Written into law in 2010, the Foreign Account Tax Compliance Act (FATCA) is a successful tool to encourage compliance by offshore banks and financial institutions held by US persons. As a result of FATCA, the Internal Revenue Service (IRS) can enforce compliance, penalties, and non-prosecution agreements against foreign financial organizations who fail to report assets held by US taxpayers.
Here are notable points about FATCA:
For expatriates, FATCA and other reporting requirements have led some to renounce US citizenship if they have been living abroad and do not wish to maintain ties with the United States. If considering your status, be aware that renouncing citizenship is a big step with significant tax and other implications.
Unlike the foreign-held banks that the IRS pursues, the United States itself has not promised robust involvement in the Common Reporting Standard, an inter-governmental tool to reduce tax fraud and evasion around the world. Despite its globetrotting efforts to return tax monies—and collect penalties on unreported assets—the US is a leading secrecy jurisdiction when it comes to rooting out foreign tax evasion on its own soil.
As with most things there are reporting exceptions. Penalties under the Act are fierce. There is a $10,000 penalty for failure to file and another potential $50,000 fine if you continue to resist filing after notification by the IRS. The Act includes up to a 40 percent penalty for understated assets as well. Accurate, timely filing is important. If you are unsure of your liabilities, speak with an experienced tax attorney sooner than later.
Locally or globally, the tax lawyers at Robert J. Fedor, Esq., LLC help you handle IRS tax challenges and other tax controversy from offices in Cleveland and Chicago. When you need confidential, responsive, legal advice, call 800-579-0997 or contact us.