The Treasury Department and the Internal Revenue Service have issued a long-awaited set of final regulations implementing the information reporting and withholding tax provisions of the Foreign Account Tax Compliance Act aimed at combating offshore tax evasion, with far-reaching implications for U.S.-born taxpayers abroad in addition to foreign financial institutions as well as U.S. banks.
The controversial set of regulations known as FATCA was enacted by Congress in 2010 as part of the HIRE Act. The various provisions aim target non-compliance by U.S. taxpayers using foreign accounts by requiring foreign banks, hedge funds and other financial institutions to report on the holdings of U.S. citizens and dual citizens to the Internal Revenue Service, or else face stiff penalties. The issuance of the final regulations marks a key step in establishing a common intergovernmental approach to combating tax evasion.
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