FATCA Enforcement Picking Up Momentum As July 1, 2014 Deadline Approaches

Under the Foreign Account Tax Compliance Act (“FATCA”), foreign banks, insurers and investment funds must send the Internal Revenue Service information about Americans’ and U.S. permanent residents’ offshore accounts worth more than $50,000. Institutions that fail to comply could effectively be frozen out of U.S. markets.

Since the release of the Model 1 and Model 2 intergovernmental Agreements (“IGA’s”) to implement FATCA, there has been robust and growing interest from jurisdictions worldwide to enter into IGA’s. To date, the United States has signed IGA’s with 26 jurisdictions and has reached agreements in substance or is in advanced discussions with many others.

Foreign Financial Institutions (“FFI’s”) continue to express strong support for a broad IGA network as a way to facilitate FATCA compliance while avoiding legal conflicts, and to more effectively and efficiently implement cross-border tax information reporting. They have also expressed practical concerns about the status of FFI’s in jurisdictions that are known to be in an advanced stage of concluding an IGA, but have not yet signed an agreement.

For this reason, the U.S. Department of the Treasury and the Internal Revenue Service announced that countries that have FATCA agreements “in substance” with the United States will be seen as complying with the law, even if the agreements are not finalized by December 31, 2014.

This impact of this announcement increased to 45 from 26 the number of countries that have IGA’s with the United States, which allow a country’s financial institutions to comply with FATCA via their domestic regulators while their officials are in the process of negotiating an IGA with the United States.

The 26 countries with IGA’s already in place are:

Countries treated as having an agreement, that are “in the process” who are added to the list:

Click here for progress and developments IRS has made in gathering information from foreign banks and foreign governments.

Federal tax law requires U.S. taxpayers to pay taxes on all income earned worldwide. U.S. taxpayers must also report foreign financial accounts if the total value of the accounts exceeds $10,000 at any time during the calendar year. Willful failure to report a foreign account can result in a fine of up to 50% of the amount in the account at the time of the violation and may even result in the IRS filing criminal charges.

The IRS is giving taxpayers one last chance to come forward and voluntarily disclose foreign accounts and unreported foreign income before the IRS starts investigating non-compliant taxpayers.

If you have never reported your foreign investments on your U.S. Tax Returns, you should seriously consider participating in the IRS’s 2012 Offshore Voluntary Disclosure Initiative (OVDI). Once the IRS contacts you, you cannot get into this program and would be subject to the maximum penalties (civil and criminal) under the tax law. Taxpayers who hire an experienced tax attorney in Offshore Account Voluntary Disclosures should result in avoiding any pitfalls and gaining the maximum benefits conferred by this program.

Protect yourself from excessive fines and possible jail time. Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Francisco and elsewhere in California qualify you for OVDI.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems, get you in compliance with your FBAR filing obligations, and minimize the chance of any criminal investigation or imposition of civil penalties.