Graduation Year
2016
Date of Submission
11-2015
Document Type
Open Access Senior Thesis
Degree Name
Bachelor of Arts
Department
Economics-Accounting
Reader 1
James Taylor
Rights Information
© 2015 Sophie S. Chou
Abstract
Tax evasion has been happening for decades, but after the highly publicized cases with two foreign banks, LGT and UBS, the United States (US) is cracking down on tax evaders. The latest addition to the Internal Revenue Service (IRS)’s repertoire of enforcement tools is the Foreign Account Tax Compliance Act, otherwise known as FATCA. The Act was enacted to incentivize tax information release by foreign financial institutions (FFIs) who would otherwise face a 30% withholding tax on any US source income. The question was whether or not the design of the Act and its implementation successfully met this goal.
This paper explores the history leading up to FATCA’s creation, beginning from the basic data underlying tax evasion. With the US losing approximately $100 billion a year of tax revenue, the IRS is keen on reducing the money flow out of the US. It will dig deeper into the facts of the LGT and UBS cases which led to Congress’s realization that their other enforcement mechanisms were not sufficient and describe FATCA’s unintended impact. Through researching articles on the predicted impact of FATCA, surveys of FFIs, testimonials from US citizens, this paper will explain how FATCA has unfortunately detrimentally impacted FFIs and US citizens living abroad.
Recommended Citation
Chou, Sophie S., "The Foreign Account Tax Compliance Act: The Solution or the Problem?" (2016). CMC Senior Theses. 1247.
https://scholarship.claremont.edu/cmc_theses/1247
Included in
Accounting Law Commons, Banking and Finance Law Commons, Courts Commons, Legislation Commons, Taxation-Transnational Commons, Tax Law Commons, Transnational Law Commons
