updated 6:47 PM CET, Jan 23, 2020

ACA podcast No. 2: Gov't Accountability Office FATCA report, and targeting of 'tax avoidance enablers'

"Material omissions" from a major U.S. Government Accountability Office report on FATCA earlier this year, along with warnings about an apparently growing trend by tax authorities to target tax advisers as well as their clients when prosecuting alleged tax evasion cases, are among the topics addressed in the American Citizens Abroad's second monthly podcast, which went live earlier this week.

This month's podcast features a well-known Washington, D.C.-based lawyer and author, Bruce Zagaris, being interviewed by the ACA's Glenn Frost.

Zagaris, who is with Berliner Corcoran & Rowe LLP, specializes in international law, particularly in such areas as tax, money-laundering, asset forfeiture, compliance and anti-corruption, according to a profile on his firm's website.

Earlier this year, the U.S. Government Accountability Office published a report on how the 2010 anti-tax evasion law known as FATCA was affecting Americans resident abroad. Asked by Frost to summarize some of his personal observations about this report, which Zagaris published in an article shortly after the GAO unveiled its 83-page analysis on April 1, Zagaris began by citing "a material omission" the GAO report had made in its "failure to fully explore the U.S. government’s commitment to join the OECD’s Common Reporting Standard".

The CRS is an OECD-promulgated version of FATCA, but unlike FATCA is fully reciprocal – meaning that all the jurisdictions that sign up to it agree to automatically exchange the same information about accounts held in their financial institutions by tax-resident citizens of all the other CRS participants – and has now been signed up to by more than 100 countries around the world.

"In particular the US government’s commitment [to exchange information with other countries] and its failure to execute on this commitment, has important policy implications," Zagaris tells Frost, before going on to note how the lack of reciprocity being provided by FATCA  is continuing to emerge as an issue.

The result of this lack of reciprocity is increasingly obvious, he noted, in growing numbers of "wealth structures and trust companies have moved to the U.S." to take advantage of the fact that "the U.S. isn’t part of the CRS", and is therefore increasingly been seen by investors who crave anonymity as the best place to stash their assets.

What's more, Zagaris adds, "other governments, especially in the EU, are starting to take action against the U.S. for not living up to international standards on the automatic exchange of information."

Zagaris briefly addresses certain "over-lapping and burdensome" aspects of FATCA that the GAO report picked up on, and concludes the podcast with observations about some of the latest regualtory arrivals to the cross-border regulatory landscape, such as "unexplained wealth orders" that are now in force in the UK, and which he notes are "extra-territorial".

He also flags up what he says is a growing trend by foreign tax authorities to emulate the U.S. in going after not just the individuals who are seen to be evading tax, but the tax and legal practitioners seen to "enable" the perceived tax evasion in question. 

This is an "increasing concern" for practitioners, and "makes giving tax advice increasingly challenging in today's world", Zagaris says.  

To listen to the ACA's podcast, which is 22 minutes long, click here. 

Based in Rockville, Maryland, the ACA is a non-partisan, non-profit organization which represents the interests of American citizens resident outside of the U.S.