U.S. and French officials signed an intergovernmental agreement Thursday to advance the implementation of the Foreign Accounting Tax Compliance Act.

FATCA, which was included as part of the HIRE Act of 2010, requires foreign financial institutions, including hedge funds, to report on the holdings of U.S. taxpayers to the Internal Revenue Service, or else face stiff penalties. The law has provoked controversy both in the U.S. and abroad, with some foreign governments and banks complaining that the law violates banking confidentiality laws, and with U.S. expatriates and dual citizens finding themselves owing taxes to the U.S. government that they never had to pay before.

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