WASHINGTON, July 26 The U.S. Treasury Department on Thursday published new rules for international tax reporting requirements, offering countries options for their domestic banks to comply with pending U.S. tax laws.
Treasury announced two model agreements countries can sign to give their home banks flexibility in reporting U.S. client information on assets held abroad to the Internal Revenue Service.
The rules are part of the U.S. Foreign Account Tax Compliance Act, or FATCA, a 2010 anti-tax evasion law.
The United States will begin penalizing foreign banks in 2014 for failing to disclose information to government authorities about clients who are U.S. citizens.
One of the models is a reciprocal agreement where the IRS will share taxpayer information with a foreign government about its citizens' assets held in the United States. But reciprocal information sharing would need approval from the U.S. Congress, Treasury said.
The other model agreement allows countries to comply with FATCA without getting an exchange of client banking information.
The model agreements are based off of negotiations Treasury announced in February with France, Germany, Italy, Spain and Britain to set up government-to-government information-sharing deals. The Treasury added Switzerland and Japan to the list in June.
Banks in countries that do not sign up with Treasury will need to report client tax information directly to the IRS. Banks that do not share client information with the IRS face up to a 30 percent withholding tax beginning in 2014. (Reporting by Patrick Temple-West; Editing by James Dalgleish)