SIFMA today released the following statement from Kenneth E. Bentsen, Jr., executive vice president, public policy and advocacy, in reaction to proposed regulations to implement the Foreign Account Tax Compliance Act (FATCA).
"FATCA is the most comprehensive statute ever passed to enhance compliance by Americans with U.S. tax laws through information reporting and withholding, with virtually the entire burden for implementing the new law falling on U.S. and foreign financial services firms. The Internal Revenue Service today issued long-awaited proposed regulations to implement the new law. The proposed regulations are nearly 400 pages long and include substantial modifications to the preliminary IRS guidance on FATCA. We look forward to analyzing the proposed regulations in more detail with a keen eye towards their impact on foreign investment in the United States, commercial viability, compatibility with local laws and the costs and compliance burdens that they will impose on our members in order to assist the IRS in addressing U.S. tax avoidance.
"As an initial matter, we very much appreciate the great lengths to which the Treasury Department has gone in developing proposed regulations in order to transition into these new requirements, and we are grateful to Treasury and IRS officials for seeking industry comments and incorporating many into these proposed regulations. The proposed regulations contemplate providing important additional time for financial services firms to develop systems and processes to implement the new law, begin reporting and withholding relating to U.S. persons with offshore accounts. The proposed regulations also have partially incorporated one industry recommendation that, to the greatest extent possible, FATCA requirements should utilize existing customer systems rather than require our members to develop new, unique and costly systems.
"Nevertheless, implementation of FATCA will impose significant challenges and costs for many United States financial services firms and their customers. The proposed regulations, as a well as a joint statement released today by the United States and certain European countries, indicates a willingness on the part of tht of these parties to work together in this effort to tackle tax evasion, while seeking to address legal impediments relating local country data privacy and security.
"As we have said throughout the comment process, it will take time to fully assess the impact of these new rules on financial markets, on bilateral and multilateral tax cooperation, and on foreign investment in the United States. SIFMA looks forward to participating in the comment process on the proposed regulations, and providing further input to the IRS and Treasury as the implementation of FATCA continues."