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February 08, 2012 at 10:26 AM
The U.S. Treasury and the IRS, as well as several foreign governments, announced jointly Wednesday proposed regulations for the implementation of information reporting and withholding tax provisions of the Foreign Account Tax Compliance Act (FATCA). The regulations are to be phased in in stages.
The governments of France, Germany, Italy, Spain and the U.K. joined with the Treasury Department to express intent to use a government-to-government framework to implement the requirements of FATCA, which target noncompliance by U.S. taxpayers using foreign accounts.
The regulations provide, according to the agencies, “a step-by-step process for U.S. account identification, information reporting, and withholding requirements for foreign financial institutions, other foreign entities, and U.S. withholding agents.”
In a statement, Acting Assistant Secretary for Tax Policy Emily S. McMahon said, “When taxpayers overseas avoid paying what they owe, other Americans have to bear a disproportionate share of the tax burden. FATCA is an important part of the U.S. government’s effort to address that issue, and these regulations implement FATCA in a way that is targeted and efficient. We believe these efforts will serve as a complement and catalyst to the ongoing global efforts to combat offshore tax evasion.”
The agencies said the implementation schedule has been geared toward minimizing the expense and burden of reaching compliance objectives. Time has also been built into the schedule to allow for delays in resolving local law limitations that may affect some foreign financial institutions, or FFIs. FFIs will also report to their own governments, rather than to the IRS.
