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Final FATCA rules to be issued within days, according to Bloomberg BNA

Posted on by Posted in Issues regarding US persons abroad 14 Comments

FATCA update from Bloomberg BNA:

 

Monday, January 14, 2013
Final rules on implementing the Foreign Account Tax Compliance Act could be issued by IRS as soon as this week, tax practitioners close to the regulators tell BNA. Enacted in 2010 as a means to stop tax evasion, FATCA requires foreign financial institutions to tell IRS about their U.S.-owned accounts. Banks that do not comply could be responsible for paying a 30 percent withholding tax on the accounts.

14 thoughts on “Final FATCA rules to be issued within days, according to Bloomberg BNA”

  1. I would hope that as soon as this text is out, we can all set to work analysing what it means.  We should react immediately as once this Policy is out, we will probably have limited time to react. 

    Does anyone have any information about proposed IGA Model IIs text for countries that have not yet formally signed?  In the case of Switzerland, the IGA has been “initialed” but not yet approved by Parliament (this could happen during the March parliamentary session).  

    http://www.news.admin.ch/message/index.html?lang=en&msg-id=47017

    http://www.news.admin.ch/message/index.html?lang=en&msg-id=45046

    The Swiss Federal press releases above discuss the content of the IGAs and suggest that account closure for Swiss résidents may not be a huge risk, but until we have the text, we are in the dark.  The text is secret, much like the final arrangement with UBS was up until November 2009. 

  3. @Jefferson D. Tomas

    I just posted a comparison of the models here.  

    Here is the text of the Model II for Switzerland from a KPMG site.

    BTW, notice this Michael Schneebeli runs a Group on Linked in.  He does not like contrarian comments, and does not let them out of moderation.  I have been saving a little beauty I wrote just to tweak him knowing it would never see the light of day…

    He was the one that said the Final Regs would be out this week.

    I posted a comment, just for the fun of it.

    We shall see how good your insider information is.  It would be nice if your “group” allowed for discussion around opposing considerations as to why the IGAs and FATCA might be in trouble.  I know you have a vested interest in this Compliance regime.  With ever page added, consulting fees will increase. Good for you, bad for us, the unintended  (by Congress) targets of this Fiasco.  

    That said, it is the Capitalist way so why hide from it, or not allow discussion in your group?  Don’t be so opaque.  I think we are mature enough to handle it. KPMG stands to make a LOT of money out of these regulations. We get that.  It is what it is.  

    However, you should be willing to allow some contra opinions or information.  Time will tell who is right, and maybe Compliance and the Surveillance State (which FATCA is part of) is a Mega Trend that like a force of nature there is no stopping. Still not all of us want to be sheep to the slaughter, especially Americans Abroad. It would be nice if you were not be so blatant in your full throated support of FATCA Compliance.  I am not sure I would be going 100% long on FATCA yet. Your audience may need some risk insurance against the huge cost.  Maybe you could sell that too!

    That said, it is your group, so you can do what you want. It is a marketing vehicle for you, so understand you not wanting to allow a different marketing message. 🙂

    I am a realist. Such is life. No hard feelings.

    Now, as for some other considerations, I would give you these points from others who don’t yet accept the freight train inevitability of FATCA Compliance. 

    Here are some factors that might continue to play into the delays:

    1. The IRS doesn’t have a permanent commissioner and won’t for months. Do they need one to keep driving this locomotive?

    2. The tax filing season has been delayed significantly because of the fiscal cliff flight taking up significant IRS resources.  Already, they have expended incredible resources that probably could have been spent better on combating the raging fire of Idenity theft and fraud on the Homeland.  The recent NTA report to Congress plus the TIGTA reports should not make them proud of their negligence in this area.  FATCA resources should be diverted back to the homeland, where the REAL revenue lies.  I am sure you could help in the process and make money on it too.

    3. Geithner is on his way out last day is Friday January 25th. I don’t get the sense that the Senate will probably confirm his successor prior to that date. What does he think?

