Rep. Reichert Demands Answers on FATCA Implementation from IRS Commissioner

Oct 17, 2012 Issues: Economy and Jobs, Tax Policy

Representative Dave Reichert sent a letter to Internal Revenue Service (IRS) Commissioner Douglas Shulman on Wednesday, demanding that the IRS provide information on its implementation of the Foreign Account Tax Compliance Act (FATCA), specifically in regard to recently-negotiated intergovernmental agreements (IGAs).

FATCA imposes new reporting requirements on foreign financial institutions, forcing them to share certain information with the IRS about their U.S.-owned accounts or face up to a 30-percent withholding tax.  In the letter, Rep. Reichert voices concerns about its impact on U.S. financial institutions’ international competitiveness, the impact on the sale of treasury bonds, the potential avoidance of foreign investment in the U.S. and the effectiveness FATCA’s implementation.

“Whether or not we agree on the approach that FATCA prescribes - which now allows the IRS to enforce the disclosure of personal private information about US persons from foreign companies – it is now clear that the implementation process of FATCA involves the IRS acting with an implied license to determine a new direction for global tax policy,” wrote Reichert. “I have talked with constituents, had discussions with international companies who are looking to comply, and many who wonder how successful these new policies will be in achieving their intended consequences.”

In the letter, Reichert, a member of the House Ways and Means Committee, asks Commissioner Shulman to provide information on how the IRS is taking into consideration the potential effects on U.S. businesses and persons when negotiating IGAs, and asks the IRS to provide information on these considerations as Congress looks toward comprehensive tax reform.