The FT reports:
The US Treasury is close to issuing rules to force banks worldwide to hand over up to 5m Americans’ account de tails in an assault on tax evasion that financial institutions say is unworkable.
Tens of thousands of banks, fund managers, insurers and hedge funds face having to give the names of US clients with at least $50,000 of assets to the Internal Revenue Service under the Foreign Account Tax Compliance Act, passed in March.
Institutions are stepping up lobbying ahead of guidance from the US Treasury on implementation of the law. They argue that the legislation will cost them billions of dollars in compliance costs and expose them to the risk of flouting domestic laws on data protection. Many countries do not allow bank details to be given to a foreign state.
An official said the department was in the “final stages” of preparing guidance. “Addressing offshore tax evasion helps level the playing field and create a fairer system for all taxpayers,” the official said.
But that’s not what mates to offshore banks it seems. Making sure that their customers are tax compliant – that is they pay the right amount of tax (but no more) in the right place at the right time where right means that the economic substance of the transactions undertaken coincides with the place and form in which they are reported for taxation purposes - is clearly not a priority for banks. For banks the upholding of banking secrecy laws that they helped promote which have the sole aim of assisting tax evasion would appear to be the highest priority.
Time for a rude awakening for the banks then. I have no doubt the US will enforce their demands, and once they have EU states will follow suit because by then all the required mechanisms to allow automatic information exchange will exist. This is the future, and it’s getting remarkably close. It’s something I and many others have campaigned for – and I’m delighted it’s happening.
Those in secrecy jurisdictions should start smelling the coffee. The game is up.