U.S. Department of Treasury Publishes FATCA Intergovernmental Model Agreement

by Akerman LLP

[authors: Sherwin P. Simmons, II, Jonathan E. Gopman, Barbara E. Ruiz-Gonzalez, and Leanne Reagan]

On July 26, 2012, the U.S. Department of Treasury ("Treasury") published the intergovernmental model agreement for government-to-government information sharing ("model agreement") to implement the information reporting and withholding tax provisions commonly known as the Foreign Account Tax Compliance Act ("FATCA"). Enacted by Congress in 2010, FATCA provisions target non-compliance by U.S. taxpayers using foreign accounts. See our Practice Update.

The model agreements are based on a framework and negotiations Treasury announced in February with France, Germany, Italy, Spain, and the United Kingdom to set up government-to-government information-sharing deals. See our Practice Update.

These countries, along with the U.S., will, in close cooperation with other partner countries, the Organization for Economic Cooperation and Development, and, when appropriate, the European Commission, work toward common reporting and due diligence standards in support of a more global approach to effectively combatting tax evasion while minimizing compliance burdens.

Treasury indicated that this is a joint effort to combat offshore tax evasion and that “this agreement implements FATCA in a way that is targeted and effective, while also providing a foundation for further international coordination.”

Two versions of the model agreement were released; a reciprocal version and a non-reciprocal version. Treasury also released a joint communique with France, Germany, Italy, Spain, and the United Kingdom, endorsing the agreement and calling for a speedy conclusion of bilateral agreements based on the model.

The joint communique indicates that the model agreements establish a framework for reporting by financial institutions of certain financial account information to their respective tax authorities, followed by automatic exchange of such information under existing bilateral tax treaties or tax information exchange agreements. The model agreements also address the legal issues raised in connection with FATCA, simplify its implementation for financial institutions, and provide for reciprocal information exchange.

The reciprocal version of the model agreement also provides for the U.S. to exchange information currently collected on accounts held in U.S. financial institutions by residents of partner countries. This version of the model agreement will be available only to jurisdictions with which the U.S. has in effect an income tax treaty or tax information exchange agreement and with respect to which the Treasury and the Internal Revenue Service ("IRS") have determined that the recipient government has in place robust protections and practices to ensure that the information remains confidential and that it is used solely for tax purposes. Subject to certain exceptions, the governments must exchange information within nine months after the end of the year to which the information relates.

Alternatively, the non-reciprocal version of the model agreement would allow countries to comply with FATCA under the same obligations, however, these countries would not receive an exchange of client banking information. The non-reciprocal version will be used for countries that do not have in effect with the U.S. an income tax treaty or tax information exchange agreement.

The release of the model agreement comes just two days after Michael Plowgian, an attorney-adviser in Treasury's Office of International Tax Counsel, stated that there most likely would not be any additional push back on the various deadlines related to FATCA.

Mr. Plowgian also stated that the final regulations related to FATCA should be released by the end of summer or early fall and that the final foreign financial institution agreement will be released around that time.

Finally, Mr. Plowgian stated that the model agreement would be released shortly (two days later in fact) and that a second alternative FATCA framework would be released soon after the model agreement with Japan and Switzerland.

FATCA requires foreign financial institutions to report U.S.-owned accounts to the IRS or face a 30 percent withholding tax. Foreign financial institutions in countries that do not sign up with Treasury will need to report client tax information directly to the IRS. Foreign financial institutions that do not share client information with the IRS will be subject to the 30 percent withholding tax beginning in 2014. 


Written by:

Akerman LLP

Akerman LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.