Long-Awaited Final Rules on Foreign Account Tax Compliance Act Issued

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The Treasury Department and IRS issue long-awaited final rules on the Foreign Account Tax Compliance Act, with changes intended to harmonize the rules with agreements negotiated with other countries. Treasury says the rules are intended to finalize a step-by-step process for U.S. account identification, information reporting, and withholding requirements for foreign financial institutions, other foreign entities, and U.S. withholding agents. The rules also are intended to build on intergovernmental information sharing agreements that allow financial institutions to report information on U.S.-owned accounts directly to their own governments, which then would share the data with the United States. The final rules phase in the timelines for due diligence, reporting, and withholding in order to give financial institutions time to build systems to comply.