Senators Levin and McCain Call for U.S. to Halt FATCA Negotiations with Russia

On April 29, Senators Carl Levin (D-MI) and John McCain (R-AZ) urged the Obama Administration to stay negotiations on a FATCA Intergovernmental Agreement ("IGA") with Russia until Russia ends its actions directed against Ukraine. Russia is among several nations that have not yet reached an agreement in substance with the United States over FATCA. Other economically-significant countries without FATCA agreements include China, Singapore and Saudi Arabia. Banks and other financial institutions in non-IGA countries that fail to register and enter into an FFI Agreement with the IRS face a 30% withholding tax on U.S. source interest, dividends and similar passive income starting on July 1. In a letter to Treasury Secretary Jacob Lew, the two Senators noted that, according to press reports, the Treasury Department recently had suspended negotiations with the Russian Government on an IGA. In the Senators' view, imposing withholding taxes on Russian banks would place financial pressure on Russia and help to reinforce diplomatic efforts to avoid military action.

See: Press Release and Letter from Senators. See also: Cabinet FATCA Materials (for Cabinet subscribers only).For more information, please contact Daniel Mulcahy and Mark Howe.