Saturday, October 31, 2015

WSJ Article on Bank Information Sharing Among Countries under FATCA and CRS (10/31/15)

Laura Saunders of the WSJ has this good summary of the state of play on tax information exchange for banks.  A New Era of Tax-Data Sharing for the IRS (WSJ 10/30/15), here.  Excerpts:
Fatca requires foreign financial firms to report account data for their U.S. taxpayers or face stiff penalties. In many countries this information is bundled and submitted by the tax agency to the IRS. After Fatca was enacted, U.S. authorities said that in some cases they would share information on U.S. accounts held by foreigners, in an effort to counter charges the U.S. was acting unilaterally. 
Fatca supporters say the law has been a catalyst for historic change. Following its enactment, several non-U.S. countries decided to push for a similar effort, called the Common Reporting Standard. The CRS will enable countries such as Germany and France to exchange tax data digitally by 2018. 
So far, more than 90 nations have signed up for CRS. “Fatca and the Common Reporting Standard are fundamental changes in the tax landscape that could help countries around the world stem offshore tax evasion,” says Itai Grinberg, an international tax specialist at Georgetown University’s Law School. 
* * * * 
What information is being shared? Richard Kando, a director of Navigant Consulting in New York, says that in general, financial firms abroad have to report the name, address and taxpayer ID number of each U.S. account holder. They also must give the account number, account balance and gross amounts of dividends, interest and other income—including items such as the cash value of annuities. The threshold for reporting foreign accounts can be as little as $50,000. 
The IRS won’t send all the same information abroad about foreigners’ accounts held in the U.S. firms, Mr. Kando says. In general, the agency will provide the name, address, account number and tax ID number or date of birth for the client, plus the gross amounts of deposit interest, U.S.-source dividends and certain other U.S.-source income. But the agency isn’t required to provide the account balance. 
The IRS declined to say what the threshold is for reporting accounts held by foreigners.

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