New FATCA Proposed Regulations Ease Burden on Foreign Financial Institutions

New FATCA Proposed Regulations Ease Burden on Foreign Financial Institutions

By:

The Foreign Account Tax Compliance Act (“FATCA”) was enacted in 2010 in order to identify foreign financial accounts held by U.S. citizens and make it more difficult for Americans to hide assets in offshore accounts. FATCA, which was implemented as a part of the Hiring Incentives to Restore Employment Act, requires foreign financial institutions to search their records for any U.S. citizen and report the assets and identities of such persons to the U.S. Department of the Treasury. Although FATCA is not without problems, its goal of lessening tax evasion through offshore accounts is an important one that requires support from all sides. Even if FATCA’s future is unclear, the proposed regulations show a willingness on the part of the IRS to work with foreign financial institutions to find a more adequate solution.