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US watchdog: IRS not ready for FATCA

The US Internal Revenue Service has spent 19 months and more than $8.6 million getting ready to enforce a new law against offshore tax evasion that takes effect next year, but the agency is still not prepared, a watchdog group has said. More IRS computer and staff improvements are needed to administer the Foreign Account Tax Compliance Act (FATCA), said the Treasury Inspector General for Tax Administration. 

Source:
Date:
Updated:
Money News
Tuesday, December 10, 2013
Tuesday, December 10, 2013

From MoneyNews.com:

The U.S. Internal Revenue Service has spent 19 months and more than $8.6 million getting ready to enforce a new law against offshore tax evasion that takes effect next year, but the agency is still not prepared, a watchdog group said.

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.

This is an excerpt from Money News as it appeared on December 10, 2013. For updates or to read the current version of this post in its entirety, please click here.

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