A report published by Taiwan’s Central News Agency on Sunday suggested that the Foreign Account Tax Compliance Act may be about to be delayed again‚ for another six months.
If true, it would be the third time that the US has delayed the implementation of the main elements of FATCA, which was signed into law in 2010 by president Obama in an effort to crack down on US citizens who made use of foreign financial institutions in order to avoid paying US tax. Last July, the implementation date was pushed back by six months. Another delay was announced in October, 2012.
In yesterday's CNA report, unidentified officials were quoted as saying that although Taiwan “is preparing to sign” up to the FATCA agreement, it was “likely” that the scheduled 1 July implementation date “would be postponed”.
This, the article went on, could benefit Taiwan by giving it added leverage in any follow-up negotiations.
According to the report, carried in a couple of regional English-language publications including Taiwan's English language China Post, unidentified officials suggested that the delay in implementation might be the result of numerous pending inter-governmental agreements (IGAs) between the US and other countries, through which financial institutions in these countries are expected to report information on any American account holders they have as clients, so it may then be passed on to the Internal Revenue Service (IRS).
"While Taiwan is preparing to sign a pact with the US to help local financial institutions meet tax-reporting requirements under Washington's 2010 Foreign Account Tax Compliance Act (FATCA), it is likely that the implementation of the act would be postponed, the officials said," according to the report.
It went on to note that "the US still has a lot of paperwork to complete", and that Taiwan "could use the extra time to negotiate better deals”.
The officials noted that 25 April remains the deadline for local financial institutions to register with the IRS to ensure inclusion on the list of Foreign Financial Institutions.
IRS officials were not immediately available for comment on Sunday. Calls placed to its Washington DC media office were not answered.
Sigh of relief
Numerous groups and companies would breathe a sigh of relief if FATCA were again postponed. In addition to The Texas Bankers Association and Florida Bankers Association, which have been lobbying elected representatives in hopes of getting the act amended or repealed, this group would also include the American Council of Life Insurers. In December, it formally asked the IRS to delay the implementation by six months, according to a Bloomberg report at the time.
“A July 2013 implementation date is too early a date for government and withholding agents alike when all aspects are taken into consideration”, the group said in a 26 December comment letter, Bloomberg said.
As reported, US bankers have begun to express concern and opposition to FATCA because the scope of what it is likely to ask of them, in terms of compliance costs as well as in providing information about their overseas clients, has finally reached them. This is because it is increasingly evident that the countries with which the US has signed intergovernmental agreements to provide a mechanism for obtaining data on American account-holders are expecting US financial institutions to reciprocate, with the same kind of information on these countries' citizens' US bank accounts.