Large amounts of money all over the world are kept “elsewhere” or “other where,” and go untaxed as taxpayers fall short of complying with their tax obligation in their home jurisdictions. The Foreign Account Tax Compliance Act (FATCA) was established to fight tax evasion by U.S. individuals and entities via the use of foreign accounts. FATCA has a long reach and a substantial sign-up sheet. However, the United States is not the only jurisdiction looking for tax evaders. Tax evasion is a global problem. FATCA has served as a catalyst for propelling the Common Reporting Standard (CRS) which will facilitate the automatic exchange of tax information between non-U.S. countries.
The United States is not participating in CRS. Why isn’t the United States participating in CRS? It is generally due to the fact that participation would require an act of Congress because significant changes in the way that financial institutions document accounts and report information would have to take place. Moreover, the United States has stated that it already shares financial information under certain fully reciprocal intergovernmental agreements (IGAs), and that this should give the United States special consideration. Because U.S. financial institutions will not have CRS compliance obligations, this fuels the perception that the United States is a tax haven.
