WASHINGTON (Reuters) - The United States and Ireland have agreed to share information about wealthy citizens’ financial accounts in a pact intended to combat tax evasion, another in a series of bilateral deals announced in recent weeks by the U.S. Treasury Department.
The deals are part of the implementation of the U.S. Foreign Account Tax Compliance Act, or FATCA, which takes effect in 2014.
An agreement with Switzerland has been “initialed,” with final terms expected in coming days, Treasury said on Tuesday.
The United States has completed FATCA deals with the UK, Denmark and Mexico. Spain has also “initialed” with Treasury, the department said on Thursday.
Enacted in 2010, FATCA requires foreign financial institutions to tell the U.S. Internal Revenue Service about Americans’ offshore accounts worth more than $50,000.
Banks, funds and other institutions failing to comply could effectively be forced out of U.S. financial markets.
Separately on Thursday, IRS Acting Commissioner Steven Miller highlighted FATCA as a “tool” that has compelled delinquent taxpayers with hidden assets abroad to enter a voluntary disclosure program at IRS.
FATCA has come under fire from Americans with foreign financial accounts because they are accustomed to secrecy. Foreign financial institutions have complained, too, about compliance costs and the law’s intrusion, especially in countries where banking secrecy has been a part of the financial tradition.
Despite the controversy, the IRS’ disclosure program has collected $5.5 billion. It continues to receive 75 to 150 applications a week from people seeking to enter the program, Miller said at a tax conference speech in Washington.
The program will remain open, but will be less sympathetic to new applicants going forward, he said.
The government-to-government FATCA deals are a pragmatic approach to enforcing the U.S. tax dragnet, experts have said.
“FATCA is doing its job,” said Nicole Tichon, executive director of the nonprofit, nonpartisan Tax Justice Network, in an email. “FATCA is stemming the race to the bottom in terms of financial secrecy.”
Miller also said he would consider merging a taxpayer’s FATCA compliance with an older, similar statute known as the Report of Foreign Bank and Financial Accounts (FBAR).
The FBAR form, which is due annually, is required of any U.S. person who has a financial interest or signature authority over foreign financial accounts whose value topped $10,000 at any time during the calendar year.
Reporting by Patrick Temple-West; Editing by Kevin Drawbaugh and Jan Paschal