The Treasury Department rolled out new rules on Thursday designed to make it easier for banks to comply with an offshore tax evasion law that takes effect in July.
“We look at this as the last big step in implementing FATCA,” the senior Treasury official said.
FATCA requires foreign banks to share information with the Internal Revenue Service on accounts held by U.S. taxpayers. If they don’t, U.S. banks would withhold certain payments to those foreign banks.
Congressional Republicans have long taken issue with the law, passed when Democrats controlled Congress in 2010, and the banking industry has derided it as incredibly burdensome.
But the White House says the law is a critical tool in combating offshore tax evasion that costs the Treasury millions of dollars.
The Treasury Department says it rolled out the more than 50 alterations to FATCA rules after what it called significant input from outside groups. Those new rules seek to make it easier for U.S. banks to fulfill their FATCA obligations, given that banks already face certain withholding requirements under the law.
Treasury’s new rules seek to synthesize those existing requirements with what’s expected of banks under FATCA, to make complying less burdensome and to reduce any overlap. They also try to make it easier for foreign banks to report account information directly to the IRS, instead of through an intermediary.
Republicans have continued to call for FATCA’s repeal, and advocates for the banking industry have not stopped seeking relief from the law, which some blame for causing U.S. taxpayers to renounce their citizenship.
But a separate senior Treasury official said Thursday that President Obama’s administration sees no reason why the law won’t go live on July 1.
The federal government has signed close to two dozen agreements with foreign governments to smooth the implementation and is working to finalize many more.
“Countries around the world know that July 1 is the date,” the senior Treasury official said.
“We’re going full speed ahead on getting this implemented by July 1 and don’t see any likely event that’s going to change that,” the official added.