Congress votes for delaying US compliance with TIEAs

251 U.S. Congressmen decided that the taxpayer resources were better spent trying to reduce unemployment to 6% than collecting information about accounts held by foreigners in U.S. banks. TIEA compliance by the US is among the projects which would cost more than US$50 million to carry out.

Despite strong bipartisan requests in both chambers of Congress, the Treasury Department has refused to withdraw the rule, or at a minimum, conduct an economic impact analysis on how the regulation would affect the banks and the economy.

According to Florida’s Office of Financial Regulation, the regulation could lead to tens of billions of dollars being withdrawn from Florida banks and moved to overseas accounts.

Congressman Bill Posey’s amendment, was introduced with Congressman Gregory Meeks (D-NY) to stop the IRS from implementing new misguided regulations expected to lead to billions of dollars of capital flight from U.S. banks to foreign institutions.

However, agreements for the implementation of FATCA continue full speed ahead, burdening banks worldwide with more compliance. Countries like Panama which have signed tax information exchange agreements are still expected to amend their legislation and information systems to eliminate bearer shares and collect information on deposits by U.S. account holders.

"My hope is that at the end of the day people will say this is not a good time to do this," Posey said.

See also:

EU suspendería el intercambio fiscal http://www.prensa.com/impreso/economia/eu-suspenderia-el-intercambio-fiscal/112399/

House Passes Bill to Halt Regulations, Expands Freeze to Rules Costing $50 Million http://www.bna.com/house-passes-bill-n12884910868/

Housa approves three Posey amendments http://spacecoastdaily.com/2012/07/house-approves-three-posey-amendments/

FATCA not appropriate for the Bahamas http://www.tribune242.com/news/2012/aug/03/ex-ag-fatca-iga-not-appropriate-for-the-bahamas/

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Center for Freedom and Prosperity

For Immediate Release
Tuesday, July 31, 2012
202-285-0244
www.freedomandprosperity.org

CF&P President: Congressional Vote on IRS Regulation is First Step in Reasserting Proper Legislative Role in Policymaking

Washington, D.C., Tuesday, July 31, 2012) Last week the House of Representatives voted with bipartisan support (251-165) to approve an amendment to the Red Tape Reduction Act (H.R. 4078) that would include the recently adopted IRS regulation requiring reporting on nonresident alien interest deposit information among the regulations to be delayed until unemployed drops below 6%. Andrew Quinlan, President of theCenter for Freedom and Prosperity, offered the following statement:

“The House has taken a first and necessary step in taking back the power to pass regulation from an IRS agency that has gone rogue. With passage of this rule, Treasury Secretary Geithner and the Obama Administration usurped the authority of Congress to determine how best to attract much needed foreign investment to the US. Thanks to the leadership of Congressman Posey, the House has began taking that authority back. I call on the Senate to follow suit, and then for this temporary delay to be made permanent.”

Congress has long opposed agency efforts to implement the reporting regulation, which undermines more than 90 years of Congressional intent on foreign investment. Each time the issue of foreign deposits has come up, Congress has specifically decided not to tax it nor asked for it to be reported. The IRS facilitating taxation by other governments will have the same economic impact as if the US taxed it directly, thus undermining the clear intent of Congressional policy.

The IRS has also flaunted legal requirements for regulatory enactment, such as requirements that economically significant rules be accompanied by a cost-benefit analysis. They have never conducted a proper analysis because there are no direct benefits to which they can point. A study by the Mercatus Centeron an earlier, more limited and thus less damaging, version of the rule estimated the US would lose $88 billion in foreign investment, well above the $100 million impact necessary to trigger the cost-benefit requirement.

CF&P has fought various versions of this regulation for over 10 years, successfully delaying the rule on several occasions. The vote on Rep. Posey’s amendment represents another victory for those who believe not only that ensuring American requires keeping it an attractive destination for capital, but in the rule of law and proper checks and balances.

For more information on the destructive IRS regulation:

http://freedomandprosperity.org/issues/irs-information-sharing-regulation/

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Treasury Signs FATCA Agreement with 5 European Countries

... “This morning’s announcement that an ‘Intergovernmental Agreement to Improve Tax Compliance and to Implement FATCA’ has been reached with U.K., France, Germany, Italy and Spain was anticipated and welcomed,” commented Denise M. Hintzke, global tax leader of foreign account tax compliance at Deloitte Tax LLP. “At a high level, both the reciprocal and non-reciprocal versions should help financial institutions reach important FATCA objectives, while potentially reducing costs to comply. We expect further negotiations on the specifics of what will be required in the country attachments. Much remains to be done to meet the requirements in the tight timeline, and many details are to come, but this announcement represents a significant step forward in the global exchange of information to combat tax evasion.”

However, that global exchange of information received a setback on Thursday in Congress, the same day as the integovernmental agreement was announced. The House voted 251-165 to support an amendment to the Red Tape Reduction Act sponsored by Rep. Bill Posey, R-Fla., and Gregory Meeks, D-N.Y., to stop the IRS from implementing new regulations requiring U.S. banks to disclose the identities of foreign depositors to the IRS, which would then pass along the information to their home countries. The regulations were set to take effect in January, but under the amendment that passed on Thursday, they would be postponed until the U.S. unemployment rate declines to 6 percent.

The prospects for passage of the amendment in the Senate are uncertain. Sen. Marco Rubio, R-Fla., has been building support for introducing similar legislation in the Senate, but he told the Orlando Sentinel he prefers to go a different route for pressuring the IRS to withdraw the regulations. Lawmakers argue that the regulations discourage foreigners from depositing their money in U.S. banks. The Treasury Department counters that it is merely requiring the same information to be reported on foreign depositors that it requires from U.S. citizens, and delaying implementation of the regulations impedes the IRS's efforts to crack down on offshore tax havens.

FATCA was enacted in 2010 by Congress as part of the Hiring Incentives to Restore Employment Act. FATCA requires foreign financial institutions to report to the IRS information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest.

The Treasury Department and the IRS said they would continue to work with other governments and with businesses to implement FATCA and to achieve maximum consistency and standardization in the technical implementation of the agreed information exchange, including by providing more detailed guidance as necessary.

Updates and further information on FATCA can be found by visiting the FATCA page on www.IRS.gov.

See full text in http://www.accountingtoday.com/news/treasury-signs-fatca-agreement-uk-france-germany-spain-italy-63416-1.html