The Foreign Account Tax Compliance Act (FATCA), which passed as part of the HIRE Act, typically
requires that foreign financial Institutions and particular non-financial foreign entities
report on the foreign assets held by their U.S. account holders or be subject to withholding on
withholdable payments. The HIRE Act also contained legislation requiring U.S. persons to report,
depending on the value, their foreign financial accounts and foreign assets
Under FATCA, individual U.S. taxpayers holding financial assets outside the United States must
report those assets to the IRS, generally using Form 8938, Statement of Specified Foreign
Financial Assets. The aggregate value of these assets must exceed $50,000 to be reportable, in
general, but in some cases, the threshold may be higher.
Although the primary purpose is preventing and detecting tax evasion by a U.S. person, FATCA
will have a substantial consequence across financial markets and will impact non-U.S. companies
and individuals. FATCA demands all foreign financial institutions ("FFIs") to register with the
IRS, conduct due diligence to identify U.S. accounts and report client data to the IRS or their
local government through an Intergovernmental Agreement ("IGA"). FFIs that do not comply will
suffer a 30% withholding tax on all U.S. sourced income or payments remitted to them by the U.S.
paying agents or other FFIs.
The Hiring Incentives to Restore Employment (HIRE) Act provides a payroll tax holiday for employers hiring new employees and an increased business credit for employers that retain new employees for 52 weeks. It also increases the Sec. 179 expense deduction limit and phaseout thresholds for 2010.
The HIRE Act also encourages public-sector infrastructure investment and hiring through a provision that extends the direct payment option available under Sec. 6431 for Build America Bonds to most new qualified tax credit bonds.
To offset the costs of the incentives, the HIRE Act includes new foreign account and asset withholding, reporting, and penalty provisions. It also modifies the corporate estimated payment requirements.