Exceptions from Reporting Foreign Financial Assets (FATCA)

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Rescind Foreign Investment Loopholes

AKA “Protect American Interests from Hidden Foreign Influence”


Which agency/agencies promulgated the regulation? *
Department of the Treasury- Internal Revenue Service (IRS)
Which title, parts, and/or sections of the Code of Federal Regulations (C.F.R.) should be rescinded? *
26 CFR §1.6038D-2 — Exceptions from reporting foreign financial assets
What is your name?
—OPTIONAL--
Is your proposed rescission a notice of proposed rulemaking, final rule, direct final rule, interim final rule, or interpretive rule? *
Notice of Proposed Rulemaking
What is the name of the regulation being rescinded, if applicable? *
Exceptions from Reporting Foreign Financial Assets (FATCA)
Please provide a short summary of the justifications for the rescission. *
Rescinding exemptions from foreign asset reporting under FATCA will close regulatory gaps that enable the concealment of offshore wealth and beneficial ownership. This action promotes financial transparency, curbs tax avoidance, and aligns with anti-money laundering and anti-corruption goals.
Please insert the address of the agency. [NPRM, DFR, and IFR only]
Department of the Treasury Internal Revenue Service 1111 Constitution Avenue, NW Washington, D.C. 20224
Please insert the contact information for the agency. *
public_liaison@irs.gov
What is the background for the regulation being rescinded? *
FATCA was enacted to increase offshore transparency and prevent U.S. persons from hiding assets abroad. However, under 26 CFR §1.6038D-2, several exemptions were introduced to reduce filing burdens for certain taxpayers and entities. These include carve-outs based on filing thresholds, asset types, and indirect ownership structures. While administratively convenient, these exemptions have become tools for high-net-worth individuals and multinational interests to obscure foreign holdings using nominee entities, passive investment vehicles, and layered corporate structures.
Explain the reasons for the rescission. *
Rescinding or substantially narrowing these exemptions will: Ensure that all foreign financial assets are reported consistently, regardless of ownership pathway or entity structure Reduce the use of offshore shell companies and passive conduits to evade scrutiny Restore public trust in tax fairness and the integrity of domestic and international financial systems Support anti-money laundering (AML) and counter-terrorism financing (CTF) initiatives by closing beneficial ownership reporting gaps Align FATCA enforcement with broader U.S. goals on transparency and global anti-corruption leadership If full rescission is not administratively feasible, the scope of these exemptions should be significantly reduced and subjected to stricter audit triggers to prevent misuse by individuals with material influence or foreign financial leverage.
Describe the text of the relevant C.F.R. provisions as it will exist after the rescission. *
All exemptions defined under 26 CFR §1.6038D-2 that exclude specified foreign financial assets from reporting based on asset type, filing threshold, or indirect ownership shall be rescinded or amended to ensure full beneficial ownership transparency. All specified individuals and domestic entities with direct or indirect control over such assets must report without exception. Existing penalty provisions for non-reporting shall apply uniformly, and audit procedures shall be updated accordingly.
Please insert the name of the current agency head. *
Michael Faulkender
Please insert the title of the agency head. *
Acting Commissioner of Internal Revenue

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