In addition to the proposed regulations, Treasury released a joint statement with France, Germany, Italy, Spain and the United Kingdom in which the countries pledged to work together to implement FATCA.
But the United States has not reached similar agreements with other countries, like Canada and Switzerland, where many Americans either live or have assets.
“This proposal is a mixed bag,” said Scott Talbott of the Financial Services Roundtable, who noted that his group was still studying the close to 400 pages’ worth of regulations. “Treasury clearly recognized the complexity of the law, as well as the importance of working internationally.”
Congress tucked FATCA into a broader jobs bill in 2010, after the Obama administration made battling tax evasion a priority.
In 2009, for instance, the Swiss banking giant UBS agreed to identify around 4,450 Americans suspected of tax evasion.
The new government regulations also come as Democrats have made tax fairness a key part of their election-year messaging, and not long after the IRS announced that the tax gap grew to $450 billion in 2006.
The nonpartisan Joint Committee on Taxation estimated that a 2009 version of FATCA would prevent roughly $8.5 billion in tax evasion over a decade.
On Wednesday, a Treasury official said FATCA was broadly written legislation, and suggested that filling in the details with the proposed regulations would help assuage some of the financial industry’s fears.
Under the law, foreign banks are required to hand over information about Americans’ accounts to the IRS, and face a 30 percent withholding fee on certain payments received from the United States if they don’t comply.
Federal authorities say the new regulations would allow foreign banks to use information they already collect to comply with FATCA rules, and would no longer require some banks to enter into separate agreements with the IRS.
The regulations also stretch out the reporting requirements for the law, which is scheduled to go into effect in 2013.
Under the new rules, banks would have to report the identities, account balances and other information on U.S. accounts in 2014 and 2015.
By 2017, banks would have to supply full reports, including income associated with U.S. accounts and gross proceeds from broker transactions.
But while the banking industry applauded the government’s efforts on the regulations, they stopped far short of embracing FATCA itself.
“Implementation of FATCA will impose significant challenges and costs for many United States financial services firms and their customers,” Ken Bentsen of the Securities Industry and Financial Markets Association said in a statement.
This story was first posted at 1:18 p.m. and has been updated.