WASHINGTON Jan 31 The chief of the U.S.
Internal Revenue Service said on Friday that a new law meant to
fight offshore tax dodging by Americans will not be delayed
again beyond its July 1 effective date, despite a clamor among
banks asking for more time and guidance.
"We're not going to have any delays," IRS Commissioner John
Koskinen told reporters on a conference call.
His remarks came five months before the United States must
start enforcing the Foreign Account Tax Compliance Act (FATCA).
It will require foreign banks, insurers and investment funds to
send the IRS information about Americans' offshore accounts
worth more than $50,000.
Foreign businesses that do not comply with the law can be
effectively frozen out of U.S. capital markets because of a
30-percent withholding tax on U.S. source income.
The IRS is expected soon to publish forms and guidance that
financial institutions are keenly awaiting so they can figure
out how to avoid FATCA penalties.
"We expect to issue the final package of rules shortly," a
Treasury spokeswoman said on Friday.
"We are working diligently to finalize all related guidance
to ensure that financial institutions have time to effectively
prepare and comply, and there is no consideration for a delay of
FATCA implementation," the spokeswoman said.
Jonathan Jackel, a lawyer with Burt, Staples & Maner LLP,
said the more time Treasury takes to publish the final guidance,
the likelier it is that the law could be delayed again.
"They can't possibly expect people to comply with rules that
have not been published yet," he said.
"If there is going to be a delay, it will be more of an
internal issue within the government - whether they can crank
out the infrastructure that they need," he said.
The lack of FATCA guidance from the government prompted four
bank lobbying groups in November to ask the Obama administration
for another six-month delay in a law that has already been
Signed into law by President Barack Obama in 2010, the law
was originally supposed to take effect on Jan. 1, 2013.
In 2011, the start-date was postponed to Jan. 1, 2014. Then
in the middle of last year, the start-date was pushed back again
to July 1, 2014.
There is room within the law to spare financial institutions
the FATCA withholding after July 1, former Treasury Department
"They can certainty provide relief. There has always been
flexibility on certain aspects of this," said John Harrington, a
former Treasury official who is now with law firm Dentons LLP.
But given strong assurances from the Obama administration
that the law will not be delayed again, "it would take something
extraordinary" for the administration to waiver, he said.
A source familiar with the Obama administration's position
on FATCA said the White House will not allow another delay.