Posts Tagged ‘FATCA’

FATCA Regulations Issued

Saturday, February 11th, 2012

Earlier this week the IRS issued proposed regulations to implement the Foreign Account Tax Compliance Act (FATCA). The press release from the Department of the Treasury states,

After many months of intensive discussions with foreign governments, the Treasury Department today also jointly issued a statement with France, Germany, Italy, Spain and the United Kingdom expressing mutual intent to pursue a government-to-government framework for implementing FATCA – an important step toward addressing legal impediments to financial institutions’ ability to comply with the regulations.

The statement does not contemplate an exemption from FATCA for any jurisdiction, but instead offers a framework for information sharing pursuant to existing bilateral income tax treaties and allows FFIs to report the necessary information to their respective governments rather than to the IRS. [emphasis added]

Given what some countries have looked at as the US sticking its fingers into local law, it will be interesting to see how this plays out. A good test will be Canada, as our neighbor to the north is not happy with how previous discussions on FATCA have progressed.

Other coverage:
TaxProf Blog
Washington Post

Canada Fights Back

Monday, September 19th, 2011

Jim Flaherty is the Finance Minister in Canada. Mr. Flaherty (along with many Canadians) is not happy about FATCA and FBAR. FATCA will impose requirements on Canadian banks (and other financial institutions throughout the world) to report transactions to the IRS. Mr. Flaherty wrote a letter to several newspapers, including the New York Times, Washington Post, and Wall Street Journal regarding his displeasure. Here are some excerpts:

Many Canadians, however, have become concerned about the impact of a proposed piece of American tax legislation – the Foreign Account Tax Compliance Act, or FATCA. [See Note Below]

I share their concern.

We appreciate efforts to combat tax evasion. In fact, our two jurisdictions co-operate to prevent it. But FATCA has far-reaching extraterritorial implications. It would turn Canadian banks into extensions of the IRS and would raise significant privacy concerns for Canadians…

But put frankly, Canada is not a tax haven…[W]e share the same goal of fighting tax evasion and we already have a system that works.

To rigidly impose FATCA on our citizens and financial institutions would not accomplish anything except waste resources on all sides…

But the threat of prohibitive fines for simply failing to file a return they were unaware they had to file, is a frightening prospect that is causing unnecessary stress and fear among law abiding hardworking dual citizens.

We support efforts to crack down on legitimate tax evasion. These measures, however, do not achieve that goal.

Mr. Flaherty got one item wrong in his letter: FATCA is not a proposed piece of legislation; FATCA already passed Congress. What is in the future is the date of implementation of FATCA. FATCA passed Congress in March of 2010; the legislation goes into effect on January 1, 2013.

On everything else, Mr. Flaherty got it right. Congress wants to turn the world into minions of the IRS. And the IRS prefers to go after jaywalkers with shotguns (with regards to FBAR violations).

I expect lots more pushback worldwide as countries realize what Congress hath wrought. Canada (and every other country in the world) is, after all, its own sovereign country no matter what the United States Congress might think.