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By Catholic Online (NEWS CONSORTIUM)

2/7/2014 (1 year ago)

Catholic Online (www.catholic.org)

Set to take effect in July, agreement will require foreign banks to share information on American accounts

With billions of federal income lost to tax dodgers every year, both the United States and Canada have entered into a tax information-sharing pact. However, there are challenges remain in implementing a U.S. international tax transparency law.

An intergovernmental agreement, FACTA aims to address Canadian government concerns that may violate domestic privacy laws and burden financial institutions.

An intergovernmental agreement, FACTA aims to address Canadian government concerns that may violate domestic privacy laws and burden financial institutions.

Highlights

By Catholic Online (NEWS CONSORTIUM)

Catholic Online (www.catholic.org)

2/7/2014 (1 year ago)

Published in Americas

Keywords: Tax dodgers, FACTA, United States, Canada


LOS ANGELES, CA (Catholic Online) - Set to take effect on the first day of this coming July, President Barack Obama's Foreign Account Tax Compliance Act, or FATCA will require foreign banks to share information about Americans' accounts worth more than $50,000 with the Internal Revenue Service, or IRS.

A scandal involving Americans hiding away profits in Swiss bank accounts in 2010 resulted in a web of bilateral tax deals between the U.S. and 22 other countries, with Canada and Hungary the latest signatories.

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"The agreements announced today clearly demonstrate the considerable international support behind FATCA," Robert Stack, the U.S. Treasury Department's deputy assistant secretary for international tax affairs, said in a statement.

The movie is being challenged by two banking industry groups. Both the Texas Bankers Association and the Florida Bankers Association say they are appealing the dismissal of a lawsuit they brought last year that challenged rules meant to help the U.S. implement FATCA.

Political opposition on the law gained traction last week when the Republican National Committee called for FATCA's repeal. The move sided with big banks, libertarians and American expatriates opposed to the law.

FATCA, critics say, is an example of government overreach that will jeopardize personal financial privacy. Dissenting, supporters say it is needed to combat widening offshore tax avoidance.

Other banking associations have called for FATCA to be delayed by six months, arguing that the government has not provided enough guidance about how to comply with it.

Signed into law by Obama, FATCA has been delayed twice. Authorities have struggled to finish drafting the various rules and forms that the banks say they need to comply. Foreign banks that do not comply could effectively be frozen out of U.S. capital markets.

An intergovernmental agreement, FACTA aims to address Canadian government concerns that may violate domestic privacy laws and burden financial institutions.

"Canada engaged in lengthy negotiations with the U.S. government to address our concerns, and as a result, significant exemptions and other relief were obtained," Canadian Finance Minister Jim Flaherty said in a statement.

Under FACTA, Canadian tax authorities will collect information from the country's banks and share it with the IRS under an existing bilateral tax treaty.

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