The next round of guidance under the Foreign Account Tax Compliance
Act expected in coming months will focus on giving banks and withholding agents
the information they need to begin reporting U.S.-owned accounts to U.S. tax
authorities, a senior Treasury Department official recently said.
“We are on track to issue proposed rules by the end of the year,”
said Michael Plowgian, an attorney-adviser in Treasury's Office of International
Tax Counsel.
Speaking at the 2011 fall meeting of the American Bar Association
Section of Taxation on Oct. 21, Plowgian said the proposed rules will focus on
critical issues for immediate answers as the government begins phased
implementation of FATCA.
One key area is to give foreign financial institutions (FFIs) the
information they need to begin entering into withholding agreements with the
United States, the Treasury official said. Another is providing guidance for
withholding agents.
Plowgian said while FATCA is in part a response to a number of
financial scandals involving overseas banks, “it is generally consistent with a
trend toward increased transparency of tax information.”
Speaking to the tax section's Investment Management Committee,
Plowgian acknowledged that the withholding provisions under the legislation get
“a lot of attention.”
However, he said, the government's aim is to achieve the reporting
by foreign banks, not to take a punitive stance.
“If this worked out perfectly, there would be no withholding under
FATCA and that's ultimately our goal,” he told practitioners.
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