Has the Trump administration gone soft on foreign accounts?

Editor’s Note — This article is part of a series of articles from top CNNMoney journalists examining pressing economic issues facing the United States. Read all the articles in the series here.

(CNNMoney) — One of President Donald Trump’s first acts as President was to sign a law that threatened to squeeze foreign shell companies and individuals, some located in tax havens, out of the United States if they were involved in illegal activities.

The very moniker of the law — the Foreign Account Tax Compliance Act, or FATCA — is meant to put foreign companies and individuals on notice that U.S. tax dollars are an issue and the IRS is watching.

But, since that law was signed, Americans have been complaining bitterly about what it is and isn’t doing.

About a million Americans hold a foreign bank account or business address and are subject to FATCA, according to the Treasury Department.

Critics say the law doesn’t go far enough, particularly when it comes to foreigners who live in the United States and work here legally.

The law also leaves thousands of other U.S. taxpayers with offshore accounts out in the cold and without serious sanctions.

While hundreds of U.S. offshore firms are facing audits, about 100,000 Americans face no financial penalties, says the Department of the Treasury, which is charged with enforcing the law.

Related: Senators: US tax law is a threat to foreign companies

It comes to a boil as Congress debates whether to give guidance on how to best apply FATCA to individual taxpayers in the future.

The law’s supporters say it’s a small, targeted piece of the larger battle to stamp out tax evasion.

And they say the IRS and Treasury should have been more effective in implementing it.

“FATCA was implemented more slowly than expected, and it has been extremely challenging for banks and companies to comply with the law,” says Alan Dershowitz, a prominent criminal defense attorney and adjunct professor at Harvard Law School.

What happened to FATCA?

When Congress passed FATCA, it provided broad powers to the IRS to crack down on financial institutions, including non-U.S. banks.

To comply with the law, which started coming into effect in 2013, banks would have to collect the names of U.S. customers with a bank account or business address outside the United States, notify the IRS, and provide additional information to the IRS in exchange for a waiver of FATCA penalties.

Large banks outside the United States were largely exempt from the law, but smaller banks, credit unions and retail banks faced administrative fines and administrative delays.

Under pressure from big banks, Congress in 2017 included a provision in the Tax Cuts and Jobs Act to let those small banks and credit unions that have been subject to FATCA for a year or more continue to do so.

The same year, some non-U.S. banks voluntarily agreed to turn over names and other details of U.S. customers with a foreign bank account.

The IRS only started considering for the first time a list of international bank account holders it received voluntarily under the 2017 law.

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Why do foreign bank accounts matter?

There’s a major tax evasion problem in the United States involving foreign accounts. The IRS estimates that Americans have more than $2 trillion in offshore accounts.

About half of that money comes from offshore accounts held by U.S. taxpayers. (Another quarter comes from individuals that failed to report their offshore accounts. Many of those individuals never complied with the law and continue to operate their account.)

There are strict limits on how much of your income and assets you can take out of the country without declaring it on your tax return. When you’re a high-income earner and take foreign income out of the country, you’re triggering a withholding tax that the IRS collects. When you send money into an offshore account, there’s another amount of tax withheld that you have to pay upon repatriation.

Under the law, the government can get as much as half of that money. But several countries, including Switzerland, Norway and Germany, have abolished such withholding taxes on U.S. banks and financial institutions and have returned the money that has been taken out of their countries.

Related: The countries with the biggest tax havens

Wouldn’t it make more sense to bring foreign accounts back to the United States?

Yes, but it’s much more politically complicated.

Of the total $2 trillion in offshore accounts, only $43 billion comes from international financial institutions. The rest is tied

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