Tuesday
July
29
2014
3:42 am
Weather

  Home
  Local News
  State / National / World
  Sports
  Opinion / Letters
  Business
  Arts / Entertainment
  Lifestyle
  Obituaries
  Calendar
  Submit Event
  Comics / Games
  Classifieds
  DJ Designers
  Archives
  Advertise With Us
  About Us
 
 
 
 

Check out our archive of Dining Guides - Yum!

77,000 foreign banks to share tax info with IRS
June 03, 2014, 05:00 AM By Stephen Ohlemacher The Associated

WASHINGTON — It will soon get a lot harder to use overseas accounts to hide income and assets from the Internal Revenue Service.

More than 77,000 foreign banks, investment funds and other financial institutions have agreed to share information about U.S. account holders with the IRS as part of a crackdown on offshore tax evasion, the Treasury Department announced Monday.

The list includes 515 Russian financial institutions. Russian banks had to apply directly to the IRS because the U.S. broke off negotiations with the Russian government over an information-sharing agreement because of Russia’s actions in Ukraine.

Nearly 70 countries have agreed to share information from their banks as part of a U.S. law that targets Americans hiding assets overseas. Participating countries include the world’s financial giants, as well as many places where Americans have traditionally hid assets, including Switzerland, the Cayman Islands and the Bahamas.

Starting in March 2015, these financial institutions have agreed to supply the IRS with names, account numbers and balances for accounts controlled by U.S. taxpayers.

Under the law, foreign banks that don’t agree to share information with the IRS face steep penalties when doing business in the U.S. The law requires American banks to withhold 30 percent of certain payments to foreign banks that don’t participate in the program - a significant price for access to the world’s largest economy.

The 2010 law is known as FATCA, which stands for the Foreign Account Tax Compliance Act. It was designed to encourage - some say force - foreign financial institutions to share information about U.S. account holders with the IRS, making it more difficult for Americans to use overseas accounts to evade U.S. taxes.

“The strong international support for FATCA is clear, and this success will help us in our goal of stopping tax evasion and narrowing the tax gap,” said Robert Stack, deputy assistant treasury secretary for international tax affairs.

Under the law, U.S. banks that fail to withhold the tax would be liable for it themselves, a powerful incentive to comply. U.S. banks are scheduled to start withholding 30 percent of interest and dividend payments in July, though recent guidance from the Treasury Department gives U.S. banks some leeway on timing as they gear up their systems.

The withholding applies to stocks and bonds, including U.S. Treasurys. Some previously owned securities would be exempt from the withholding, but in general, previously owned stocks would not.

Private investors who use foreign financial institutions to facilitate trades also face the withholding penalty. Those private investors could later apply to the IRS for refunds, but the inconvenience would be enormous.

Treasury released the list of complying banks on Monday so American financial institutions will know it is OK to send them payments without withholding the tax. Treasury is expected to update the list next month, after another push to complete information-sharing agreements.

“I think having 77,000 on this first list is a pretty big success,” said Denise Hintzke of Deloitte Tax LLP. “It appears to me that people are taking it pretty seriously and intend to comply.”

Banks in many countries are prevented by local privacy laws from sharing account information with foreign governments. To get around these restrictions, the Treasury Department has been negotiating agreements in which foreign governments will collect the information from their banks and then share it with U.S. authorities.

Russia was negotiating one of these agreements when the U.S. broke off talks in March. Nevertheless, 515 Russian financial institutions applied to the IRS directly and have been accepted into the program. More could apply in the coming weeks.

 

 

Tags: banks, financial, information, foreign, institutions, treasury,


Other stories from today:

 

 
Print this Page Print this Page  |  Bookmark and Share
<< Back
 
Return To Archives
 
  


 
 
 
Daily Journal Quick Poll
 
Do you think Social Security will be solvent when you retire?

Yes, I'm already retired
Yes, I'm not there yet but it will be
No, the baby boomers will exhaust it
Not without major changes
It better be
Too heady to think about

 

 
 
 
 
 
 
Virgin America files plans for IPO
The California-based airline filed on Monday for an initial public offering of shares. Virgin Amer..
San Bruno alleges misconduct, seeks removal of CPUC president
San Bruno officials called on Gov. Jerry Brown today to remove California Public Utilities Commissi..
Israel denies striking Gaza hospital, park
JERUSALEM — The Israeli military has denied its forces were responsible for an attack on a hospita..
UN chief reinforces call for Gaza cease-fire
UNITED NATIONS — Secretary-General Ban Ki-moon reinforced the Security Council's call for "an imme..
Police team turns back from Ukraine crash site
SHAKHTARSK, Ukraine — Heavy fighting raged Monday around the Malaysia Airlines debris field, once ..
More >>  
 
 
  
 
  
 
©2014 San Mateo Daily Journal
San Mateo County marketing