OTTAWA/WASHINGTON -- Canada and the United States on Wednesday unveiled a tax information-sharing pact, advancing the Obama administration's fight against tax dodgers, although challenges remained to implementing a U.S. international tax transparency law.
Set to take effect on July 1, President Barack Obama's Foreign Account Tax Compliance Act (FATCA) will require foreign banks to share information about Americans' accounts worth more than $50,000 with the Internal Revenue Service, the U.S. tax agency.
The enactment of FATCA in 2010, after a scandal involving Americans hiding money in Swiss bank accounts, has resulted in a web of bilateral tax deals between the United States and 22 other countries, with Canada and Hungary the latest signatories.
"The agreements announced today clearly demonstrate the considerable international support behind FATCA," Robert Stack, the U.S. Treasury Department's deputy assistant secretary for international tax affairs, said in a statement.
But a court challenge by two banking industry groups to some key FATCA-related rules also churned forward on Wednesday.
The Texas Bankers Association and the Florida Bankers Association said they are appealing the dismissal of a lawsuit they brought last year challenging rules meant to help the United States implement FATCA.
In addition to the bankers' legal threat, a political assault on the law gained traction last week when the Republican National Committee called for FATCA's repeal, siding with big banks, libertarians and American expatriates opposed to the law.
Critics say FATCA is government overreach that will jeopardize personal financial privacy, while supporters say it is needed to combat widening offshore tax avoidance.
Another Delay Sought
Other banking associations have called for FATCA to be delayed by six months, arguing that the government has not provided enough guidance about how to comply with it.