There were major recent developments relating to FATCA in Africa and the Middle East, especially as they relate to South Africa and the South African Revenue Services (SARS). SARS and the IRS will be sharing information reciprocally so that the IRS can use the SARS information to collect US taxes from American citizens, and that SARS can use IRS information to collect taxes from South African citizens – especially those living in the US. In addition, Israel and three Gulf Cooperation Council (GCC) members have signed onto the treaty: The United Arab Emirates (UAE), Kuwait and Qatar.
We receive a lot of questions about FATCA and FBARs and issues of money in foreign bank accounts, investment accounts, real property or assets. The simplest explanation for FATCA is this: The United States taxes its citizens and taxpaying residents on their income and assets, no matter where in the world they may be physically located. The second message of FATCA is a political threat: If you aren’t willing to comply with FATCA the United States will use all of its financial power to lock you out of US markets and access to the wealth within.
The potential consequences to US taxpayers are real and significant, in many cases criminal. FBAR reporting fines and consequences range up to $500,000 and up to 10 years in jail. In addition to the fines, the IRS can level penalties exceeding 50% based upon the highest accumulated balance of ALL of your holdings at any point over the past 8 years, regardless of the present balance. If in 2010 your investment holdings and accounts were valued at $2.5 Million, and today there is $200,000 in those accounts, your penalties will be based upon the $2.5 Million. You would owe the IRS over $1.5M in penalties alone, regardless of your present balance of $200,000.
“They won’t come after ME!”
The IRS doesn’t care about how old you are, or what health you are in – they recently jailed an 87 year old Florida man. This is serious business, and the IRS now has access to your personal information worldwide. They mean business, and yes, this means you.
As a result, to date more than 80 countries worldwide have agreed to abide by the rules, as have more than 75,000 financial institutions, including the Swiss. There are no more safe havens, and the time to come into compliance with IRS Foreign Bank Account Reporting (FBAR) requirements is upon us. The IRS has the information about your accounts and assets, and they are tied to your individual social security number or taxpayer ID. It is only a matter of time for them to connect the dots and come knocking for an audit.
Major institutions such as the Wall Street Journal, Forbes, International Financial Institutions and several US Expatriate groups are sounding the alarm, trying to raise the awareness of US taxpayers before it is too late. This isn’t sabre rattling or sensationalism, this is genuine, immediate and consequential financial risk. If you presently have bank accounts, investments or investment accounts, real property or assets outside of the US or have in the past 8 years we invite you to contact us for a free consultation at 866-631-3470. We can protect you through our extensive tax experience and expertise, accounting resources as well as the attorney-client privilege. We can guide you. We can help.
