"I can't even say with conviction that I'm sure, looking strictly on a cost-benefit basis, that FATCA's . . . benefits are going to outweigh the cost," Miller told a lunch crowd at the Securities Industry and Financial Markets Association FATCA Policy Symposium in Washington. "It's not clear to me that when you look solely at the burden placed on financial institutions and others, versus the amount of revenue that may come into the treasury, that this is going to be a revenue-positive event for the United States."
And despite the fervent wishes of some in the finance industry, FATCA is here to stay, said Miller, now national director of tax for Alliantgroup. "I don't see a repeal in the cards," he said. "FATCA . . . is tied inextricably to offshore evasion work, and that has to be kept in mind as you talk about repeal, as you talk about changes."
Miller said he recognized "that the folks in this room are sort of on the wrong end of FATCA implementation and that you're bearing the cost and not necessarily the benefit of FATCA."
But Miller added, "The future is an improved global set of rules, [and] I have high hopes that it will create a level playing field that will make it much more expensive and risky to hide assets offshore. And that should be some help at least to compliant financial institutions as people consider where to invest their money into the future."
Miller, former deputy commissioner of services and enforcement and a 25-year veteran of the IRS, acknowledged both problems and progress in the implementation of FATCA and said that he believes "offshore evasion is an area in which noncompliance will never be completely eradicated."
"While I have high hopes that the implementation of FATCA will be successful and of great assistance in this regard, I fear that it's not going to be a panacea," Miller said. "I also believe that we have yet to see the full breadth of creativity in terms of the types of assets that will be used into the future to store wealth overseas."
Miller praised the IRS's new streamlined filing compliance program under its offshore voluntary disclosure program. "Like so many things since I've left [the IRS], it's an improvement on what I left behind," he said.
Miller encouraged people to think about entering the streamlined program "as a part of that risk analysis that people will have to do as they decide to come in from the cold."
The issue of reciprocity "pose[s] an interesting set of political questions into the future," Miller said.
Some in the finance industry, especially in border states, have argued that FATCA, intergovernmental agreements, bank deposit interest rates, the most recent regulations from Treasury's Financial Crimes Enforcement Network, and related rules on information sharing "pose a real risk to the safety of foreign account holders," Miller said.
"The argument goes that certain countries or some individuals within those countries will use the information the IRS provides to punish, to pressure, and to extort," Miller said. "I think that this concern is real, and we will have to see how it all unfolds."
It's the IRS's responsibility to ensure that no information is released unless it is secure and used only for tax purposes, Miller said.
"That means that there are some countries with which information sharing is simply not appropriate and should not occur in a short, or even longer, term," Miller said. "This area is one that the IRS has to be vigilant on. If not, I see all the gains that are happening in terms of information exchange really being put at risk."
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