The IRS said it would regard 2014 and 2015 as a transition period for purposes of IRS enforcement and administration of the Foreign Account Tax Compliance Act, or FATCA, for banks that have made a good-faith effort to comply.
FATCA was included as part of the HIRE Act of 2010 and requires foreign financial institutions to report on the holdings of U.S. citizens or else face stiff penalties. The controversial law has led to a record number of citizenship renunciations abroad, and protests that it would violate the banking secrecy and privacy laws in other countries. In response, the Treasury Department has been negotiating a series of intergovernmental agreements with the tax authorities of other countries. It and the IRS have also been delaying some of the provisions, but they are set to take effect this year.
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