WASHINGTON, April 29 Two U.S. senators on
Tuesday urged the Obama administration to continue refusing to
negotiate with Russia over a tax agreement that, if not approved
by July 1, could result in Russian banks facing steep penalties.
Talks were suspended weeks ago with Russia over a pact to
help its financial institutions comply with 2010's U.S. Foreign
Account Tax Compliance Act (FATCA), a Treasury Department
spokesperson said on Monday.
FATCA requires banks, insurers and investment funds to give
the Internal Revenue Service information about the accounts of
Americans and U.S. permanent residents worth more than $50,000.
The Treasury has more than two dozen FATCA deals with foreign
"We should not be negotiating with the Russians to help them
avoid FATCA's sanctions at a time when Russian forces are
threatening and continuing to destabilize Ukraine," said
Democratic Senator Carl Levin and Republican Senator John McCain
in a letter to the Treasury Department.
"FATCA sanctions provide a powerful, non-military option
that, when added to the other financial sanctions already
imposed, could help deter Russia from continuing its threatening
actions against Ukraine," said the senators.
Levin chairs a Senate panel that regularly investigates
international tax dodging of the sort targeted by FATCA, as well
as the Senate Armed Services Committee.
To turn up heat on Russia over its role in the Ukraine
crisis, the United States on Monday announced a new round of
sanctions aimed at business leaders and companies close to
Russian President Vladimir Putin.
Financial firms in Russia or any country without a FATCA
agreement must register with the IRS and comply with the law on
Sanctioned Russian banks cannot register with the IRS to
comply with FATCA, but all other Russian financial firms are
allowed to register, the Treasury spokesperson said.
Foreign institutions that fail to comply with FATCA face a
potential 30-percent withholding tax on their U.S. source
income, a penalty that could effectively freeze them out of U.S.
(Reporting by Patrick Temple-West; Editing by Kevin Drawbaugh
and Meredith Mazzilli)