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Oct. 2 — The IRS has begun the reciprocal exchange of financial account information with other countries under the Foreign Account Tax Compliance Act, meeting a key Sept. 30 deadline.
The exchange involves certain information on accounts held by foreigners in the U.S. being provided to other countries, just as the U.S. is receiving information on its citizens' foreign accounts. An Internal Revenue Service announcement (IR-2015-111) released Oct. 2 didn't specify the type or extent of information being exchanged on either side.
The IRS also didn't specify the countries where the exchanges are taking place, saying only “certain tax administrations.”
Exchange Under IGAs
According to the IRS, the exchange is taking place under intergovernmental agreements (IGAs) the U.S. put in place to implement FATCA. The law requires foreign financial institutions to report U.S.-owned accounts to the IRS or face a possible 30 percent withholding tax on their U.S. source income.
Reciprocal IGAs called for the first round of information exchange to take place by Sept. 30.
IRS Commissioner John Koskinen called meeting the deadline “a major milestone in IRS efforts to combat offshore tax evasion through FATCA and the intergovernmental agreements. This groundbreaking effort has fundamentally altered our relationship with tax authorities around the world, giving us all a much stronger hand in fighting illegal tax avoidance and leveling the playing field.”
Actions by Canada, Australia
Although the IRS didn't reveal country names, the development comes as both Australia and Canada have said they shared information with the IRS on U.S.-held accounts within their borders by the deadline.
The Canada Revenue Agency confirmed Oct. 1 that it completed the first exchange with the IRS of banking information for U.S. persons resident in Canada on Sept. 30 (191 DTR I-5, 10/2/15).
The Australian Taxation Office said Sept. 23 that it had provided the IRS with details of 30,000 accounts worth more than $5 billion—what the ATO called “the first step in a wave of transparency measures being implemented globally by Governments and tax administrations” (186 DTR I-1, 9/25/15).
The IRS stressed Oct. 2 that the U.S. will only engage in reciprocal exchange with jurisdictions that meet the agency's “stringent safeguard, privacy and technical standards.”
In order to reach the point of that exchange, the IRS conducted detailed reviews of each jurisdiction's laws and infrastructure, the announcement said.
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