IRS's Sweeping Guidance on FATCA Reporting Wins Practitioner Praise

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Banks in foreign jurisdictions and the United States get sweeping guidance on the next major phase of implementation of the Foreign Account Tax Compliance Act, in nearly 400 pages of eagerly-awaited rules (REG-121647-10) that practitioners say show positive responses to industry concerns. The rules make changes such as relaxing the due diligence requirements for banks to use in identifying U.S. accounts and expanding the categories of “deemed compliant” entities under a law that requires banks to report their U.S.-owned accounts to the U.S. government or face, in some cases, a 30 percent withholding tax. At the same time, the government unveils a ground-breaking agreement with France, Germany, Italy, Spain, and the United Kingdom to create an intergovernmental exchange of information on bank accounts held across borders. The proposed framework would call for country-to-country sharing of information on foreign accounts. A U.S. Treasury official says the U.S. government is in discussions with other countries on similar pacts.