FATCA has gained the IRS the cooperation of over one hundred countries, with more entering into agreements every month.
The number of countries and jurisdictions that have now signed an agreement with the United States under the Foreign Account Tax Compliance Act (FATCA) has now exceeded one hundred. While this number grew slowly at first, more and more countries are climbing on board as the world realizes banking transparency is becoming a thing of the past.
Among the most recent jurisdictions to sign an agreement are areas within Russia, China, and even The Vatican Bank. The penalty for not signing an agreement or complying with FATCA requirements is steep. Banks and foreign financial institutions face a 30% withholding on all U.S. based transfers of funds. The IRS has made it clear it will enforce penalties and many institutions that were once sitting on the fence are now scrambling to comply to avoid penalties.
The most recent deadline for signing an inter-governmental agreement (IGA) was December 31, 2015. For those countries and jurisdictions that showed a strong effort to come to an agreement, the deadline has been extended and the lists of those who have yet to sign will be re-evaluated monthly.
What does this mean for U.S. taxpayers living abroad?
What this means for taxpayers living abroad is that they can expect their financial institution, investment company, and even insurance group to be gathering information on their accounts and sending it along to the United States. Consequently, failure to disclose assets held overseas will become much more apparent. Tax avoidance is considered a serious crime and individuals who are found guilty may face expensive penalties and even criminal charges.
Because of these changes, it is imperative that Americans living and working abroad disclose all of their income and assets to the IRS. If you have failed to do so in the past, you should consult a tax attorney or tax law firm to discuss your best options. The IRS offers a few different voluntary disclosure programs that enable taxpayers to report income and assets that were previously withheld. Penalties and charges vary depending on the selected disclosure process. Even individuals who paid all of the taxes due but failed to submit an FBAR form are being followed up on and should take the necessary steps to amend their returns and submit the appropriate documentation. In many cases, this is not a simple process, but can be navigated with the assistance of a tax attorney.
About Freeman Tax Law
Freeman Tax Law (FTL) is a boutique law firm consisting of a multi-disciplinary team of tax professionals including tax attorneys, CPAs and a professional staff that have vast experience with foreign tax compliance and regulatory matters for financial institutions. FTL consults with both FFIs and USFIs with regard to Foreign Account Tax Compliance Act (FATCA) and related regulatory matters and assists them developing procedures on how to comply with these laws. FTL provides a multidisciplinary approach for filing offshore voluntary disclosures. Working to help clients prevent future tax headaches we offer a complete wealth management and estate planning team. As an experienced firm with wide reach, Freeman Tax Law provides immediate assistance to our clients planning for and resolving all tax related challenges.
Freeman Tax Law