The vision that was encompassed in the design and passage of the Foreign Account Tax Compliance Act or FATCA has been formally realized. The IRS recently announced that the swap of data with other countries, institutions and tax agencies who have signed onto the FATCA agreements is underway.
The IRS Is Now Receiving Direct Information About You from Overseas Sources
The IRS established specific data formats, protocols, encryption, and transmission specifications in order to protect the information being exchanged. In addition, foreign banks who do not provide information to the IRS about US taxpayers accounts must collect a 30% tax on all transactions, or face the penalties established in FATCA. Many foreign institutions have begun to collect the 30% withholdings, and this is expected to increase in the near future.
FATCA established harsh penalties for US taxpayers who are not in compliance with IRS requirements established on the Foreign Bank Account Report or FBAR, which was originally the form TD F90-22.1 “Report of Foreign Bank and Financial Accounts.” In mid-2013, the form was renamed, and is now called FinCEN 114. Most taxpayers and those in the industry simply refer to it as the FBAR.
Penalties for non-compliance can exceed the actual amount of monies in offshore accounts for some taxpayers, and the criminal penalties for “willful” non-disclosure are severe and include the genuine threat of prison. The exchange of information has begun, and the noose is tightening for those who continue to attempt to shield foreign accounts and assets.
If you are concerned about FBAR compliance and the implications of FATCA on your offshore accounts, business and investment portfolio we invite you to contact us for a complimentary and substantial consultation at 866-631-3470. Learn about the protections of the attorney-client privilege and the unique single source service offerings Allen Barron brings to the table.
