Treasury announces moves to smooth tax law implementation

The Treasury Department announced a pair of new measures to smooth the implementation of a key tax evasion law on Wednesday, including giving foreign banks more time to register with the federal government.

{mosads}Treasury also said that it would count substantive agreements it has reached with 19 countries to implement the Foreign Account Tax Compliance Act as signed through 2014. FATCA, enacted in 2010 to battle offshore tax dodging, starts on July 1.

Foreign banks now also have until May 5 to register with the IRS, 10 days after the previous deadline of April 25.

The moves mark Treasury’s latest efforts to ensure that FATCA – a law still firmly opposed by most Republicans – avoids a bumpy rollout, by giving foreign banks more information about their governments’ agreements wit the U.S.

Under the law, foreign banks are required to inform the IRS about certain offshore accounts or face a withholding tax.

The U.S. already had FATCA agreements with 26 countries, in effect giving them 45 now.

“With 45 countries now considered to have IGAs in effect, and more jurisdictions far along in the process, the robust international support behind FATCA is undeniable,” Robert Stack, Treasury’s deputy assistant secretary for International tax affairs, said in a statement. 

“Today’s announcement both adds to our global effort against tax evasion and provides crucial clarity for financial institutions as they prepare to comply with FATCA starting on July 1.”

Australia, Belgium, Brazil, Gibraltar, Portugal, Qatar, South Africa and South Korea are among the 19 countries whose substantive agreements will count as signed through the end of the year.