US Department of Treasury Initiating Governmental Engagements with Foreign Territories
While the IRS may be considering a slow implementation strategy of this year’s new FATCA regulations, the United States Treasury Department has initiated communication with more than 4 dozen foreign governments in an effort to ‘keep the ball rolling’ on the enforcement of international tax compliance. Discussions currently taking place between the US Department of Treasury and foreign territories such as Argentina, Belgium, Cyprus, Israel, Liechtenstein, New Zealand, Singapore, Sweden, and about 8 others are actually the ‘third wave’ of bilateral information sharing and tax withholding agreements which are either already formed or in some stage of being negotiated.
New Bilateral Agreements Already in Place
The Treasury Department has announced the completion of a bilateral agreement that includes new FATCA considerations with the United Kingdom. While this is the only intergovernmental agreement that has been finalized the Treasury Department also noted that it’s actively working on finalizing agreements with 16 other foreign governments which consist of Canada, Denmark, Finland, France, Germany, Guernsey, Ireland, Isle of Man, Italy, Japan, Jersey, Mexico, Netherland, Norway, Spain, and Switzerland.
Treasury Department’s Exploration of Potential International Government Cooperation
In addition to the aforementioned bilateral agreements which are either already formed or in the process of being formed (or at least discussed), the US Department of Treasury is also investigating potential international support from another 15 countries:
- The British Virgin Islands
- The Czech Republic
- Sint Maarten
- South Africa
FATCA Initiatives Shaping Up
FATCA (Foreign Accounts Tax Compliance Act) is a creation of US Congress that was enacted in 2010 to enforce the United States’ reporting requirements imposed on US Citizens and Green Card Holders with foreign financial accounts. During the course of recent years, the IRS and Department of Treasury have been preparing for full-fledged international implementation of FATCA regulations and have involved the Department of Justice numerous times to issue indictments on both US Persons and foreign bank officials assisting in their goal of tax evasion.
New forms have been created to identify varied levels and types of assets being held in foreign territories such as Form 8938 have been implemented, and agreements in place and being formed with countries across the globe stipulate that foreign governments and financial institutions will begin disclosing information on US Persons who have substantial ownership of certain financial accounts and other assets to the United States and can expect the same information on their residents in return in 2014.
The relentlessness of the United States Department of Treasury is a clear indication that – even though 4 years after its creation – FATCA is inching closer and closer to its stated goal: Make international tax evasion a chapter in history.