Rare Praise For IRS For FATCA Work
The Treasury Inspector General for Tax Administration has generally praised the US Internal Revenue Service for its implementation of the Foreign Account Tax Compliance Act.
To improve US taxpayer compliance in reporting foreign financial assets and offshore accounts, Congress passed FATCA in March 2010. FATCA is intended to ensure that the US obtains information on accounts held abroad at FFIs by US persons, as failure to disclose such information can result in a 30 percent withholding tax on payments of US-sourced income.
In addition, individual taxpayers with specified foreign financial assets that meet a certain dollar threshold are required to report this information to the IRS by attaching a Form 8938, Statement of Specified Foreign Financial Assets, to their annual tax return.
TIGTA undertook its audit to assess the IRS’s progress in implementing FATCA and found that the agency “has taken steps to provide information to affected stakeholders that explains the FATCA requirements and expectations.” It pointed out that the IRS has a website solely dedicated to providing a variety of FATCA-related information for individuals, financial institutions, and foreign governments.
The audit decided that, “overall, the FATCA Compliance Roadmap is fairly comprehensive,” and “the IRS has made a reasonable effort to keep external stakeholders informed on the status and events related to the implementation of the FATCA.”
It found, however, that the IRS has experienced “some delays in implementing its compliance strategy and anticipates that some of the estimated implementation dates may change due to the availability and accessibility of FATCA data and budget limitations (e.g., information technology and human resources funding).”
TIGTA also suggested some improvements. In particular, it recommended, and the IRS agreed, that the IRS “needs to update the FATCA Compliance Roadmap to include more information on how the IRS will specifically ensure that FFIs comply with FATCA (such as when, what, and how the data related to FFI compliance will be reviewed and what outcomes are expected).”
