Crown dependencies sign FATCA agreement with USA
Many US tax payers may not have noticed in the run-up to the festive season that the Foreign Account Tax Compliance Act (FATCA) net continued to tighten. The three Crown dependencies – Guernsey, Jersey and the Isle of Man – all signed Model 1 intergovernmental agreements with the US government in mid-December at the US embassy in London.
FATCA was explicitly designed to combat offshore tax evasion by US tax payers and to recoup federal tax revenues. Under the Model 1 agreement financial institutions in the three islands will be required to report tax information about US account holders directly to their own tax authorities which will then pass this data to the IRS.
Ministers from all three Crown dependencies were keen to point out that the agreements provide evidence of their commitment to combatting tax evasion and their support for international initiatives to improve tax compliance and enhance transparency. US Deputy Assistant Secretary for International Tax affairs Robert B. Stack sounded a blunter warning, “FATCA continues to gather momentum as we work with partners worldwide to combat offshore tax evasion. This large number of signings in one week alone sends a strong signal to tax evaders everywhere: international support for FATCA is growing.”
It is hard to disagree with this prognosis as over the course of December at least five other countries also signed intergovernmental agreements with the US from the Cayman Islands and Costa Rica to Malta, the Netherlands and the Islands of Bermuda. With these most recent agreements the US has signed 18 FATCA intergovernmental agreements, has 11 agreements in substance and is engaged in related discussions with many other jurisdictions.
The implications are clear for US taxpayers – wherever you or your accounts are based - Uncle Sam is going to do everything he can to get what is due to him so the need for tax compliance has never been greater.
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