WASHINGTON, Feb 20 (Reuters) - The U.S. Treasury Department announced on Thursday it was easing some of the reporting requirements for banks and investors under a global anti-tax evasion law due to take effect on July 1.
The more than 50 changes and clarifications are part of the Obama administration’s effort to implement the Foreign Account Tax Compliance Act (FATCA) of 2010. Some financial firms called the law unworkable at the time of its passage.
“These regulations are the last substantial set of guidance necessary to implement FATCA,” Robert Stack, deputy assistant secretary for international tax affairs, said in an interview.
The changes will make it easier for some foreign insurance companies to report customer information to the United States and address some concerns banks had about how to comply with FATCA and other U.S. financial reporting and withholding laws on the books.
Congress passed FATCA in response to a scandal involving Americans hiding money in Swiss bank accounts. The law requires foreign banks to share information about Americans’ accounts of more than $50,000 with the Internal Revenue Service, the U.S. tax agency.
Foreign institutions that fail to comply at all 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. financial markets.
Before Treasury announced its FATCA rule changes, four banking groups called for a six-month delay to the law, saying businesses did not have enough guidance to guarantee they were complying with the law.
This week the Senate Permanent Subcommittee on Investigations announced it would hold a hearing next Wednesday to scrutinize the U.S. effort to crack down on tax evasion in Switzerland. (Reporting by Patrick Temple-West; Editing by Howard Goller and Chizu Nomiyama)