The Treasury Department announced in December and January that the United States has signed eight more bilateral agreements to implement the reporting and withholding provisions of the Foreign Account Tax Compliance Act (FATCA), P.L. 111-147. The agreements with Italy, the Netherlands, Malta, Bermuda, Jersey, Guernsey, the Isle of Man, and Mauritius bring the number of signed FATCA intergovernmental agreements to 20.
FATCA requires foreign financial institutions (FFIs) to report to the IRS information about financial accounts held by U.S. taxpayers or by foreign entities in which U.S. taxpayers hold a substantial interest.
Italy, the Netherlands, Malta, Jersey, Guernsey, the Isle of Man, and Mauritius each signed what are known as Model 1A agreements, under which FFIs report information about U.S. accounts to their home governments. Those governments then report the information to the IRS. These agreements are reciprocal, meaning that the U.S. government will provide similar tax information to these governments regarding individuals and entities from their jurisdictions with accounts in the United States.
Bermuda signed a Model 2 agreement, under which Bermudan FFIs will register with the IRS and report the information required by FATCA directly to the IRS.