Client Alerts

Foreign Account Tax Compliance Act of 2009

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TO:Clients and Friends of the Firm
FROM:Stanley C. Ruchelman
RE:Foreign Account Tax Compliance Act of 2009
DATE:November 18, 2009

This memorandum is being circulated to provide a topside explanation of tax legislation now being considered in Congress affecting foreign trusts and foreign financial institutions. It is designed to facilitate the provision of bank information to the U.S. Government in order to track offshore investments of U.S. persons and to raise revenue from U.S. person’s who are beneficiaries of foreign trusts.

The bill is the “Foreign Account Tax Compliance Act of 2009.” Identical legislative language has been introduced in both Houses of Congress and it has the full support of the Administration. The bill has its roots in earlier legislative proposals submitted by the Senate Permanent Subcommittee on Investigation, but has pared away certain over-reaching provisions, including the creation of a tax haven country blacklist and certain negative presumptions in tax litigation arising from specified transactions. It is possible that the bill could be enacted in 2009 as a stand-alone legislation or with as a funding offset for estate tax reform or it could be combined with a larger general tax reform effort in 2010. It is also possible that aspects of the bill could be changed before it is enacted.