The implementation of global forms of the US FATCA tax initiative, often referred to as GATCA (Global FATCA) continue to gain steam in Central and South America.  This week a major US bank threatened to close the accounts of Argentinians with “undeclared funds.”  JP Morgan announced this week that “all funds will be duly declared” or the bank would begin closing accounts linked to Argentinians.  The result of Argentina’s aggressive offshore tax strategy will be much like the IRS FBAR strategy.

In May of this year, Argentina’s President Mauricio Macri established a tax related amnesty program for Argentinians to freely disclose offshore savings that have previously been unreported.  Under the initiative, Argentina nationals have until March 31, 2017 to disclose those funds and pay a fine of up to 15 percent on previously undisclosed balances.  This applies to all offshore accounts, investments, safe deposit boxes and foreign owned real estate.

Many Argentine and South American watchdog organizations have estimated Argentinians have more than $500 billion in unreported offshore assets.  In the past, many Argentinians simply refused to disclose the funds “since the risk of detection was low, many people didn’t participate,” said Facundo Gomez Minujin, head of JP Morgan’s Argentina unit.  As a result, Argentina’s aggressive offshore tax strategy is designed to target, identify and penalize citizens who have failed to disclose offshore assets and funds.

Many US taxpayers and foreign nationals from around the world have believed and continue to believe the risk of detection is low.  They are risking a substantial amount of their own money and potentially their personal liberty on a false sense of security due to anonymity.

The world governments have agreed to share financial information with each other and their tax agencies such as the IRS.  Banks and investment houses as well as government agencies around the world have been feverishly attempting to document the “beneficial ownership interest” in every account.  The beneficial ownership interest ties that account to a specific individual or corporate entity.  This allows the bank, investment house or foreign sovereign nation to provide detailed financial account, balance and transactional information back to the home country of the account holder.

In the case of the United States, this information flows into the IRS who then compares it with the taxpayer’s FBARs for the past several years.  When a discrepancy arises an IRS AUDIT is sure to immediately follow.

International tax sharing agreements that begin in 2017 will affect the lives of many Argentinians, and offshore account holders around the world.  “We’re offering this last opportunity because from January the tax agency will have all the instruments it needs to search for that money in any part of the world,” said Argentinian Finance Minister Alfonso Prat-Gay.

This poses a simple question for US taxpayers and foreign nationals who live and work in the United States:

If Argentina believes it will have “all the instruments it needs to search for that money in any part of the world” imagine how much farther ahead the IRS is at this moment in time.  The US FATCA initiative is years ahead of the Argentinians.  The simple fact is this: The IRS is already directly receiving information about specific and unique US individuals and entities from hundreds of thousands of offshore banks, financial houses and sovereign tax authorities.

It is only a matter of time before the IRS knocks on the door of those who have not disclosed offshore assets through FBAR compliance.  The facts surrounding Argentina’s aggressive offshore tax strategy and their confident and bold proclamation that it has “all the instruments it needs to search for that money in any part of the world” adds more reality and urgency to taxpayers worldwide and here in the United States who have failed to enter the OVDP or streamlined programs offered by the IRS.

The international tax attorneys at Allen Barron provide sound, informed expert counsel and advise to US taxpayers and foreign nationals.  We invite you to contact us for a free consultation regarding offshore accounts, assets and income at 866-631-3470.  Learn from Argentina’s aggressive offshore tax strategy and avoid the harsh Draconian penalties awaiting US taxpayers who still believe the risk of detection is low.



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