WASHINGTON, D.C. — World Council of Credit Unions this week came out in opposition to some aspects of the United States Internal Revenues Service's proposed implementation of the Foreign Account Tax Compliance Act (FATCA). The proposed regulations, which would require many foreign financial institutions (FFIs), including credit unions, to register with the IRS for the purpose of detecting taxable account activity by U.S. citizens in foreign countries, would place unnecessary and inappropriate burdens on small non-U.S. credit unions, World Council said in an April 30 letter to the IRS.
"Credit unions are in most cases small, localized financial institutions that, like banks, provide members with retail banking services," wrote Michael Edwards, World Council's chief counsel and vice president for advocacy and public affairs. "Unlike banks, only people within the credit union's common bond can become members. Credit unions are unlikely to have accounts held by ‘U.S. persons' who are not residents of the credit union's home country."
World Council further urged the IRS to revise current definitions within FATCA rulings so that small local credit unions be exempt from compliance with the rule. Some credit unions' current inability to qualify as "nonregistering local banks" as defined by the proposed legislation puts an undue and inappropriate burden on the institutions, a concern of credit union leaders around the globe. Appropriately revising the proposed rule would help small credit unions avoid noncompliant activities, the letter said.
World Council also urged the IRS to make other changes to the rule, including the following:
"We appreciate the opportunity to comment on the proposed FATCA
regulations," said Brian Branch, World Council president and CEO. "We
urge the IRS to review our recommendations and act in a way that removes
undue compliance burdens on small, locally owned credit unions, freeing
them to use their resources to serve their members."
The public comment period on the proposed FATCA regulations closed
April 30. World Council has petitioned the IRS to be allowed to
participate in a public hearing in Washington, D.C., on May 15 to
further support its recommendations. The final law, due to take effect
Jan. 1, 2013, will be released before year-end.
To view World Council's letter to the IRS in its entirety, go to: www.woccu.org/positionpapers.
World Council of Credit Unions is the global trade association and development agency for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach.
World Council has implemented more than 290 technical assistance programs in 71 countries. Worldwide, 56,000 credit unions in 101 countries serve 200 million people. Learn more about World Council's impact around the world at www.woccu.org.