The next round of guidance under the Foreign Account Tax Compliance Act expected in coming months will focus on giving banks and withholding agents the information they need to begin reporting U.S.-owned accounts to U.S. tax authorities, a senior Treasury Department official recently said.
“We are on track to issue proposed rules by the end of the year,” said Michael Plowgian, an attorney-adviser in Treasury's Office of International Tax Counsel.
Speaking at the 2011 fall meeting of the American Bar Association Section of Taxation on Oct. 21, Plowgian said the proposed rules will focus on critical issues for immediate answers as the government begins phased implementation of FATCA.
One key area is to give foreign financial institutions (FFIs) the information they need to begin entering into withholding agreements with the United States, the Treasury official said. Another is providing guidance for withholding agents.
Plowgian said while FATCA is in part a response to a number of financial scandals involving overseas banks, “it is generally consistent with a trend toward increased transparency of tax information.”
Speaking to the tax section's Investment Management Committee, Plowgian acknowledged that the withholding provisions under the legislation get “a lot of attention.”
However, he said, the government's aim is to achieve the reporting by foreign banks, not to take a punitive stance.
“If this worked out perfectly, there would be no withholding under FATCA and that's ultimately our goal,” he told practitioners.