Exclusive: U.S. Treasury to miss deadline on tax crackdown - sources
Thu Dec 20, 2012 11:02am EST
By Patrick Temple-West
WASHINGTON (Reuters) - The Treasury Department will miss a year-end deadline to publish final rules for a new global tax enforcement regime targeting the offshore assets of U.S. taxpayers, sources familiar with the timing said on Wednesday.
The rules represent one of the last implementation steps for the U.S. Foreign Account Tax Compliance Act, or FATCA, which is scheduled to take effect in 2014.
The accounting industry sources, who asked not to be named, said the rules are on track to be released in January.
A spokeswoman for the Treasury Department on Tuesday would not confirm whether the year-end deadline will be met.
"We are still working to issue the final regulations and they will be released soon," the spokeswoman told Reuters.
Treasury has already missed one deadline for the publishing the final rules. It came and went in September.
FATCA was enacted in 2010 after an outcry over a Swiss banking scandal that revealed U.S. taxpayers had hidden millions of dollars in assets overseas from the Internal Revenue Service.
The law requires foreign financial institutions to tell the tax-collecting IRS about Americans' offshore accounts worth more than $50,000.
International businesses ranging from Western Union Co to BlackRock Inc are waiting anxiously to see the rules so they can figure out how to comply with the law.
Delays mean businesses will have less time to prepare for compliance. Multinational firms have said they need at least 12 months to prepare for FATCA's 2014 start date.
"It is critically important that final FATCA regulations are issued as soon as possible," said Barbara Angus, a principal at Big Four accounting firm Ernst & Young LLP.
Treasury efforts on the rules may have been slowed by a number of government-to-government FATCA information-sharing deals it started pursuing earlier this year, tax experts said.
The United States has completed FATCA deals with the UK, Denmark and Mexico. Switzerland and Spain also have "initialed" agreements with Treasury.
Meanwhile, negotiations are continuing for deals with at least 50 other countries, according to the Treasury Department.
These deals represent a shift in FATCA implementation. While not envisioned as part of the 2010 law, the agreements are seen as a more practical way to implement the law.
Rather than forcing all foreign financial institutions to deal directly with the IRS, in some cases the agreements will allow the banks and funds to report information about American accountholders through their home governments to the IRS.
(Reporting by Patrick Temple-West; Editing by Kevin Drawbaugh)