA. Google: "Rep. Reichert Demands Answers on FATCA Implementation from IRS Commissioner"

Posted by: Just Me | November 9, 2012 2:05 PM

Report this Comment


Talking with 50 countries? What about the tens of thousands of foreign banks in the other 141 countries that that have the non-compliance 30% US withholding tax sword hanging over their necks?

Posted by: RogerC | November 9, 2012 7:27 AM

Report this Comment

Add Your Comments...

Already Registered?

If you have already registered to Accounting Today, please use the form below to login. When completed you will immeditely be directed to post a comment.

 

Follow Accounting Today
Advertisement
Advertisement

What's the Biggest Threat or Challenge Facing Accountants?

May 22, 2013

Attendees at Accounting Today's Meet the Editors Dinner at Keens Steakhouse in New York discuss the top issues confronting accountants.

Women in Accounting: Breaking the Mold

May 21, 2013

A continued conversation with Marcum’s Nanette Lee Miller and Janis Cowhey McDonagh about the obstacles women in the accounting profession face when trying to make their way into leadership positions.

Advertisement

SLIDE SHOW

Tax Season by the Numbers

May 22, 2013

The IRS recently released statistics covering the year to May 10, 2013.

Top 10 Tech Initiatives -- 2013

May 5, 2013

The AICPA's annual list of IT priorities for accounting firms.

Tax Stats: May 2013

April 30, 2013

Our monthly collection of statistics from the world of tax.

10 Biggest Estate Planning Mistakes

April 29, 2013

Help your clients avoid these common pitfalls.

Common E-mail Security Mistakes

April 23, 2013

These five bad habits can make your confidential information -- and that of your clients -- easy to steal.

Advertisement
Advertisement
Advertisement