Boston accountants waiting for the passthru payment regulations of the U.S. Foreign Account Tax Compliance Act will have to keep waiting. Some industry experts think the Internal Revenue Service will have to postpone releasing elements of the Fatca passthru payments beyond June of this year or make them easier for institutions to understand and implement.
Fatca and the Foreign Bank Account Reporting initiatives have attracted much criticism and sparked much controversy this year as the IRS attempts to collect taxes from U.S. citizens living and/or banking on foreign soil. Both initiatives conflict with foreign banking privacy and data collection regulations. Currently the IRS requires the following to file a paper Form TDF90-22: U.S. expatriates, U.S. work or resident visa holders, signers or owners of non-U.S. bank or brokerage accounts. They Facta and FBAR IRS forms cannot be filed electronically.
Global financial experts expect the IRS to either greatly simplify the passthru payments or push out the deadlines past June of this year. Many say simplification is more likely because much more clarification is needed regarding the administration, withholding, managing and reporting of the passthru payments. Others see no value in Fatca and FBAR at all.
It is also arguable that the inter-governmental agreement and Fatca regulations draft released last month prove that the IRS may be flexible when it comes to its implementation. Even if withholding the passthru payments does not occur practically, the principle is still there. The implication is that the IRS won’t eliminate passthru payments altogether, but is at least be open to various ways of implementing the principles.
Source: risk.net, “Fatca passthru payments to be simplified, expert says,” Jessica Meek, March 14, 2012