They are eight million strong: American citizens who live in other countries. Many work overseas, have retired there, have family there, or have other reasons for living outside the US. Of course these people have bank accounts where they live.
Other Americans --- including many in the Cleveland area --- also have foreign bank accounts. Many of these account holders have received or can expect to receive letters from their financial institutions requesting US tax ID numbers and statements that they are compliant with the Internal Revenue Service.
A recent Forbes column stated that American residents should be prepared to prove that you are tax-compliant. If you are unable or unwilling to do so, the bank might close your account.
The Foreign Account Tax Compliance Act (FATCA) basically puts the squeeze on foreign banks, forcing them to "hand over Americans" who are not compliant to the IRS.
In order to be compliant, account-holders must report their global income on US tax forms. Forbes notes that you might need to fill out Form 8938, check "yes" on Schedule B, and file a Report of Foreign Bank and Financial Account (FBAR). The penalties for failing to report assets held in overseas accounts can be severe. The same is true for filing a false tax return.
At Robert J. Fedor, Esq., LLC, our skilled attorneys offer representation and guidance through the process of becoming compliant, including negotiation of non-prosecution agreements, filing of amended returns and other aspects of voluntary disclosure.
Please see our Sound Advice About Offshore Tax Issues page for more information about how our Cleveland and Chicago offices serve clients nationwide.