More Nations Come to Terms with U.S. on FATCA

Officials tasked with implementation of the U.S. Foreign Account Tax Compliance Act appear to be making solid headway in their efforts to get other nations aligned with the requirements.

Treasury Department officials recently confirmed they have reached agreements with 12 governments. Bloomberg also reports they also have agreements in substance with 17 other foreign governments and are in talks with many more to reach intergovernmental agreements, or IGAs.

FATCA, as we have written about before, is intended to open the flow of information from other countries regarding assets held in their banks by U.S. citizens. The overall goal is to close what the government considers to be abusive tax avoidance tactics on the part of taxpayers.

Individuals concerned about the prospects of Internal Revenue Service auditsthat might be triggered as a result of FATCA would do well to seek the counsel of an attorney with experience in this particular area of law who can vigorously protect their rights.

Manal Corwin, a leading figure in the international tax area for consulting firm KPMG LLP, tells Bloomberg that many governments are being pressured by their own banks to get IGAs in place by July 1, 2014.

That’s a key deadline. After that, U.S. financial institutions are required to start imposing a 30 percent withholding tax on any payments made to those foreign financial firms that haven’t supplied information about U.S. holders of accounts.

The 12 agreements reached are with the United Kingdom, Switzerland, Denmark, Germany, France, Ireland, Mexico, Japan, Norway, Spain, the Cayman Islands and Costa Rica.

Hungary, Italy and Bermuda are reportedly close to finalizing agreements, as is Malta.

Talks regarding IGAs are said to be underway with the Czech Republic, Israel, Sweden, Lichtenstein, Luxembourg and Canada. Belgium, the Bahamas and the Virgin Islands have each said they intend to reach accords, as well.

Source:Bloomberg, “12 Agreements Signed to Help U.S. Fight Offshore Evasion: Taxes,” Alison Bennett, Dec. 15, 2013

Tags: Blog, IRS, Tax Evasion, Tax Topics