Foreign Activity Tax Compliance Act

FATCA requires foreign financial institutions (FFIs) to identify and report certain information regarding U.S. accountholders. Failure to enter into such an agreement would subject an FFI to a 30% U.S. withholding tax on certain payments made to the FFI by a U.S. withholding agent (U.S. banks). FATCA also provides rules that apply to non-financial foreign entities ("NFFEs"). However, the compliance burdens of FATCA are much greater for FFIs than for NFFEs.

ABA's Position

ABA supports legislation that will ensure that all U.S. citizens and residents pay their fair share of taxes, and thus, prevent loss of millions of dollars by the U.S. because of taxpayers that engage in illegal use of offshore accounts to hide taxable income. However, we believe that FATCA is so broad in scope and application that it pulls in entities and activities that are not the intended target of the legislation. 

 

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Contact for further information: John Kinsella (202) 663-5317.

 

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