Compliance deadlines loom for U.S. global tax evasion law

Mon Jul 8, 2013 2:14am EDT
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By Patrick Temple-West and Ajay Shamdasani

WASHINGTON/HONG KONG (Reuters) - In one week, the United States is scheduled to begin registering foreign financial firms with U.S. customers for a new anti-tax evasion law, despite industry lobbying to secure another implementation delay.

The Internal Revenue Service still has not finalized sign-up instructions for the new online portal, due to open by July 15 in one of the last steps toward implementing the Foreign Account Tax Compliance Act (FATCA) of 2010.

Hundreds of thousands of banks, insurance companies and investment funds with U.S. customers are required to register with the IRS, an arm of the U.S. Treasury, by October 25 to avoid FATCA penalties starting on January 1, 2014.

"At this point people have thrown up their hands," frustrated by the lack of guidance despite the looming deadline, said Laurie Hatten-Boyd, a principal at Big Four accounting firm KPMG LLP. Treasury officials will need to consider postponing the penalties if they do not produce guidance before the end of July, she said.

The Securities Industry and Financial Markets Association (SIFMA), the industry's largest trade group, last month renewed its call for FATCA penalties to be delayed until 2015.

The Treasury has missed FATCA deadlines before. The law's start date was delayed once already, by a year, to January 1, 2014.

A Treasury spokeswoman declined to comment on the status of the portal, saying only that work was going ahead on implementing FATCA.

The law is an unprecedented effort to root out U.S. tax evasion on a global scale. It requires foreign financial institutions to report to the IRS information about U.S. client accounts worth more than $50,000.   Continued...

A woman walks out of the Internal Revenue Service building in New York in this May 13, 2013 photo. REUTERS/Shannon Stapleton