The United States government is cracking down on tax crime problems. This is being done by setting July 15, 2013, as the date for full implementation of the Foreign Account Tax Compliance Act of 2010 (FATCA).
The law originated as part of the Hiring Incentives to Restore Employment Act, commonly known as HIRE. It requires American taxpayers to report the details of their overseas financial accounts to the U.S. Internal Revenue Service. In the past, many taxpayers have not reported those accounts, using them as a means to avoid tax obligations.
The IRS wants to end this practice and to be aware of every dollar in every account of U.S. taxpayers, even the accounts in other countries. That way, the IRS can determine how much income is being placed by Americans in foreign accounts and tax it. Currently, the Internal Revenue Service suspects that it is not taking enough money in taxes from American citizens, and hopes that this FATCA self-reporting provision will change that.
However, they are not relying on self-reporting requirements alone. FATCA has an additional provision, which requires financial institutions overseas to also report to the IRS. This includes not only banks, but also investment funds and insurance companies as well. All of them are required to tell the IRS about all accounts, holdings, and transactions of American taxpayers. Failure to do so will result in financial penalties.
Many of these institutions are complaining that the reporting guidelines are unclear. They want to delay implementation of the law until those guidelines can be clarified.
Meanwhile, American taxpayers who have funds with overseas financial institutions are concerned. Many are looking for information about FATCA so they can understand exactly what their obligations are and comply with them. If you are ever implicated in tax crime legal troubles, you will want to find an experienced attorney who has abundant experience dealing with tax crime cases. He or she will be able to give you professional advice and skilled representation.
Source: Reuters, “Compliance deadlines loom for U.S. global tax evasion law” Patrick Temple-West and Ajay Shamdasani, Jul. 08, 2013