Earlier today, the IRS announced a delay in key FATCA compliance dates. FATCA is short for the Foreign Account Tax Compliance Act. Under the revised timeline, the January 1st, 2014 due diligence and withholding deadlines were extended to July 1st. The date that foreign financial institutions are allowed to begin registering was moved from July 15th until August 19th. There had been widespread speculation that the IRS electronic registration portal would not be ready by next Monday.
The IRS says the extension results from the “overwhelming interest from countries around the world” and [to] “allow more time to complete agreements with foreign jurisdictions.” An IRS press release also said the delay also provides “foreign financial institutions (FFIs) with the time necessary to comply with FATCA while helping to ensure efficient implementation of the law.”
Since Congress passed FATCA in 2010, the law has encountered widespread resistance. Many countries say the law violates their own bank secrecy and financial privacy laws. Foreign banks and hedge funds say the cost of compliance will cost billions. Many countries also wonder if the IRS will deliver on its promise to share data with foreign countries about foreign nationals with U.S. bank accounts. The President has asked for this authority but some in Congress are balking.
For now, FATCA remains on track, albeit somewhat delayed. (This is the second major delay since the statute was passed.)
If you are a foreign or U.S. financial institution with questions about FATCA or have an unreported foreign account give us a call. We will gladly help you explore your options. Our tax lawyers have helped many taxpayers with a wide variety of foreign reporting problems including FATCA and unfiled FBARs.
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Post by Brian Mahany, Esq.