US citizens in no small numbers already have their own less than positive views about the IRS. Now, it appears that the world at large may soon be sharing their sentiments in no uncertain terms.
Congress has set the ball in motion regarding an act, which if put into practice will see banks in countries across the world lose billions of dollars. The Internal Revenue Service of the US has been instructed to put into place new rules and regulations, which will require financial businesses abroad to identify US citizens who currently hold accounts with them.
The Foreign Account Tax Compliance Act, or FACTA as it has come to be known is to be officially brought into use during 2014, having been designed to follow on from successful moves to identify citizens hiding money and accounts in foreign countries.
On the surface the act appears to be just, at least by way of its goals, but critics argue that to successfully implement it would be too expense, too much of a global burden and entirely impractical to enforce.
The act dictates that every “foreign financial institution” – which is of course a rather vague designation to say the very least – must comply with the IRS so as to inform that of any American account holders with savings in excess of $50,000. Those who fail to do so will be penalized with a 30% tax rate on all profits from US investments.
Those in favor of the bill have pointed out that FACTA could yield total savings of up to $8 billion in the course of the next decade, though critics have been quick to reiterate that this is far from impressive – considering the IRS collected $1.9 trillion in 2010 alone.