Foreign Account Tax Compliance Act Essay

709 WordsJun 24, 20153 Pages
Foreign Account Tax Compliance Act (FATCA) the end of the tax heavens and the Banking Secrecy, International cooperation or coercion? The offshore tax evasion is a problem that most countries face mainly because there are many structures that help sophisticated investors to avoid the payment of those taxes. After the 2008 global financial crisis, the United States was going through one of the most severe recession, the tax evasion crisis and the growing budget deficit was at it highest point, in 2009 President Obama stated during an interview "I did not run for office to be helping out a bunch of, you know, fat-cat bankers on Wall Street," making very clear his position about the bailouts and the general about the banking industry. It has been estimated the United States losses approximately $345 billion in tax revenue each year as a result of offshore tax abuse . One of the biggest scandals of offshore tax evasion was the UBS, Switzerland’s largest bank, in 2009. The Obama’s Administration came up with new approach in order to collect more revenue and try to tackle down the excessive offshore tax evasion problems, so in March of 2010 as a part of the Hiring Incentives to Restore Employment Act (“HIRE Act”), Foreign Account Tax Compliance (FATCA) was enacted, creating the sections 1471 to 1474 of the Internal Revenue Code creating a new chapter in the IRS code (Chapter 4). The core idea of the Chapter 4 is to make “whithholdable payments” to foreign financial
Open Document