By Alan Pyke From Think Progress

Over 77,000 separate foreign banks and financial firms will start sharing information on their American accountholders with the Internal Revenue Service (IRS) in cooperation with a major crackdown on offshore tax evasion, the Associated Press reports.

Under the Foreign Account Tax Compliance Act (FATCA), banks that continue to withhold information on their American clients from U.S. authorities have to pay substantial fees on any business they conduct in the states. Since that law passed in 2010, American authorities have gradually worked with international governments and bankers to implement its information sharing requirements. The list of 77,000 cooperating institutions released Monday by the Treasury Department is the first comprehensive look at which banks have chosen to cooperate with FATCA, and future lists may be even longer. It remains to be seen how U.S. officials will use this new information.

FATCA also establishes a process for the U.S. government to strike direct information-sharing agreements with foreign governments. Almost 70 countries have made such deals, including Switzerland and other common tax havens that have often fought to protect their clients’ privacy. The government of the Cayman Islands struck a FATCA deal last August that requires the government to collect, filter, and pass on information from banks in the Caribbean island chain. Switzerland’s deal leaves the information handling to individual companies, which are increasingly cooperating with American authorities in part because some Swiss banks have faced costly criminal prosecutions over their role in helping Americans duck the IRS.

The combination of criminal prosecutions against Swiss firms and FATCA cooperation with the Swiss government illustrates how Department of Justice (DOJ) and IRS efforts can complement one another. One DOJ prosecution forced the oldest bank in Switzerland to close its doors permanently. Another led to a “deferred prosecution” agreement with UBS, which provided information on U.S. accountholders to American authorities. Following those two cases, over 100 Swiss banks began cooperating with the DOJ. More recently, Credit Suisse was forced to plead guilty to criminal tax evasion charges and pay a $2.6 billion fine over similar issues. The Credit Suisse plea also required the company to hand over some information on U.S. accountholders.

But despite having received a raft of accountholder records from Swiss banks under these various agreements and prosecutions, DOJ and IRS investigators “have bogged down” in their efforts to hold Americans accountable for tax cheating, according to Senate investigators. Fewer than 100 of the nearly 5,000 UBS accountholders identified to the DOJ have been prosecuted, subpoenas against other banks have gone unenforced, and the IRS has relied on voluntary disclosure from tax evaders to recoup back taxes rather than taking a more aggressive approach.

In light of those criticisms of the tax crackdown, the coming flood of information from the 77,000 institutions on Monday’s list is no guarantee of improved outcomes for the Treasury Department. It is an unprecedented level of cooperation between international financial firms and U.S. authorities, but the tangible outcomes of that cooperation depend on how the IRS and the DOJ make use of the information. At the same time, political machinations are making things harder for those agencies. The most recent GOP budget cut IRS funding for tax enforcement, and the Republican National Committee is calling for a full repeal of FATCA.

CREDIT: FLICKR USER TAHIR

For more on this story go to: http://thinkprogress.org/economy/2014/06/03/3444090/fatca-tax-evasion-list/