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Delays in FATCA implementation, part 1: the story so far

Waiting is one of the most fundamental of human experiences. For many very basic activities, such as the nine months or so between a baby's conception and delivery, it is inevitable.

Of course, psychologically, the waiting isn't always easy. There is a reason, after all, why the singer Tom Petty said it was the hardest part (of a relationship-in-the-making).

Indeed, sometimes when waiting goes on for a long time, it is only natural to wonder whether the awaited outcome - whether it is good or ill -- will actually happen. In this two-part post, we consider the story of expectation and preparation concerning the Foreign Account Tax Compliance Act (FATCA).

Congress passed FATCA in 2010. Since then, there have been various challenges in creating regulatory infrastructure for implementing the new law's requirements for offshore account information disclosure.

One of those challenges is the need to work out intergovernmental agreements with foreign governments regarding the responsibilities of foreign financial institutions (FFIs) to share information about U.S. taxpayers with the IRS. As we discussed in our November 22 post, the list of countries that have such agreements in place with the U.S. Treasury is not large, but is growing.

The first round of reporting by FFIs was originally scheduled to begin on January 1, 2014. FFIs were to register with the IRS and be subject to withholding taxes if they failed to cooperate.

Recognizing how much work still needed to be done to make this happen, however, last July the Treasury delayed the full implementation date from January 1 to July 1 of next year.

Now, six months later, it appears that another six-month delay may be in the works. That is what the report of an IRS advisory committee called for last week.

Source: Forbes, "Will FATCA Ever Go Into Effect?," Jeremy Scott, Dec. 12, 2013

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