More IRS computer and staff improvements are
needed to administer the Foreign Account Tax Compliance Act,
said the Treasury Inspector General for Tax Administration.
Enacted in 2010, FATCA is set to take effect in July 2014. It
will require foreign financial institutions to tell the IRS
about Americans' offshore accounts worth more than $50,000.
The law was enacted after a Swiss banking scandal showed U.S.
taxpayers hid substantial fortunes overseas.
Between 200,000 and 400,000 foreign banks, investment funds and
insurers companies are expected to register with the IRS to
comply with the law, TIGTA said.
Implementing the law has involved policy changes along the way
that in November 2012 undercut the IRS' first FATCA software
system. "The IRS was unable to fully utilize the initial
system," which cost $8.6 million, TIGTA said.
Many FATCA staffers have not yet been assigned and budget
constraints have delayed work, TIGTA said in a report.
The IRS challenged TIGTA's findings. "The need to redesign the
system in 2012 was due to significant and necessary regulatory
changes," the IRS said.
In November, four bank lobbying groups asked the Obama
administration for a six-month delay in FATCA.
The TIGTA report suggests FATCA should be delayed, said Michael
Hirschfeld, chairman of the American Bar Association tax section
and a lawyer at Dechert LLP. "This is more fuel for the fire to
delay things," he said.
[© 2013 Thomson Reuters. All
rights reserved.]
(Reporting by Patrick Temple-West; editing by Kevin Drawbaugh
and Mohammad Zargham)
Copyright 2013 Reuters. All rights reserved. This material may not be published,
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