U.S. issues final tax anti-evasion rules, enforcement ahead
By Patrick Temple-West
WASHINGTON (Reuters) - Non-U.S. pension funds and mutual funds were spared the full brunt of new U.S. information-reporting rules on overseas accounts meant to catch Americans who dodge U.S. taxes by keeping their assets offshore.
Chiefly targeting banks, the Foreign Account Tax Compliance Act (FATCA) rules, published by the U.S. Treasury on Thursday, require foreign financial institutions with $50,000 of any American taxpayer's assets to report the holdings to the U.S. Internal Revenue Service.
The Treasury rejected a request by businesses, banks and foreign investment funds to delay a January 2014 start date for big penalties imposed on individuals and financial firms that do not comply with the law.
The announcement completes the rule-writing process for FATCA, a law that Congress passed in March 2010 after a Swiss bank scandal revealed that U.S. taxpayers had hidden millions of dollars overseas from the IRS.
Certain retirement funds, life insurance and other "low-risk" financial products held abroad, which are not considered havens for dodging taxes, are exempted from reporting their U.S. account holders' information to the IRS. Financial firms and foreign governments had been calling for these exemptions.
The law, the first of its kind globally, has been decried by companies and U.S.-ally countries as unilateral, over-reaching and a breach of privacy. U.S. law requires that Americans pay taxes on their global income, not just domestic.
Treasury officials are hoping to sign up more than 50 countries with FATCA agreements and kick-start a dragnet of tax enforcement.
"The real story here is that FATCA looks like it is going to become a global model," Manal Corwin, deputy assistant Treasury secretary for international tax affairs, told Reuters in an interview. Continued...