The Treasury Department and Internal Revenue Service have issued final regulations for their global reporting demands under the controversial Foreign Account Tax Compliance Act (FATCA).

Enacted by Congress in 2010, FATCA was created to target non-compliance by U.S. taxpayers using foreign accounts s a means of tax evasion. It requires foreign financial institutions (FFIs)to report to the IRS information about accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. American's with $50,000 or more of assets held by a foreign institution are targeted.

Under FATCA, a participating FFI will need to enter into an agreement with the IRS to identify U.S. accounts; report information to the IRS regarding U.S. accounts; and withhold a 30 percent tax on certain U.S.-connected payments to non-participating FFIs and account holders who are unwilling to provide the required information. The finalized regulations outline the step-by-step process for U.S. account identification, reporting, and withholding requirements.

In implementing the final regulations, and since proposed regulations were published in February  2012, the Treasury Department has collaborated with foreign governments to develop intergovernmental agreements designed to provide a framework for information sharing and remove legal hurdles to compliance. As important, these may also help defuse longstanding complaints and concerns about the global—potentially unilateral—reach of the regulations, even though no exemptions are offered by them. It was announced on Thursday that Norway has joined the United Kingdom, Mexico, Denmark, Ireland, Switzerland, and Spain as countries that have approved model agreements.Negotiations are still underway with 50 other countries and jurisdictions.

"The final rules mark a critical milestone in international cooperation on these issues, and they provide important clarity for foreign and U.S. financial institutions, said Deputy Treasury Secretary Neal Wolin in a statement.

The final FATCA regulations:

Expand and clarify the treatment of certain categories of institutions deemed as low risk for tax evasion, such as, such as governmental entities and retirement funds, and life insurance policies.

Provide that certain investment entities may be subject to being reported on by the FFIs with which they hold accounts, rather than being required to register as FFIs and report to the IRS

Clarify the types of passive investment entities that must be identified and reported by financial institutions.

Provide streamlined registration and compliance procedures for groups of financial institutions, including commonly managed investment funds, and provide additional detail regarding FFIs' obligations to verify their compliance under FATCA.

Registration will take place through an online system. FFIs that do not register and enter into an agreement with the IRS will be subject to withholding on certain types of payments relating to U.S. investments. Updates and additional information on FATCA are available at the FATCA pages of the Treasury Department and IRS.

The Treasury Department announcement says there will be a phased-in timeline for compliance with withholding required starting in 2014.