FATCA (The Foreign Account Tax Compliance Act) was passed in 2010, and requires all US citizens with foreign investment or banking accounts to report them to the IRS. FATCA also requires foreign banks and agencies to report to the US all accounts held by US citizens, as well as foreign entities in which US citizens have a substantial interest. The IRS and US Justice Department filed suit against Credit Suisse and financial institutions around the world. They have reached landmark agreements with most foreign banks and agencies to provide information about previously hidden foreign accounts to the IRS. On July 1, the IRS will have access to an incredible base of new data about these accounts and interests, and will begin to connect the dots back to US citizens, as well as citizens of foreign nations who live and work in the United States.
There is an historic reckoning approaching for many investors who thought it would be forever possible to shield income and assets off shore to avoid or reduce tax implications. For many, July 1 will be a day when all of their secrets become known by the IRS, and at that point it will in all likelihood be too late to negotiate a way out of it.
