New Briefing Paper Describes Jobs Bill Impact
A new briefing paper by Principal Analyst Jim Hamilton discussing the impact of the "Hiring Incentives to Restore Employment Act," or HIRE, is now available. The jobs bill, signed into law by the president on March 18, 2010, creates a new reporting and taxing regime for foreign financial institutions with U.S. accountholders. A provision of the bill, the Foreign Account Tax Compliance casts a wide net in search of undisclosed accounts and hidden income.
The reporting and withholding obligations imposed on the foreign financial institutions will serve as a backstop to the existing obligations of the U.S. persons themselves, who have a duty to report and pay U.S. tax on the income they earn through any financial account, foreign or domestic. These new reporting obligations for financial institutions will be enforced through the imposition of a 30-percent U.S. withholding tax on a wide range of U.S. payments to foreign financial institutions that do not satisfy the reporting obligations.