Upcoming FATCA Guidance Aims to Reduce Reporting Burden, Treasury Official Says

More guidance under the Foreign Account and Tax Compliance Act (enacted as part of the Hiring Incentives to Restore Employment (HIRE) Act of 2010 (P.L. 111-147)) is expected to be released shortly and taxpayers should anticipate a reduced reporting burden, Danielle Rolfes, deputy international tax counsel, Treasury Department, reported on February 2. Rolfes spoke during an international taxation webcast sponsored by the Practising Law Institute (PLI).

FATCA

FATCA generally requires specified taxpayers to report their holdings of specified foreign financial assets. The IRS has developed Form 8938, Statement of Specified Foreign Financial Assets for that purpose.

Additionally, foreign financial institutions must report directly to the IRS certain information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. The IRS announced in 2011 that it would implement reporting for foreign financial institutions over a phased-in timeline. In late 2011, government officials predicted that FATCA guidance would be released in early 2012.

"FATCA guidance is in the final stages," Rolfes said. "It is a very long package," she added. Rolfes explained that the Treasury and the IRS have tried to answer as many questions as they could in the guidance. "Taxpayers asked for very specific guidance and we have endeavored to do that."

The Treasury and the IRS have attempted to "take on-board" the many comments they have received from taxpayers, financial institutions and foreign governments about FATCA, Rolfes said. "We have really endeavored to reduce the burden of FATCA reporting," she added. "We have attempted to reduce due diligence for preexisting accounts."

Rolfes also indicated that final Code Sec. 909 regulations are near completion. "We hope Code Sec. 901(m) regulations will follow," she added. Other projects include guidance under Code Sec. 367(d), Code Sec. 954 and Code Sec. 987.

Corporate Taxation

In other news, House Ways and Means Committee Tax Counsel E. Ray Beeman described Committee Chairman Dave Camp’s discussion draft for a U.S. territorial tax system. Beeman said that the discussion draft reflects Camp’s objective of "getting down to a 25 percent corporate tax rate."

President Obama has proposed a number of measures potentially impacting corporate taxation. The president’s proposals (part of his "Blueprint for An America Built to Last") include a new minimum tax for overseas profits along with a new 20-percent tax credit to cover moving expenses for companies that close production overseas and return work to the U.S. Beeman did not predict how the proposals will play out in Congress.