International accounts/assets currently need to be disclosed to IRS for compliance with FATCA. Do you have some property in another country? Perhaps you have some funds at the bank which is not in the US? If the answer is yes, then this article is a must-read. Per IRS newsroom website on October 2nd 2015, “IRS announced reaching a key milestone in FATCA implementation. U.S. Begins Reciprocal Automatic Exchange of Tax Information under Intergovernmental Agreements.”1Is your information kept private and confidential during this intercontinental exchange? IRS sure hopes so and expects this requirement to be met by its partner jurisdictions.
Tax information will now be exchanged among certain counties in order to prevent tax evasion. Intergovernmental agreement (IGAs) facilitate data transfer on offshore funds and properties for secure exchanged with IRS. FATCA has been originally enacted by Congress in 2010 and IRS has been given a deadline of September 30 to put in place the appropriate infrastructure for this exchange with foreign jurisdictions. Please note that some agreements with other counties also require IRS to reciprocally provide information about accounts maintained by residents of those countries in U.S. financial institutions. Tax compliance in US and abroad seems to be the ultimate goal. “This groundbreaking effort has fundamentally altered our relationship with tax authorities around the world, giving us all a much stronger hand in fighting illegal tax avoidance and leveling the playing field,” IRS Commissioner, John Koskinen, said.1
This Act has caused some global discussions resulting in reciprocity clause. The aim here is to prevent double taxation by exchange of information between US and partnering countries. 2 Members of intergovernmental agreements (IGAs), need to comply with IRS’s stringent policies in regards to protection of privacy/confidentiality as well as comprehensive technical standards including encryption of data.
Offshore Voluntary Disclosure Program (OVDP) allowed and resulted in many individuals coming forward and voluntarily providing information on their foreign assets in order to comply with US tax laws. Over the last 6 years, over 50,000 people have come forward to comply with taxation, paying billions in back taxes, interest and penalties. 3Moreover, foreign banks that have not handed over details of US accounts, have been heavily fined. Based on article in Forbes, “FATCA cuts off companies from access to critical U.S. financial markets if they fail to pass along American data. More than 100 nations have agreed to the law. Countries must agree to the law or face dire repercussions.” 3
Therefore, if you or someone you know has funds in another country or owns some property there, your compliance is crucial. Protect your assets by knowing the law. Although information presented above is essential to someone who has assets abroad, it is not intended as legal advice. It is advisable to reach out for services of a qualified professional. Beress and Zalkind have vast experience in the field of taxation and representation before IRS. Their attorneys at law have CPA degrees and possess high degree of professionalism.
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