The final FATCA (Foreign Account Tax Compliance Act) rules have been published by the US Treasury. The rules require foreign financial institutions (including institutions in Australia) with US$50,000 of any American taxpayer’s assets to report the holdings to the US Internal Revenue Service. Reuters said non-US pension funds and mutual funds were spared the full brunt of new information-reporting rules.
The US Treasury rejected a request by businesses, banks and foreign investment funds to delay a January 2014 start date for big penalties imposed on individuals and financial firms that do not comply with the law.
Certain retirement funds, life insurance and other “low-risk” financial products held outside the US, which are not considered havens for dodging taxes, are exempted from reporting their US account holders’ information to the IRS. Financial firms and foreign governments had been calling for these exemptions.
US Treasury officials are hoping to sign up more than 50 countries with FATCA agreements and kick-start a dragnet of tax enforcement. “The real story here is that looks like it is going to become a global model,” Manal Corwin, deputy assistant Treasury secretary for international tax affairs, told Reuters in an interview.
The rules also incorporate the government-to-government agreements US Treasury has been signing with countries to get their local firms compliant with the law. Norway became the 7th country to forge an agreement, the US Treasury said. Reuters said the United Kingdom, Mexico, Denmark, Ireland, Switzerland and Spain are finalising FATCA agreements. The Australian Government is exploring the feasibility of an intergovernmental agreement with the US.
[LTN 12, 18/1/13]
Swiss Bank to close after 250 years following a guilty plea in relation to assisting wealthy Americans to evade their taxes with secret accounts
According to a report by Reuters, Wegelin & Co, the oldest Swiss private bank, has announced it would shut its doors permanently after more than 250 years (it was founded in 1741), following its guilty plea to a US District Court on charges of helping wealthy Americans evade taxes through secret accounts. “Once the matter is finally concluded, Wegelin will cease to operate as a bank,” Wegelin said in a statement on 17 January 2013 from its headquarters in St. Gallen. William Sharp, a tax lawyer in Tampa, Florida, with many US clients of Swiss banks, said Wegelin’s plea “should serve as a wake-up call” to the world banking community servicing US clients to takes steps to ensure compliance with US law.
Read the full report in Issue 3 of the 2013 Thomson Reuters Weekly Tax Bulletin.
[LTN 12, 18/1/13]