Vatican becomes whistleblower of potential U.S. tax cheats? Yes!

The Vatican announced that it will share the tax information of U.S. citizens holding accounts in the Vatican Bank, with the United States. This is expected to reveal many who have evaded taxes in the United States which will result in prosecutions. Vatican and U.S. officials signed an agreement in which the Holy See committed to comply with a 2010 U.S. law designed to encourage some say force foreign financial institutions to share information about U.S. account holders with U.S. tax authorities.

But the Vatican foreign minister, Monsignor Paul Gallagher, said the Vatican’s decision to sign its first intergovernmental agreement with the U.S. was part of its “long-term strategy to ensure and promote legality, transparency and ethical behavior in the economic and financial fields.”

62 countries have signed these Foreign Account Tax Compliance Act agreements with the U.S., while 50 others have “agreements in substance.” The Holy See recently signed a tax information-sharing agreement with Italy, though that is based upon request whereas the FATCA reporting is automatic and annual, U.S. officials said.

Under the U.S. law, foreign banks that don’t agree to share information face steep penalties when doing business in the U.S. The law requires American banks to withhold 30 percent of certain payments to foreign banks that don’t participate in the program a significant price for access to the world’s largest economy.