U.S. Treasury belatedly reveals 'regulatory reform' talks with EU

However, in a statement, in the form of a press release on its website, the Treasury didn't indicate what changes, if any were being considered, and made no direct reference to the Foreign Account Tax Compliance Act (FATCA), apart from noting that "matters related to tax requirements affecting U.S. and dual EU-U.S. citizens resident in the European Union and related reporting by financial institutions" had been among the subjects discussed. 

The meeting took place after a series of appeals by various EU organizations and governmental bodies, including the European Council, that, as this publication has been reporting, have called on the U.S. to address issues with the way FATCA is affecting so-called accidental Americans and other Americans who also have citizenship in EU countries.

Most recently, as reported, what some say may be as many as "hundreds" of such dual American/EU citizens have been struggling as a result of having their European bank accounts frozen by their non-U.S. financial institutions as a result of a FATCA requirement that such citizens provide their banks with their Social Security numbers or "Tax Information Numbers", which some don't have and are reluctant to get, as they don't consider themselves to be American citizens, which they would have to do to be able to provide such information. 

In its statement, the Treasury referred to those participating in last week's talks as the "EU Financial Regulatory Forum", an entity that in addition to the European organizations mentioned also includes, from the U.S. side, officials from the Securities and Exchange Commission, Board of Governors of the Federal Reserve System, Commodity Futures Trading Commission and Office of the Comptroller of the Currency.   

"Given the global nature of financial markets, participants acknowledged the importance of the [EU Financial Regualtory Forum]n in fostering ongoing dialogue between the United States and European Union," the Treasury statement concluded.

"Regular communication on supervisory and regulatory issues of mutual concern should foster financial stability, supervisory cooperation, investor protection, market integrity, and a level playing field.

"Participants will continue to engage on these topics, as well as on other topics of mutual interest ahead of the next Forum meeting, which is expected to take place in Brussels in the summer of 2020."

Fabien Lehagre, president and founder of the Paris-based Accidental Americans Association, said he had been told by an EU official that "FATCA and [the subject of] accidental Americans" had been on the EU Financial Regulatory Forum's agenda last week, even if not specifically mentioned in the Treasury Department's press release, and that he was "pleased" to see that the problems "accidentals" are facing were "finally being addressed". 

Signed into law in 2010, FATCA came into force in most countries around the world in 2014, and requires non-U.S. banks and financial institutions to report to the IRS, through their local authorities, on the financial accounts of all their account-holders who are considered to be "U.S. persons". This definition can include individuals who have lived abroad their entire lives, and who have never even had a U.S. passport. 

Because the law is not reciprocal, and because the U.S. has not signed up to a global version of this law known as the Common Reporting Standard, which is reciprocal, FATCA has enabled the U.S. to become an increasingly-major tax haven for non-U.S. citizens.

This is said to be one of the main reasons that, as reported earlier this week, the London-based Tax Justice Network awarded the U.S. second place in its 2020 "Financial Secrecy Index", moving it ahead of Switzerland for the first time, and behind only the Cayman Islands.

Although the U.S. has "pioneered powerful ways to defend itself against foreign tax havens, it has not seriously addressed its own role in attracting illicit financial flows and supporting tax evasion", as elites from other countries increasingly have been using it "as a bolt-hole for looted wealth", the Tax Justice Network noted, in explaining how it came to its decision to place the U.S. in second place.  

In late December, a report on the BloombergTax.com website quoted David Kautter, assistant secretary for tax policy at the U.S. Treasury, as saying that the U.S. government was working on regulations aimed at reducing the asset reporting burden of non-U.S. banks.

Kautter made his comments at an annual converence sponsored by George Washington University law School, the IRS and Treasury in Washington, according to the Dec. 20 BloombergTax piece, which quoted him as saying that "the new regulations are one of the department's highest priorities outside of implementing the 2017 tax law", a reference to President Trump's Tax Cuts and Jobs Act.