In an article in today’s Wall Street Journal, the Internal Revenue Service is brandishing a “very big stick.” It’s called the Foreign Account Tax Compliancy Act. According to the article, panelists during a Dow Jones webinar agreed that the unfolding law, which will uncover U.S. investors who evade taxes by putting their money in foreign funds and institutions, deserves that forceful designation.
It is the opinion, though, of Laurie Hatten-Boyd, a principal at KPMG, that this new law has information gathering purposes, not a revenue-making machine.
As proposed, the law would require any U.S. entities paying dividends, interest or proceeds from the sale of securities to withhold a 30% punitive tax if the foreign recipients of this payments refuse to agree to disclose information about their U.S. investors or account holders to the U.S. government.
The law is complex, though, and will take as much as five years to implement fully. A comment period on the proposed rules ended on April 30, but lawyers, compliance officers and consultants are still waiting to hear the final word on the changes.
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