"We're not going to have any delays," IRS Commissioner John
Koskinen told reporters on a conference call.
His remarks came five months before the United States must start
enforcing the Foreign Account Tax Compliance Act (FATCA). It will
require foreign banks, insurers and investment funds to send the IRS
information about Americans' offshore accounts worth more than
Foreign businesses that do not comply with the law can be
effectively frozen out of U.S. capital markets because of a
30-percent withholding tax on U.S. source income.
The IRS is expected soon to publish forms and guidance that
financial institutions are keenly awaiting so they can figure out
how to avoid FATCA penalties.
"We expect to issue the final package of rules shortly," a Treasury
spokeswoman said on Friday.
"We are working diligently to finalize all related guidance to
ensure that financial institutions have time to effectively prepare
and comply, and there is no consideration for a delay of FATCA
implementation," the spokeswoman said.
Jonathan Jackel, a lawyer with Burt, Staples & Maner LLP, said the
more time Treasury takes to publish the final guidance, the likelier
it is that the law could be delayed again.
"They can't possibly expect people to comply with rules that have
not been published yet," he said.
"If there is going to be a delay, it will be more of an internal
issue within the government — whether they can crank out the
infrastructure that they need," he said.
[to top of second column]
The lack of FATCA guidance from the government prompted four bank
lobbying groups in November to ask the Obama administration for
another six-month delay in a law that has already been delayed
Signed into law by President Barack Obama in 2010, the law was
originally supposed to take effect on January 1, 2013.
In 2011, the start-date was postponed to January 1, 2014. Then in
the middle of last year, the start-date was pushed back again to
July 1, 2014.
There is room within the law to spare financial institutions the
FATCA withholding after July 1, former Treasury Department officials
"They can certainty provide relief. There has always been
flexibility on certain aspects of this," said John Harrington, a
former Treasury official who is now with law firm Dentons LLP.
But given strong assurances from the Obama administration that the
law will not be delayed again, "it would take something
extraordinary" for the administration to waiver, he said.
A source familiar with the Obama administration's position on FATCA
said the White House will not allow another delay.
(Editing by Kevin Drawbaugh and Ken Wills)
[© 2014 Thomson Reuters. All rights
Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.