Why did the US legislature pass FATCA? Why did the US Justice Department spend years and millions of taxpayer dollars pursuing foreign banks and investment houses in international courts? Why did a few of the Swiss institutions agree to pay Billions in fines to the US, and then send letters to US taxpayers recommending that they review past FBAR filings? What more will follow from the almost 100 other sovereign nations and their own banks and taxation authorities who have since agreed to abide by FATCA?
The answer is simple: Money, and a lot of it.
Where will that money come from? It will be recovered from US taxpayers who did not accurately report their foreign bank account balances, investment accounts, foreign assets and offshore holdings in companies and corporations. It will be recovered in the form of large tax bills, exponentially increased by heavy penalties and interest. It will be compelled with the real and genuine powers of:
- The ability to levy any personal or business bank account
- The power to place a lien on any asset
- The garnishment of wages and revenues from business ownership
- The threat of criminal tax evasion charges and federal prison sentences
Why did the US invest the past several years in laying this groundwork? To gain access to the raw data that will allow them to pursue each individual US taxpayer who has not accurately reported offshore income and assets. The IRS now has access to all of that data at an individual taxpayer level, going back years. It is only a matter of time before the dots are connected, and a letter arrives in the mail from the IRS, notifying you of an audit.
The IRS has not provided amnesty for those who did not accurately report this information on prior returns and FBARs. The streamlined domestic offshore procedures are not an amnesty program to let US taxpayers off of the hook.
The IRS now has individual account information provided by foreign banking and taxation authorities that they can tie back to individual US taxpayers. Is it safe to assume that they went through all of that effort, all of that expense, and all of that government activity just to close a loophole?
The real answer is this: Many thousands of US taxpayers have under-reported offshore accounts and income for years. The US government needs those revenues, and they have enacted FATCA and pursued foreign institutions and sovereign nations to gain access to your information.
The end game is simple: The IRS now has all of the actual balances, activity history and value of the offshore accounts, investements, and holdings of US taxpayers. The reason to invest the time and substantial governmental resources to obtain it was not to provide an easy way out and amnesty for those who have attempted to reduce their US tax liability through offshore strategies.
This is serious business, and the IRS has powerful tools with which to pursue this money from US taxpayers.
