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Foreign Banks, Others Struggle to Prepare FATCA Compliance

Reese Darragh | January 17, 2012

Companies, including foreign banks and other institutions, continue to fret over compliance with the reporting requirements of the Foreign Account Tax Compliance Act, also known as FATCA. Now,  a delay in the release of the proposed rules by the U.S. Department of the Treasury and the Internal Revenue Service has  left tax experts and large foreign banks behind on their compliance efforts.

FATCA, which was enacted in 2010, is aimed at foreign financial institutions and other financial intermediaries to prevent tax evasion by U.S. citizens and residents through use of offshore accounts. It requires foreign banks to report information to the IRS on foreign accounts held by U.S. taxpayers or by foreign entities that are substantially owned by U.S. taxpayers.

Implementation guidance gives foreign banks until June 30, 2013, to reach agreements with the IRS to comply with the information reporting in order to avoid withholding penalties on certain types of payments...

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