The long overdue final round of FATCA regulations have been issued by the IRS and US Treasury Department, a move that looks to put the final nail in the coffin for FATCA’s opposition.
The final draft is reported to contain around 50 amendments to the original issued in January 2013, with the aim “to provide clarifications and to take into account certain stakeholder suggestions regarding ways to further reduce burdens consistent with the compliance objectives of the statute”. The Treasury added that these amendments are
“those relating to the accommodation of direct reporting to the IRS, rather than to withholding agents, by certain entities, regarding their substantial US owners; the treatment of certain special-purpose debt securitisation vehicles; the treatment of disregarded entities as branches of foreign financial institutions; the definition of an expanded affiliated group; and transitional rules for collateral arrangements prior to 2017″.
President Obama signed FATCA into law in 2010, and it’s become the standard for global information exchange. It requires financial institutions outside of the US to report any accounts belonging to US citizens that hold over $50,000. Ostensibly this is is to target US tax dodgers, but many US expats argue that it’s becoming increasingly difficult to find foreign financial institutions that will take them as clients. This has lead to to three times as many Americans rescinding their US citizenship in 2013 than the previous years.
Despite opposition arguing that this violates certain foreign bank secrecy laws, it looks like FATCA’s here for the long run.