“The Treasury Department will temporarily relax enforcement of a new law aimed at discouraging offshore tax dodging, at least for financial institutions that are making good-faith efforts to comply.
The announcement on Friday doesn’t postpone the July 1 implementation of the law, known as the Foreign Account Tax Compliance Act, or FATCA. However, the Treasury and Internal Revenue Service won’t rigorously enforce many of the law’s requirements for 2014 and 2015, as long as firms are trying to cooperate, according to the notice.
Current FATCA rules already phase in a number of financial institutions’ new duties—including identifying and reporting on U.S.-owned accounts—through 2016. To further ease the administrative burden, officials said the IRS will regard calendar years 2014 and 2015 as a transition period for purposes of enforcement and administration of those requirements. With respect to the transition period, “the IRS will take into account the extent to which institutions have made good faith efforts to comply with the new regulations, forms, and other requirements of FATCA,” the Treasury said.
Other steps announced on Friday will ease requirements for creation of some new accounts during the transition period in 2014. The U.S. also will ease rules for branches of multinational banks that are located in countries that haven’t yet come to agreement with the U.S. on enforcing FATCA.”
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