    4. No IGA’s signed as officially listed on the Treasury web site the since the UK, Denmark, and Mexico ones.

    5. Of the 5 FATCA partner announcement back in February, only the UK has signed, and enabling legislation has NOT been passed.  Where are Germany, France, Italy and Spain that should have been signed by now!  Why not?

    6. Rand Paul successfully holding up Swiss Tax Treaty over privacy issues (At first this would appear to be unrelated to FATCA but it is and embarrassment for Treasury that they have yet to respond to).

    6. The window for successfully implementing withholding on January 1 2014 is closing fast.  Treasury has claimed on many occasions they would give a twelve month window after publishing the final regs until the start of withholding. If withholding can only start on Jan 1(and there are many reasons why that is the only possibly date) the twelve month window has already closed.

    7. Non Resident Alien Reporting. Not necessarily to related to FATCA in terms of full reciprocity (which only comes ‘if and when’ Congress votes for it)  but in terms of the IRS being flooded with a lot of rather useless paperwork and reporting they are going to have to figure out what to do with.

    Maybe all of these factors will be magically overcome and the regs will roll out, and 10 new IGAs will be announced in a week, but there is nothing there that makes this inevitable.

    My 2 cents worth.

    BTW, credit to @Tim who was the origin of most of this list. He is a good and generous material source. Thanks Tim.

  4. Correct me if I am wrong, but “Final Regulations, I believe, mean just that. They are no longer open for discussion once they are issued.  If they are bac then the effort has to be redirected to getting them revoked.  Does not that become the only hope once they have been published?

  5. From Risk.net

    Final FATCA Regulations must provide clarity

    Yvonne Kunihira-Davidson, a London-based tax reporting and withholding specialist at law firm Burt, Staples & Maner, hopes the final regulations will detail how the US Internal Revenue Service (IRS) actually intends to administer Fatca. “There are a lot of administration issues. The understanding around how the US is going to administer Fatca is unclear. It’s unknown. It’s not understood even by the UK’s HM Revenue & Customs,” she says. 

    The industry is awash with rumours that final Fatca regulations will be released this week, with some saying they are expected today.

    “The final regulations are due to be released soon and we understood that the soon could be as early as this week as opposed to later in January,” says one industry source. “The IRS is said to have been having a discussion on edits to the final regulations as late as last week, so it’s a question mark. It would be nice if they came out today or in the next couple of days, but there is a high chance that they’ll come out this week,” the source adds.

     

  6. Here’s hoping that the “final” regulations will be just as confusing and undecipherable as the draft ones were. I think the odds of that are pretty good, given the US’ absolute refusal to back down on much of anything these days.

    If they produce another set of impossible regulations, it’s far more likely that the world (and in particular Canada) will balk at compliance. And I wonder how they’ll deal with the current Jan. 1 2014 implementation date. Not much news circulating about more IGAs these days.

  8. I’m not sure this FATCA timeline by Ernst & Young is comprehensive but it does give an overview of what happened when and what is expected to happen when …

    http://www.ey.com/GL/en/Industries/Financial-Services/Banking—Capital-Markets/FATCA–overview-and-timeline

    And this page seems to be tracking the latest “FATCA Alerts” …

    http://www.ey.com/GL/en/Industries/Financial-Services/Banking—Capital-Markets/FATCA–communications-and-alerts

    Always keep in mind that Ernst & Young is part of the “compliance industry”.

  9. @Just Me

    My banking source just sent me a note saying that US Treasury and Finance Canada are still talking, but an IGA is not imminent. My guess is that these final rules, once they’ve been analyzed here, will determine whether or not there’s still any momentum for an IGA.

  10. Pingback: What a FATCA IGA “would” mean for non-compliant U.S. citizens abroad « Freedom from the tyranny of U.S. citizenship-based taxation for U.S. and dual citizens outside the U.S.

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