Tags: fatca | mark meadows | foreign tax | obama

The Hill Extra: GOP Lawmaker Mark Meadows Seeks to Investigate Obama's Foreign Tax Compliance Law

The Hill Extra: GOP Lawmaker Mark Meadows Seeks to Investigate Obama's Foreign Tax Compliance Law

(Dollar Photo Club)

By    |   Thursday, 29 September 2016 09:04 AM

 

 

A congressional panel is planning to examine President Barack Obama’s signature foreign asset reporting law that aims to target offshore tax evasion, Rep. Mark Meadows, R-N.C., told The Hill Extra’s Kat Lucero.

 

FATCA is designed to ferret out individuals who have unreported offshore bank accounts and other assets. The controversial law requires financial institutions to share information about Americans' accounts worth more than $50,000.

 

FATCA, enacted in 2010 as part of the Hiring Incentives to Restore Employment (HIRE) Act, has faced a wide range of criticism involving U.S. treaty obligations, intrusion of other countries’ sovereignty and privacy rules, the Hill explained.

The penalty for foreign institutions that fail to comply "is a withholding rate of 30 percent on payments received from U.S. sources, including dividends and interests. The U.S. government has entered into bilateral intergovernmental agreements (IGAs) with dozens of countries to implement the tax reporting law abroad," the Hill reported.


“It was having a chilling effect not only on us being able to do business abroad but certainly from expats [who] are running into regulations. I don't believe they were the intent of the law originally,” Meadows, who recently introduced a bill aiming to repeal FATCA, told the Hill. The lawmaker is chairman of the committee's Government Operations Subcommittee.


The House Oversight and Government Reform Committee is planning to hold a FATCA-related hearing. Earlier this month, Meadows unveiled his own bill that would repeal FATCA and other individual reporting requirements (H.R. 5935) that violate “Fourth Amendment privacy rights,” according to a press release. The issue with privacy rights stem from the reporting requirements for foreign financial institutions. 

This development comes just after the Internal Revenue Service spent $15 million on a delayed implementation of an upgraded system for fully enacting FATCA, but the software didn’t yield the expected results, Accounting Today reported.

A report from the Treasury Inspector General for Tax Administration (TIGTA) acknowledged the IRS made recommended improvements to strengthen the management controls on the systems development requirements for FATCA projects.

“However, in an effort to meet the project schedule and manage resources, one of the new IRS systems, Withholding and Refund Release 2.0, went forward despite critical data quality problems that resulted in unplanned work and a four-month implementation delay. TIGTA said improvements were needed to ensure high-risk issues are given priority,” Accounting Today reported.

“The IRS implemented Withholding and Refund Release 2.0 in time for a revised February 2016 deployment date and the new system was built in accordance with the requirements, but the IRS spent $15 million delivering functions that TIGTA believes have not provided the intended business results,” the Accounting Today report said.

“The IRS first identified data matching issues in May 2015,” said the Treasury report. “Although the initial data matching issues were resolved, the IRS identified new data matching issues as recently as February 2016. The IRS does not have a timetable for when the latest data matching issues will be resolved and automated functionality will provide all of the expected business results.”

To implement the law, the Treasury Department and the IRS needed to set up online portals and systems to accept the information and process it.

FATCA and tax rules generally have been fingered in the growing number of Americans abroad who renounce their citizenship. In a 2015 survey, 86 percent of respondents felt the law needs to be reworked. Both parties' representatives abroad agree on that, though there are differences on how they propose to accomplish it, Bloomberg News has reported.

 

Meanwhile, a bumpy path may lie ahead for crucial agreements to ease the process for foreign banks to report their U.S.-owned accounts under the controversial law—even as IRS pressure grows for countries to get their pacts in force quickly, Bloomberg's BNA reported.

"Some countries face legal challenges to agreements under the Foreign Account Tax Compliance Act, while others may not be moving quickly. The lack of agreements in force is raising big concerns among global banks with operations in some jurisdictions that have fully functioning pacts and some that don't," BNA reported.


"Known as intergovernmental agreements, or IGAs, the pacts allow overseas banks to transmit information on U.S.-owned accounts to their own governments, which then would share the data with the Internal Revenue Service at a high level. IGAs aren't considered to be in force until a country passes implementing legislation," BNA reported.

"The alternative—directly reporting individual accounts to the U.S. or potentially facing a 30 percent withholding tax—is a major concern for cross-border financial institutions as difficulties continue in countries that haven't managed to get an IGA in legal force. According to Sept. 23 Treasury Department data, 113 countries have agreements, but 49 still need to reach the finish line."

(Newsmax wire services contributed to this report).

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A congressional panel is planning to examine President Barack Obama's signature foreign asset reporting law that aims to target offshore tax evasion, Rep. Mark Meadows, R-N.C., told The Hill Extra's Kat Lucero.
fatca, mark meadows, foreign tax, obama
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2016-04-29
Thursday, 29 September 2016 09:04 AM
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