The Government has signed an agreement with the United States that allows the private data of taxpayers in New Zealand to be passed on to America.
The law means financial institutions will have to pass details of New Zealand taxpayers who are United States citizens or permanent residents to the US tax department.
It is part of an intergovernmental deal aimed at reducing tax evasion by American citizens.
Revenue Minister Todd McClay said the agreement would make it easier for New Zealand financial institutions to comply and thereby reduce additional costs being passed on to New Zealand customers.
Mr McClay signed the agreement with the US Charge d'Affaires Marie Damour at Parliament on Thursday.
It comes just two weeks after Mr McClay admitted before a select committee that he had not seen the detail of the agreement.