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FATCA, Foreign Account Tax Compliance Act
FATCA, the Foreign Account Tax Compliance Act, was enacted by the US Congress in 2010 as part of the Hiring Incentives to Restore Employment (HIRE) Act. It's stated purpose was to reduce US tax evasion by requiring foreign financial institutions to report to the IRS on their US account holders. FATCA was a revenue raising provision added to help fund the substantive provisions of the HIRE Act and was never costed or examined by the Congressional Budget Office. The actual consequences, intended or not, were to deny banking and investment accounts to a large portion of the estimated 9M US citizens living outside of the US. FATCA is extra-territorial in application and requires Foreign Financial Institutions (FFIs) to break domestic law (especially privacy laws) in order to comply with US law - under the threat of 30% withholding on US payments if they did not comply. To work around the “problem” of domestic law interfering with US law, the US Treasury signed Intergovernmental Agreements (IGAs) with more than 100 countries.
The actual FATCA provisions are found in Chapter 4 of the Internal Revenue Code. These provisions were unenforceable as written because they required Foreign Financial Institutions (FFIs) to comply regardless of whether compliance violated domestic law in their own country. The workaround to this problem was the development of Intergovernmental Agreements (IGAs). For an overview of FATCA in the context of the current repeal effort in the US Congress, see this post on John Richardson's blog, Citizenship Solutions.
More Information: Wikipedia - FATCA
A collection of public submissions to the US and other governments on FATCA and its implementation can be found here (includes several submissions by Australian organisations).
Australia - US FATCA IGA
FATCA Implementation and Maintenance Costs
To our best knowledge, there have been few published in-depth studies into the cost of implementing FATCA on Australian businesses nor on the Australian economy, although the sums involved are expected to be material.