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The Treasury Department said it would delay for six months the implementation of a global regulatory system that aims to make it harder for Americans to hide money offshore.
In the first three years of the Internal Revenue Service and the Department of Justice Offshore Programs the feds raked in $5.5 billion.
IRS is going to slam the door shut on those taxpayers or businesses not paying their tax debt relating to their offshore bank accounts.
The best advice we can give you is to find IRS before they find you.
The Treasury delayed implementation of the new law for six months.
Effective Date now July 2014
The change means that central provisions of the Foreign Account Tax Compliance Act will go into effect in July 2014.
FATCA requires financial institutions in other countries to provide information to the U.S. government about accounts held by U.S. citizens.
Financial institutions in many countries are arranging to share the information through their own governments to avoid violating local privacy laws.
80 countries now getting involved
Treasury officials said they have signed nine agreements with other countries to implement the new law, and currently are negotiating with about 80 countries.
“Given the groundswell of international interest in FATCA, we are providing an additional six months to complete agreements with countries and jurisdictions across the globe,” said Robert B. Stack, the Treasury Deputy Assistant Secretary for international tax affairs.
The anti-evasion net being cast by the U.S. is inspiring similar efforts by other big countries.
Finance ministers from the Group of 20 large economies in April endorsed a global system similar to the U.S. measure that would help other countries combat tax evasion. But such a system is expected to take years to complete.
In the meantime, Treasury officials faced a tricky and difficult task in working out all the pending country-by-country agreements.
While the basic terms of the pacts are the same, crucial details vary—for instance, which low-risk financial accounts can be exempted from FATCA’s main requirements.
International banks and financial institutions also said the U.S. law would force them to cope with significant new complexity and absorb big compliance costs.
They’ve been urging more modifications to the planned system and longer lead times.
“While we had asked for an extension until Jan. 1, 2015, we greatly appreciate Treasury recognizing that financial institutions globally need more time to comply with this important law that our members continue to support,” said Payson Peabody, tax counsel at the Securities Industry and Financial Markets Association, a trade group. “We look forward to continuing our dialogue with Treasury in order to ensure that FATCA is implemented in accordance with the intent of Congress with the least possible disruption to financial markets.”
“FATCA is a tremendous undertaking for both the IRS and the financial services industry, and we think the extension is warranted and helpful,” said Sally Miller, CEO of the Institute of International Bankers.
Manal Corwin, a former top Treasury official who’s now an international tax practitioner at KPMG LLP, said she expects a significant number of agreements to be between the U.S. and other countries by the new deadline.
“Just because an agreement is not publicly signed doesn’t mean it’s not far along,” she said. “I’m confident that [Treasury officials] will” conclude a substantial number of agreements by mid-2014.
contributed to this article, tks John Mc Kinnon
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