FATCA puts the pressure on taxpayers and foreign financial institutions to come into compliance regarding information sharing and taxes on overseas accounts with upcoming deadlines.
FATCA, the Foreign Account Tax Compliance Act was passed in 2010, and has since gone into effect as of 2014. The law requires all foreign financial institutions to report information to the United States government regarding U.S. account holders. Those institutions that fail to do so face penalties of up to a 30% sanction on funds transfers from the United States. With such steep penalties on the table, many foreign financial institutions have already signed up to comply with the law. In fact, over 100 countries have signed an Intergovernmental Agreement (IGA) to comply with FATCA requirements.
So now that many jurisdictions and institutions are on board with the new tax laws and have agreed to this heightened level of banking transparency, they need to stay current with updates and deadlines that are coming this year. Here is a brief list of important dates to note in 2015:
March 31st, 2015 – This is the deadline for foreign financial institutions within non-IGA jurisdictions and those in Model 2 IGA agreements to submit their first reports to the IRS. American taxpayers can expect their bank or employer to request information regarding these reports and should consult with their tax attorney if they have questions about how to respond.
May 31st, 2015 or June 1st, 2015 – This is usually the first reporting deadline for financial institutions within Model 1 IGA jurisdictions. At this time, information must be reported to the IRS regarding U.S. account holders.
June 30th, 2015 – This is the deadline for reviewing pre-existing high-value accounts (over $1m USD). Again, if taxpayers have questions or concerns on how to respond or prepare for these reports, they should consult a tax attorney.
As time goes on and we move further into the year, we can expect to see more and more jurisdictions sign an IGA agreement. Furthermore, global efforts to develop a standard tax information sharing process are in place and will only continue the move towards greater financial transparency throughout the world.
For this reason, it is important to ensure you are in full compliance with tax payments and reporting requirements. This affects taxpayers and financial institutions abroad alike. Failing to disclose information will lead to strict penalties and even the possibility of criminal charges for individuals and hefty financial penalties for financial institutions. To avoid these issues, now is the time to hire a professional tax law firm that can put your mind at ease by helping you navigate this ever-changing process.
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.
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