The proposed Treasury Regulations concerning Chapter 4 of the Internal Revenue Code, Taxes to Enforce Reporting on Certain Foreign Accounts, otherwise known as FATCA (Foreign Account Tax Compliance Act) were released in February 2012.
The 388-page Regulations significantly modify and add to the guidance provided in the FATCA notices released to date.
Collectively these pronouncements address, amongst other things, implementation requirements, notably those for Foreign Financial Institutions who face reporting requirements which if not met will result in a 30% withholding tax on certain payments from 2014 onwards.
The Internal Revenue Service and the Treasury continue to work with affected parties including foreign governments in the wake of global pandemonium created over FATCA. An intergovernmental agreement is now in force between the United States and France, Italy, Germany, United Kingdom and Spain. The agreement provides a less stringent framework for reporting on an annual basis by the governments of these countries to the United States. In exchange, these countries receive a certain reciprocity privilege as regards disclosure of United States accounts held by citizens of these countries.