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Sen. Tim Kaine, D-Va., has asked Treasury to address the unintended consequences of the Foreign Account Tax Compliance Act for Americans living abroad, asserting that some of his constituents have faced "varying degrees of turmoil" regarding their bank accounts since FATCA's passage in 2010.
December 21, 2015
The Honorable Jacob J. Lew
Secretary, U.S. Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220
Dear Secretary Lew,
I write to request an update on the Treasury Department's efforts with respect to international tax avoidance and the Foreign Account Tax Compliance Act (FATCA).
FATCA was enacted in 2010 as an effort to curb tax avoidance by Americans who held money overseas to avoid paying taxes they owed. At its core, FATCA requires foreign financial institutions (FFI's) to report to the IRS about financial accounts of American citizens. FATCA increases transparency by requiring greater documentation and reporting of important information, and is a step forward toward preventing the avoidance of U.S. taxes. Unfortunately, it has also had some unintended consequences.
Despite the fact that FATCA has become an international standard for fighting tax evasion since its enactment, many Americans living abroad have indicated they have had trouble opening or continuing to hold bank accounts abroad. Millions of Americans live abroad for a variety of reasons -- work, family, study -- and serve as great informal Ambassadors for our country. I have heard from Virginians about these issues. These Americans have faced varying degrees of turmoil with respect to their bank accounts since FATCA's passage in 2010. Some of them have been notified it is because of FATCA's enactment that FFI's chose to close accounts tied to Americans as to avoid compliance with FATCA.
As such, please provide answers to the following questions:
- What steps has the Treasury Department taken to address complaints about FATCA by Americans living abroad?
- What resources are available to Americans who have had accounts closed?
- What, if any, legislative assistance is needed to ensure seamless, consumer-friendly FATCA implementation going forward?
- What steps are other countries taking to pursue tax avoidance, and are these steps in line with FATCA?
Should you or your staff have any questions regarding this matter please do not hesitate to contact Ron Storhaug in my office.
The Honorable Mark J. Mazur,
Assistant Secretary of the Treasury (Tax Policy)
Tax Analysts Information
|Code Sections:||Section 1471 -- Foreign Financial Institution Withholding|
Section 1472 -- Foreign Entity Withholding
Section 1473 -- Foreign Financial Institution Withholding Definitions
Section 1474 -- Foreign Institution Withholding Special Rules
|Magazine Citation:||The Insurance Tax Review, Mar. 2016, p. 533|
50 Ins. Tax Rev. 533 (2016)