Bilateral Agreement Alternative to FATCA Implementation Brings New Twist to International Tax Cooperation

On the evening of February 8, 2012, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) issued proposed regulations on the Foreign Account Taxpayers Compliance Act[1] and a joint statement regarding an intergovernmental approach with five major trading partners of the U.S. with respect to improving international tax compliance and implementing FATCA (hereafter the Joint Statement).[2] This article discusses some of the policy issues surrounding the Joint Statement. [1]               U.S. Department of Treasury, Regulations Relating to Information Reporting by Foreign Financial Institutions and Withholding on Certain Payments to Foreign Financial Institutions and Other Foreign Entities, REG-121647-10, Feb. 8, 2012.   [2]               U.S. Department of Treasury, Joint Statement regarding an Intergovernmental Approach to Improving International Tax Compliance and Implementing FATCA, Feb. 8, 2012.