Bank groups seek more delay in offshore anti-tax evasion law

Reuters

WASHINGTON, Nov 19 (Reuters) - Four bank lobbying groupshave asked the Obama administration for a six-month delay in thestart of an anti-tax evasion law set to begin on July 1, 2014,saying that banks and other financial institutions need moretime to prepare.

The effective date of the Foreign Account Tax Compliance Act(FATCA) has already been postponed twice, pushing it back 18months. The law was approved in 2010. It is still not in fulleffect.

But the Obama administration has yet to provide all therules needed by banks and financial firms to comply, thelobbying groups said in a Nov. 18 letter to tax officials.

FATCA requires foreign banks, insurers and investment fundsto send the Internal Revenue Service information aboutAmericans' offshore accounts worth more than $50,000.

Foreign businesses that do not comply can be effectivelyfrozen out of U.S. capital markets because of a 30 percentwithholding tax on their income from the United States.

Less than eight months remain before penalties start.

"This is insufficient time to achieve the effective, fullimplementation of FATCA," said the letter, signed by theAmerican Bankers Association, The Clearing House AssociationLLC, the Institute of International Bankers and the SecuritiesIndustry and Financial Markets Association.

A Treasury Department spokeswoman did not have an immediatecomment on Wednesday.

In 2009, Swiss financial services company UBS , the world's largest wealth manager by assets,paid a fine of $780 million to the United States to avoidcriminal charges over Americans' use of secret Swiss bankaccounts to avoid taxes.

Months later, Congress drafted FATCA, which was signed intolaw by President Barack Obama. Banks immediately blasted it andsaid compliance would cost more than $100 million.

Enforcement of FATCA penalties was delayed initially untilJan. 1, 2014, and then again by another six months.

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