WASHINGTON Feb 27 U.S. tax authorities and
foreign governments are on track to conclude dozens of
agreements in coming months on the sharing of financial data
about citizens, with deadlines nearing for implementation of a
sweeping U.S. anti-tax-evasion law, tax experts said.
The U.S. Treasury on Monday initialed an intergovernmental
agreement (IGA) with Germany, for instance. The deal still needs
final approval by both countries' tax officials, but shows
progress being made in implementing the Foreign Account Tax
Compliance Act (FATCA).
FATCA, made law in 2010 as part of a crackdown on tax
dodging by wealthy Americans, requires foreign financial
institutions to disclose to the Internal Revenue Service more
about Americans' offshore accounts that are worth more than
Banks and other institutions are affected by the law, which
Treasury is implementing through a series of bilateral IGAs.
Completed pacts are in place with Britain, Denmark, Ireland,
Mexico and, since earlier this month, with Switzerland.
More than 50 other countries are working with Treasury to
sign IGAs by the end of the year. FATCA takes full effect on
Jan. 1, 2014. An interim deadline is Oct. 25, when foreign firms
need to register with the IRS for FATCA.
Germany was "the next big domino to fall" in Treasury's IGA
process, said Jonathan Jackel, a lawyer with Burt, Staples &
Maner LLP. The German deal was "a positive development" for
additional IGAs, he said.
If a foreign firm fails to comply with FATCA, it could be
frozen out of U.S. capital markets.
Treasury and IRS still need to publish forms and
instructions for foreign banks and other financial institutions
so they can comply with FATCA. The foreign firms will begin
reporting U.S. client information to the IRS beginning in 2015.
FATCA implementation is seen by some tax experts as
contributing to greater tax strictness around the world.
The European Commission said on Monday that it is studying
EU-wide taxpayer identification numbers to fight tax evasion.
"There's been a real shift on the international level in
identifying tax evasion as a massive social problem," said
Heather Lowe, director of government affairs at anti-graft
watchdog Global Financial Integrity.
"The U.S. definitely kicked it off, but Europe's now running
with it," Lowe said. "There is a sense of urgency."
Separately, Manal Corwin, deputy assistant Treasury
secretary for international tax affairs and a top negotiator for
FATCA, has left the department, a Treasury spokeswoman confirmed